Memphis Rent Growth Last 10 Yers.

[Hadar Orkibi]

Hi Team of Memphis Investors, Experts and Property managers.

I'm doing some research prior to jumping in to the market and seeking to confirm what is the rent growth trend in Memphis. it is known that Memphis is more of a cash-flow Market then appreciation market, but I would appreciate some insight information about the rental growth in Memphis. 

I'm asking that as if one is to invest say $100k for property an say it is returning $12k per year with hardly any rent growth over the next 10 years (or just keeping up with inflation) and no capital gain as bonus then one is going backwards or just holding mediocre investment.

I have researched and found this Freddie Mac report, note page 10. stating that "Memphis will fall short of expected inflation" http://www.freddiemac.com/multifamily/pdf/2015_out...

Also here over 9 Years the rental growth in Memphis is gone up from $809pm to $851pm from 2005-2014 which is "bugger all" and hardly keeping up with inflation.

http://www.deptofnumbers.com/rent/tennessee/memphi...

Also i note that vacancy rates are trading down But seating at around 10.5% according to this info.

Any info and feedback from "Boots on the ground" investors and operators would be much appreciated.

Thanks Hadar

[Jay Hinrichs]

In the mid west I NEVER raise rent.... there are too many other homes for folks to consider.

this is not San Francisco or Portland or Seattle.. were you have 1% or less vacancy rates and rents have risen 20 to 40% over the last 5 years.. but then again no one really bought west coast for cash flow so only the local owners enjoyed the rapid rent rise.

In the mid west and any cash flow market from FLA to IL  ... you get a good tenant you keep them.. Turn over will KILL you in this business..its even better to LOWER rent if you need to to keep a great tenants.

I bought 11 new constructions in Jackson MS back in Katrina days  ( Gozone) and have 4 left.. I never raised rent once.. a few of them have had same tenant the entire time I owned them and since they were brand new hardly any maintenance.. they cash flowed barely.. but my mortgages got paid down and now i have nice equity checks as I sell them off. 

when you look at Mid west performa's that show appreciation and rent grow as a function of your overall return.. I would discount that .... the reason to buy in these markets is to let your tenant pay your home off and make a few hundred a month in cash flow and to own 20 to 100 of them.. thats how you make money in those markets.. not on specualting on rent increases.. its the same.. as people talk about appreciation is speculation.. well so is rent raises in these markets.

As well as West coast I think rents have topped for this run up