Memphis MultiFamily Investors - Need some advice

[Kon Zel]

Where are all of the Memphis multifamily investors?  I need to bounce some ideas off some experienced people.  Looking at a potential deal, but want to avoid pitfalls.  

Please reach out.

[Stephen Blalock]

@Kon Zel From what I see and hear, multifamily in Memphis is rougher than most cities. I've been here since 2007 (but only started investing in SFH recently) and have definitely noticed that when I see a duplex, tri, quad, 8+ they all seem to be in rougher neighborhoods...that being said, I myself definitely want to find some and may end up relying on off-market deals to find what I want.

Let me know if you learn anything new about multifamily here in Memphis, I'd love to understand it more as well!

-Stephen

[Kon Zel]

@Stephen Blalock That's what I've heard and therefore want to run some things by an experienced MF investor in Memphis.  

[James Wachob]

@Kon Zel Our team has recently purchased several multifamily properties in Memphis. I'd be happy to help and share some of the things we may have done differently. 

[Philippe Schulligen]

@Kon Zel I have experience in commercial multifamily in Memphis: my first deal there was 80 units, and now co-sponsor in 1000+ units. There are definitely opportunities in that market.

The pitfalls are obviously bad neighborhoods (easy to gauge talking to brokers or running crime maps) and also find the right property manager depending on the size and class of the property. 

[Lluis Allen]

@James Wachob

What are some of the criteria that you look for when purchasing multifamily?

[James Wachob]

In Memphis, TN, evaluating a property's potential involves more than just looking at its zip code. To attract long-term, responsible tenants, focus on these key factors:

1. Homeownership vs. Renters:
   • A-Class: Ideally 90% or more homeowners.
   • B-Class: 50% homeowners and 50% renters.
   • C-Class: Predominantly renters.
2. Land Value:
   • In A-Class areas, land should be worth rebuilding and upgrading.
   • In B-Class areas, rebuild as-is if the property were destroyed.
   • In C-Class areas, it might be better to sell the land if it’s not cost-effective to rebuild.
3. Crime Rates:
   • Use resources like Trulia.com to gauge crime levels. A-Class areas should have lower crime rates compared to C-Class.
4. Amenities:
   • A-Class neighborhoods have diverse shopping options and amenities (e.g., Chick-fil-a, Wholefoods).
   • B-Class areas often feature Walmart and Dollar Stores.
   • C-Class neighborhoods usually have fewer amenities and more basic stores.
5. Schools:
   • A-Class areas may have access to better private or charter schools. Check Greatschools.org or Zillow.com for school ratings.

Investment Strategy:

• A-Class Properties: Lower risk, lower return, suitable for long-term investors looking for stable, high-quality tenants.
• C-Class Properties: Higher risk, higher return, appealing to investors with limited capital who can manage more properties for less initial cost.

In summary, choose your investment neighborhood based on your risk tolerance and desired return.

[Reed Rickenbach]

I invest in MF in Memphis. Closing on a 5 unit next week. Happy to chat.