Why I buy in the same 9 ZIP codes on repeat

Question

I run 236 doors in Memphis and I buy in the same 9 ZIP codes on repeat: 38109, 38111, 38112, 38114, 38116, 38117, 38118, 38122, 38128.

It's not laziness. It's math and speed.

In those ZIPs I know the streets cold — what a 3BR actually rents for, what Section 8 pays ($1,395 to $1,950 for 3BR+ depending on the area and voucher), what rehab really costs, and what a finished house actually appraises for. My buy box is under $100K, ARV $180K to $265K, rent that clears the 1% rule. When a wholesaler sends me a deal in one of those ZIPs, I can underwrite it in minutes because I've already bought the same house three streets over.

Outside those ZIPs I'm guessing. Guessing slows me down, ties up crews in areas they don't know, and puts my appraisals at risk. Deal flow is my bottleneck — not money, not contractors — so I don't waste flow on learning a new submarket every month.

Concentration is the edge. Same ZIPs, same floor plans, same conversion plays — 2/1 to 3/1, 3/1 to 4/2 — same rents, repeatable BRRRR.

For those of you buying in one market: how many ZIP codes are you actually active in, and do you think spreading wider helps or hurts you?

Adam Summerer · Answer

The appraisal part is underrated. When you're refinancing out of a BRRRR, having sold comps of the same 2/1-to-3/1 or 3/1-to-4/2 conversions a few streets over makes the refi appraisal a lot less of a coin flip. Outside your ZIPs you're stuck with whatever the appraiser finds, and on a sub-$100K buy that gap can be the whole deal.

James Jones · Answer

Appreciate it, Jules — a tight footprint is an underwriting advantage, not a limitation.

Jules Aton · Answer

Great post. I think most of the encouragement to purchase out of state random properties where the buyer has no contacts comes from those with something to gain. It is unfortunate buyers don't take time to read some of the threads here. There is a fair number of people who have issues down the road with their Class B property that is actually Class D.

James Jones · Answer

Matthew — I drop the deal, not the box. If a ZIP creeps past under $100K on purchase and the rent does not move with it, the 1% rule breaks and the DSCR refi at 70 to 80% LTV stops working. I do not fix that by paying more and hoping ARV $180K to $265K saves me. What I will do is keep watching that ZIP, because prices cycle and a distressed house in a ZIP I know is still a deal at my number. Adjusting the box to chase a hot ZIP is how you end up with 236 doors you do not understand. The box stays. The buying pauses in that ZIP until the numbers come back.

Matthew Morrow · Answer

@James Jones A tight footprint makes a ton of sense when the buy box is that repeatable. Going wider only works if you have a reliable team, systems, and management of both the units and the contractors locked in. Our team hit that wall and learned quickly. Even when the numbers are great, without support and eyes on the ground, the most productive property on paper can turn into your biggest headache the farther away it is. When a ZIP starts creeping past your price range, do you drop it or adjust the box?

Why I buy in the same 9 ZIP codes on repeat

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