Memphis has long been known for it's decent, plentiful, and affordable housing. Among the many attractions to investors today is the fact that Memphis has developed into a suburban city of detached homes with sizable yards at prices below the national average. Making it even more attractive to investors is the fact that it's a city of middleclass renters where 48% of the population rents.
Why Memphis is the Place to Invest Today
Memphis has more than it's share of major corporations, including International Paper, FedEx, AutoZone, First Horizon, St. Jude Hospital, and others. Memphis is also home the University of Tennessee medical and dental schools. All of these and more added up to a stable rental market.
In addition to being an air cargo hub for Fedex, Memphis is the third largest railroad hub in the country, which Warren Buffet recently saw fit to invest in. The Memphis River Port is the second largest inland port on the Mississippi River, connecting Memphis to 25,000 miles of interconnected inland waterways. Memphis is a mega distribution hub with eight federal highways, three interstate highways, and seven state highways making trucking to the rest of the country easy from the railroads, waterways, and air cargo hubs.
Memphis is ranked number one for property appreciation by Moody's Case Schiller Index. Moody's projects houses in Memphis will appreciate 18.8% over the next four years.
Pick Your Neighborhood Carefully
As it happens in any major city, there are "war zone" neighborhoods in Memphis. Places where you can buy houses for a few thousand dollars. Don't do it! These neighborhoods are almost impossible to keep in rentable shape. Gangs and drug dealers take them over when they are vacant. Even when they are occupied, graffiti is sprayed on the walls. Also, these are in neighborhoods where few people can afford to rent. Those that can want out of the hood. Just save yourself the frustration by avoiding investing in these neighborhoods.
Also, stay away from high-end investment houses. These don't have the troubles of the war zone houses but they are harder to lease at profitable rents. These houses start at around the $90,000 range and go up to the millions.
Where you will maximize your profits and minimize your risks are houses that appeal to middle-income working class people. In Memphis, prices for these houses generally range between $40,000 to $80,000. Your investment will cost less and your return on investment will be the greatest.
About the author: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years.