All Forum Posts by: Daniel Weaver

Though I don't know enough about NY to compare Memphis neighborhoods to Brooklyn or the Bronx, I can make a couple observations as a lifelong resident of Memphis:

There are a number of massive reinvestment projects going on in the downtown and midtown areas of Memphis. Search for St Jude expansion or Crosstown redevelopment for two of these. The areas surrounding these developments are mostly older homes with a fair amount of crime. 

Possible that these developments will kick start additional redevelopnent in these areas, but this probably makes more sense for very large projects like converting an old warehouse into upscale condos (as many have done downtown over the last few years). There may be opportunity for small investors in some areas of midtown - these are older homes, with quite a mixture. Some homes need full remodels and others that have already been updated. This also tends to be the part of town that attracts our most liberal artsy population, for what it's worth. As with the rest of Memphis, street by street and block by block, there can be significant differences, and out of town investors can get burned.

East Memphis is mostly slightly newer homes than midtown, and mostly more stable than midtown - not quite the same variation in home condition. Parts of East Memphis are homes worth hundreds of thousands of dollars, but most parts of what I consider East Memphis are areas with homes $80k-$150k such as around the University of Memphis, Colonial Acres, and Berclair. Typically not as much crime in East Memphis, and some of the better city schools are located here.

Cordova is a much newer suburb of Memphis, I'm not as familiar with this area, but it seems to me that the original residents of the brand new homes are starting to leave and sell their homes to investors - which is leading to a decline in value and asset class. Could be off base here, though.

Bartlett is a suburb and independant city from Memphis, which has pros and cons. Probably has lower property taxes for one, but my image of Bartlett is that it is a slightly lower income area, compared to east Memphis or Cordova. Likely a good stable area to invest, but I would not count on much appreciation.

Personally, I have one rental in East Memphis close to the University of Memphis (38111) and a contract on a home in 38134, on the Memphis side of the Bartlett area. I like East Memphis and Colonial Acres, but the prices tend to be higher, so the numbers don't look quite as good on paper.

Hopefully this helps. I know out there are some local real estate companies with great reputations that have already been tagged in this thread. As an out of state investor, I would focus on identifying which company or team you want to use and go from there. Memphis still has great opportunities for cash flow, but an out of state investor would have an especially hard time trying to understand some of the complexities and block by block changes in the Memphis market so I'd recommend choosing the company you want to work with and listen carefully to their advice.

Sometimes units are allowed because they are "grandfathered" into the code (built before the law made illegal), but this is going to be a local issue, and probably not something you can get a definative answer about in an online forum like this.

If you're worried about insurance disallowing, why don't you call and ask a couple companies for a quote - if you explain the details, they should be able to tell you if it is not insurable.

Yes - a good consideration to be sure, though still very early in the consideration process. As @Jay Hinrichs points out, this would end double-taxation, since county homeowners only pay property taxes to Shelby county rather than also paying Memphis city taxes. Probably a net benefit for any areas that choose to de-annex themselves.

I'm a born and raised Memphian, but only been through Covington, TN a couple times in my life, so I'm not suggesting I'm an expert on this area. However, you should know that the area and communities North of Memphis tend to be much more depressed than the areas and communities to the East of town. There are pockets of homes that do not fit this mold, but overall, these communities North of town have been hit hard by meth and other drugs and the crime that comes along with them. 

I've never figured out why you can buy homes 30 minutes North of Memphis for $20k yet homes 30 minutes East of Memphis are $200k+. If you figure out why, let me know.

That said, I would be surprised if the home value was that far above the asking price. Seems like you should investigate the recent sales in the area and find your own comps, as well as try to get a feel for what volume of deals there are actually closing. I would not be terribly surprised for a nicely rehabbed home to eventually get a good offer, but you would have to weigh the holding costs against the price - might only be worth top dollar by waiting months for the right buyer to come along.

Alex, completely agree with your purpose to help inform out of state owners about the risks to these neighborhoods in Memphis. Not trying to criticize your points at all, but actually reinforce them. Your point about getting up early to check on some of your homes is absolutely spot on as well. I avoid certain areas after dark that I would have no problem visiting during daylight hours.

Also agree with the misleading nature some of the marketing for homes in Memphis. Even just in my short time of following the BP forums, I've noticed homes being marketed as "close to the U of M" that are C class homes at best. Certainly seems misleading to me to market as close to the University of Memphis when most students are going to avoid that area.

Read an article today that was interesting. Thought I would share to see what other people thought about this program. 

Article is here: http://memne.ws/2jCsD7

Basically, seems like this new mortgage program will encourage home ownership at sub $50k price points. Could help increase buyer demand, increase appreciation and reduce occupancy costs for those in low paying jobs and C class areas. Seems like a good thing to me, but I'm not currently invested in any of the target areas, so I wondered what the community here thinks. Will this program help, or just go bust?

I live in 38111 and currently own one rental in 38111 as well and agree almost 100% with what has been said above, though Alex is exaggerating the picture slightly with his colorful imagery. The 38111 zip is a perfect example of the stark differences that can occur in Memphis just by crossing one street.

Pretty easy to get a decent feel for which areas of this zip code are better based on rents shown on zillow.com. My neighborhood, Normal Station, is located between the University of Memphis main campus, and the University's South Campus (border is highland to the west, southern to the north, goodlett to the east and park to the south). Rents in this neighborhood are mostly to college students and tend to be $850+ for a 2/1 and $1100+ for a 3/2. Go South across Park Ave, and even before you get to the real hood rents immediately drop about $300/m - a 2/1 renting for $550 instead of $850. Home prices also drop accordingly.

To the other extreme, cross Southern Ave heading North, and you cross railroad tracks into a very affluent area of East Memphis. Some of the northern part of 38111 has homes valued in the hundreds of thousands of dollars.

Even within my small neighborhood, I feel the area East of Goodman Rd is more stable with less crime than the area West of Goodman Rd.

Lots of investment activity in the zip code, but uncertain outlook for appreciation unless some of the growing crime issues can be stemmed. Certainly some opportunities in the zip code, but I'm currently looking further east for my next property. 

Thanks for the update. I've been watching this building go up during my daily commute. Any thoughts on what this property will do to rental prices on SFH rentals in the area?

Hi @Eugene Lee - Since the topic of Memphis came up, I thought I'd throw my two cents out there as a born and raised Memphian. 

Lots of properties available in Memphis which will cash flow at least $150 per month (even after a mortgage payment), but if you are set on an A class home be very selective. In Memphis, the neighborhoods can sometimes change character block by block.  You cannot really analyse an entire area as one class - one street could be great, while the next street over could have issues. But it works the reverse also - don't write off an entire area as B or C class, because you might miss a wonderful micro area with a great opportunity. Best advice would be to visit and talk to locals to get a sense of where you want to invest.

Very inspirational, thanks for taking the time to share with us!

I also am curious which neighborhood this home is located - midtown, central gardens perhaps? Sounds like you got a steal on the purchase price if you were able to sell for that much. Profit is made on the buy not the sell, right?!

Also curious whether you have any estimate for what the costs would have been if you had hired everything out instead of doing the work yourself? I know sweat equity is an option, but it's hard to gauge the success of a flip unless you know about how much value you added by personal time.