The 4 numbers that decide every deal I buy in Memphis

General Real Estate Investing
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The 4 numbers that decide every deal I buy in Memphis

James JonesPro Member
Investor · Collierville, TN 38017 · Member since 2017 · 951 posts · 648 votes

I own 236 properties in Memphis, and I still run every deal the same way. No story, no hype. Just 4 numbers. If one of them fails, I pass and move on. Deal flow is the bottleneck, not finding a reason to force a bad deal.

1. Purchase price. I buy single-family BRRRR deals under $100K. That is the entry point that makes the rest of this work in Memphis.

2. ARV. I need $180K to $265K after repair. Below that range, the refinance does not do enough and you end up leaving too much cash in the deal.

3. Rent. For 3BR and up, Section 8 rents here run $1,395 to $1,950. I also check the 1% rule — rent needs to be at least 1% of what I have in it. If the rent is soft, the deal is soft.

4. The refinance. I plan on DSCR at 70-80% LTV on roughly a 30-year term. I underwrite to that on day one, not after the rehab is done and I am hoping the appraisal saves me.

That is also why I look hard at conversions — 2/1 to 3/1 and 3/1 to 4/2, for example. Adding a bedroom is often how a marginal deal starts hitting the rent and ARV numbers above.

What numbers do you run first before you make an offer, and what number kills the most deals for you?

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Marisol Gallegos
Real Estate Agent · Dallas · Member since 2026 · 35 posts · 35 votes
18h

@James Jones I always find your approach interesting because you seem to have a very clear system and don’t let a deal become emotional. I especially like that you underwrite the refinance from day one rather than hoping the numbers work out later.

Tell me one thing: with so much of your strategy depending on ARV and rental income, how do you account for changes in neighborhood conditions when deciding whether a property is still worth pursuing?

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  • Marisol Gallegos
    Real Estate Agent · Dallas · Member since 2026 · 35 posts · 35 votes
    18h

    @James Jones I always find your approach interesting because you seem to have a very clear system and don’t let a deal become emotional. I especially like that you underwrite the refinance from day one rather than hoping the numbers work out later.

    Tell me one thing: with so much of your strategy depending on ARV and rental income, how do you account for changes in neighborhood conditions when deciding whether a property is still worth pursuing?

    2Reply
  • Ametria Chaney
    Realtor · Memphis, Shelby County · Member since 2026 · 235 posts · 79 votes
    17h

    Love this framework, James — especially underwriting the refinance on day one. From the agent side in Memphis, the number that kills the most deals I see is ARV, specifically when it's based on the wrong comps. Investors will pull renovated comps from two neighborhoods over, but appraisers and DSCR lenders stay tight to the subject's immediate area — and in Memphis, values can shift street by street. I always tell my investor clients: fall in love with the rent and the rehab budget, but let the ARV be the skeptic in the room. A knowledgeable local agent running a real CMA before you offer is the cheapest insurance on a BRRRR. What part of town are you finding the 2/1-to-3/1 conversions pencil best right now?

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  • Sheldon DavidBusiness Member
    Technology · Member since 2026 · 12 posts · 2 votes
    17h

    James, underwriting the refinance before buying seems especially valuable here. I’d also want to see the cash left in the deal and monthly cash flow if the appraisal comes in below target or the lender offers less leverage than expected.

    The rent-to-cost ratio is a useful screen, but taxes, insurance, maintenance, and financing still determine how much income survives.

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  • James JonesPro Member
    OP
    Investor · Collierville, TN 38017 · Member since 2017 · 951 posts · 648 votes
    17h

    Marisol, plain answer: I do not try to predict the neighborhood. I try to buy cheap enough that I do not have to.

    I stay in the same nine Memphis ZIPs — 38109, 38111, 38112, 38114, 38116, 38117, 38118, 38122, 38128 — and I buy single-family under $100K against an ARV of $180K to $265K. That gap is my protection. If a street softens, I am not the guy who paid retail and needs everything to go right.

    Same on rent. For a 3BR, Section 8 here pays $1,395 to $1,950, and I underwrite at the low end of that range, with the 1% rule on top. If the deal only works at the top of the band, it does not work and I pass. The refinance is DSCR at 70-80% LTV, underwritten before I buy, not after.

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