BEST ZIPCODES IN MEMPHIS,TN!!

[Takeshia Martin]

I'm currently starting up a new direct mail campaign and I'm from Memphis,TN and I need to know. What are the best zipcodes in Memphis, TN to add on my direct mail campaign that are recommend  for wholesalers in the City  of Memphis.Any suggestions would be greatly appreciated..!!

[Chris Clothier]

I know this is an old thread that got revived, but I want to make sure that anyone reading this gets a view point from a local investor.

Out of state investors must be very, very careful no matter where they are investing, but they also have to be very careful not to get ahead of themselves, especially as it relates to knowledge of an out of state market.  I say this regardless of how often an investor is in an area and I'm certainly not knocking anyone commenting.

Memphis has a number of areas of town that struggle to keep up with the rest of the city.  Frayser is one of those areas.  At one time, this was a thriving area, but with the 1971 Supreme Court decision to re-route Interstate 40 around the city of Memphis, the area was cut off un-naturally from the rest of the city.  A buffer was built and growth, funding, jobs transportation, etc. were all funneled away from North Memphis, Frayser in particular.  To be clear, the same thing happened to south Memphis.  It is called the Loop here in Memphis, but both North and South of Downtown Memphis were cut off from the city.  This is an over-simplified explanation, but maps cannot show what is really happening on the ground.

The growth in pricing is fueled primarily by investors.  The average value of homes in this area is still below $50K and the percentage of vacant properties continues to hover close to 10%.   At its low point only 1 out of every 10 homes sold in this area were owner-occupant and a major effort including grants and intervention from different groups has only pushed this up slightly.  So, as it relates to getting a little over our skis, my point is that every 10-12 years or so real estate markets can reset.  Some more often, some less often.  Every time this market resets, foreclosures skyrocket, values plummet, vacancies go way up and rents go in the opposite direction. It takes major capital and a super long-term horizon to be successful as a buy and hold investor in this zip code.  Every time this market resets, the values will cut by more than half and when the market peaks again they reach the same values.  It is a cycle and unfortunately they never get higher because the market itself has so many issues to overcome before values can actually re-establish and stick.

Thinking that these areas listed as zip codes to avoid are the only areas new investors can find returns that work is unfortunate to read.  These areas are extremely challenging and any paper returns investors see here will be hard to materialize for long periods of time.  These are challenged areas that are in need of basics.  Grocery stores, doctors offices, dentists, locally owned shops, higher paying jobs but also just more jobs themselves, restaurants, etc...  These areas are rife with poverty and when measuring average incomes, home values, access to services - no matter the metric - these zip codes are in the lower half.

There is so much more needed to bring these zip codes up.  And in case you think I'm peddling something other than advice, I have personally invested millions into these zip codes in the past and lost.  I thought I could change things and I was trying to be a steward for my city.  Im not going to fluff this.  I also thought I was smarter than everyone else and was going to make a lot of money by buying lower cost housing and making huge rental profits.  I was wrong on all accounts.  My investment in these zip codes almost crushed me economically during the last housing downturn.  The next one is coming.  The market cannot continue to go up and up.  At some point it resets and pulls back and then begins growing again.  Zip codes and areas like the ones in the recent posts are the ones that pay the heaviest prices over the last 4-5 cycles.  

There are not very many Turnkey companies that are buying up everything they can.  Those that are, promptly resell them getting them off their long-term books.  That is the business model so you can't blame them.  However, as the investor left holding the property, make sure you are well equipped to deal with the ups and downs too.