Bought a Turnkey investment property in Memphis TN

[Ernesto Gencarelli Jr.]

Investment Info:

Single-family residence buy & hold investment in Memphis.

Purchase price: $65,000
Cash invested: $16,000

3 Bed 1 bath. Freshly rehabbed, with a great tenant in a not so great area. My PM company is excellent.

What made you interested in investing in this type of deal?

I can't make my money work for me in the NJ/NY area. Everything is inflated.

How did you find this deal and how did you negotiate it?

Roofstock.

How did you finance this deal?

15 year.

Lessons learned? Challenges?

Paid a little high, but worth the price considering the same type of house would be close to 379000!!!

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

roofstock

[Al D.]

@Ernesto Gencarelli Jr.

Congratulations on your purchase. It kind of sounds like it’s your first.

I am not sure whether you meant that “the same type of house would be close to 379000” in New Jersey or New York. It may be close to $1MM in San Francisco. But this should never - ever - play a role in your investing decision-making.

You bought in Memphis. There is a reason that the house is not worth $379k. I don’t know what it appraised at - if you had it appraised - but there is a good chance it cost around the same 20 years ago.

In Memphis, you get a higher yield per dollar spent because of additional risk that a place known as “Eviction Capital USA” carries:

https://www.citylab.com/equity/2017/10/where-evictions-hurt-the-most/544238/

I am not saying that you made a bad investment (I don’t have enough data to assess that.) I would only like to put in my 2 cents about the potential considerations you should not be making with your future investments. This is definitely one.