Murfreesboro, TN -- what neighborhoods to focus on / avoid ?

Question

My partner and I are multi-family investors but live in areas where investing is difficult. We are looking to invest some capital into some smaller, stable, multi-unit apartments (5-20 units) with short term rental potential. After a few weeks of market research, we have narrowed our search to three cities with Murfreesboro, TN as a strong contender.

Any investors/agents/managers in Murfreesboro, TN familiar with the area and willing to share an area overview?

Based on our research, (since 2000) Murfreesboro has shown great population growth (40%+), median household income growth (25%+), crime is on a downward trend, and job growth is above 2% over the past year. It appears to be affordable, however we are unfamiliar with the area and need help identifying the specific neighborhoods to avoid.

Thank you in advance.

Aaron Lovett · Answer

Look me up next time you are in the area.  I don't think you can go wrong with Murfreesboro as a rental market in general, but Julie's warning about having an exit strategy in case STR regulations interfere is spot on.   Murfreesboro population growth is expected to continue - it's one of the fastest growing cities in the country.  There is support at the city planning level for increased density - more multifamily complexes are being built and many units are being bought in bulk as long term rentals.  You don't have the same STR regulations as Nashville, although that can always change anywhere.  Give me a call or text and I'll share my property manager's info - he'd be happy to talk with you.

Rhett Kelton · Answer

@Brandon Magierowski

As for long-term rentals, I think it is a great place. I have several houses in the downtown area where the tenants drive 45-60 minutes for work, and have been there several years. For good versus bad neighborhoods, I would look at the maps of Opportunity Zones. But even then, it can come down to individual streets.

For example, in the downtown area, the houses on Main Street can sell for 1.5+, while houses 4 streets down, like State Street, have houses for $75,000, and 100 years old.

If you see a couple units that would interest you, you can PM me the addresses and I could probably better give you a good versus bad from my local perspective.

Brandon Magierowski · Answer

@Art Perkitny in short, we purchased 2 multi family properties in Shreveport three years ago. All the numbers looked great (Cap Rate, Cash Flow, 1% rule, etc...) but what we didn't realize at the time is that the data shows Shreveport as one of the worst investment cities in the Country (declining population growth, stagnant household income and value, and high crime rates). Instead of diving into market research before purchasing, I let my emotions take over -- I wanted to get into real-estate and no better place to do that in your home city with multi-family units (just like the books say). All cash-flow profits have been eliminated by tenant turn-over (make ready costs) and repairs. We plan to sell both properties in 2020, take my loss, and move on to a better deal.

I plan sharing ALL my lessons learned from my first 2 multi-family purchases after I have a successful deal/property 'under my belt'. I want to share with people how I took the lessons learned and applied them to finding a successful deal. The next step for me -- Market Research > Education > Find the right deal.

Rhett Kelton · Answer

@Brandon Magierowski

Two other things I thought of.

The top school zones are probably Seigel, followed by Blackman.

it might be a good idea to get a property manager's point of view as well. I know that Nathan Beach (I think it is @nathan beach, but I am on my cell phone and can't guarantee it.) works as a property manager and is familiar with Murfreesboro, and is on Bigger Pockets.

Rhett Kelton · Answer

Brandon,

I live here in Murfreesboro.  I agree with Julie above, as far as finding out more about the regulations,  but locally there is definitely the desire to be different from Nashville.  Because of the growth, area's/streets close to each other can be very different. On the STR (I'm assuming something like AirBnB?) side, For STR, I would personally look around the university (MTSU) area (graduations, games, weddings, etc), or the Medical Center Pkwy area (transportation to Nashville, corporate Nissan/Amazon, medical personnel.  These might be more of a 3-6 month rental?)

* My focus is not in the STR side of the business, so I can't guarantee any information. But the people I know that  have invested in the STR here have been pretty successful here.  They have both been in the MTSU/downtown area.

Art Perkitny · Answer

@Brandon Magierowski

The majority of Murfreesboro, TN seems to be B/C grade (on an A to F scale), which is a good thing since you won't really need to avoid any specific area all that much.

The map below shows the risk scores for census block groups in the Murfreesboro, TN area. The areas ranked F and D are such due to the high percentage of mobile home parks.

As for the population growth, the data you have seems correct.

Population has been growing consistently since 2010 and so have home values

All in all, seems like a solid area to invest!

Brandon Magierowski · Answer

@Art Perkitny thank you for the map and info. I am assuming QuantMaps is something you developed and manage yourself? Looks like a great tool for market research. I have flirted with Neighborhood Scout over the past month to pull market reports on Murfreesboro and other Cities/Neighborhoods...is there a difference between QuantMaps and Neighborhood Scout?

I have learned a tough lesson on the importance of market research before investing in a property. I am not a tech guru, BUT I am committed to using the 'data' to make my investing decisions in the future.

Julie McCoy · Answer

@Brandon Magierowski Have you looked into current STR regulations in Murfreesboro and potential regulation?  Nashville is very strict and getting stricter; Murfreesboro is on the outskirts of Nashville and it's fairly likely that when/if they introduce regulation (if they haven't already) they'll model it after Nashville.  You'll want to be sure that you can flex with any regulations that come down the pike.

Art Perkitny · Answer

@Brandon Magierowski

I think the biggest distinguishing feature between Quantmaps and Neighborhoodscout is that we allow users to view all markets for a fixed monthly amount, rather than a one-off payment per report.

We are more map focused as well and allow all variables to be plotted visually as a choropleth.

We also offer REI specific metrics such as cap rates, rent to price ratios, and location grades

In the future I plan on adding additional datasets to the system that I don't believe Neighborhoodscout provides

You mentioned that you learned a tough lesson on the importance of market research before investing in a property. Could I ask what that lesson was?

Brandon Magierowski · Answer

@Rhett Kelton awesome. Thanks Rhett. I’ll PM you in the near future.

Murfreesboro, TN -- what neighborhoods to focus on / avoid ?

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