If you are checking out our website, we assume that you are a real estate investor orlooking forward to becoming one. And what a successful real estate investor needs first is a LOCATION.
One of the most important decisions that you will make in real estate investing is choosing the right city – and then the right neighborhood – for your income property. In this article we will show you why you should seriously consider Memphis investment properties if you are looking for a good deal likely to bring you sound profits.
Memphis Real Estate Overview
When thinking about investing in real estate, Memphis, TN might not be the first market that comes to mind. However, this should change. Memphis is one of the hot real estate markets for 2016, and this will continue in 2017 and beyond. Wondering why?
Here are the reasons why Memphis investment properties are a great idea at the moment:
- Affordability
Both for homebuyers and for real estate investors, housing prices are a key factor. Memphis investment properties are really affordable right now. Median home prices in Memphis are less than half of the national average. Condos, single-family homes, townhomes… Various types of Memphis investment properties are all available at very reasonable prices, below the national averages.
Well, part of the explanation for the relatively low property prices in Memphis is that household income is also below the nationwide average values. This fact will work well to your benefit if you are not from Memphis (and thus enjoy a higher income) and are considering out-of-state real estate investing.
Related: Real Estate Investing Beyond the 20 Mile Radius
- Millennials
If you are thinking about Memphis investment properties, your target tenants should be the Millennials. The Memphis population is generally young, which means that they still cannot afford buying a home on their own, at least not in the next few years. You should take advantage of this reality and invest in a rental property which can accommodate a small family.
- Southward Migration
It is not only local Millennials that make the Memphis real estate market hot but also such migrating from northern locations with less amiable climates. As Millennials across the nation are starting to get married and have children, many of them are willing to move away from the busy 24-hour cities into places which offer a home with a yard with place for a car and a dog. Memphis is an ideal location because of the availability of such homes and because of the nice weather.
- Young Population
The next reason you should really think seriously about Memphis investment properties is demographic again. As we’ve just mentioned, Memphis enjoys a relatively young population (15% of the people are under 9 years of age). So, investing in the Memphis real estate market is not only an excellent option in the short run (to accommodate the Millennials without a home yet) but also in the long term (to provide housing for these youngsters when they grow up in 10-15 years and want to move out of their parents’ homes).
- Moving Towards a Seller’s Market
It is not exactly clear whether Memphis real estate market is a buyer’s or a seller’s one at the moment. What is clear though is that it will soon be an evidently seller’s market as inventories have started to decline. If demand continues increasing, inventories will drop even further, while prices will go up. So, it is now the time to buy Memphis investment properties.
Related: Is it a Buyer’s Market or a Seller’s Market?
The Numbers
Real estate investing is all about numbers, so let’s take a look at the Mashvisor analytics of the Memphis real estate market:
- Median Property Price: $182,000
- Traditional Monthly Rental Income: $936
- Airbnb Monthly Rental Income: $2,130
- Traditional Cash on Cash Return: 2.3%
- Airbnb Cash on Cash Return: 9.9%
- Traditional Cap Rate: 6.9%
- Airbnb Cap Rate: 15.0%
Related: How To Do Investment Property Analysis
These numbers tell us a few clear points:
- Memphis investment properties are really affordable at the moment. Hurry up! This might not last for long.
- Airbnb is definitely the optimal rental strategy in Memphis as it is way more profitable than traditional renting.
- Memphis Airbnb is actually quite a good deal with expected monthly rental income of $2,130, cash on cash (COC) return of 9.0%, and a cap rate of 15.0%.
Top Memphis Neighborhoods
Once you’ve settled on buying one of Memphis investment properties, you have to make another important decision: which neighborhood is the best. Mashvisor data points out to a few top neighborhoods in Memphis for investing in real estate. The common thing among them? That they are all much better suited for Airbnb rather than traditional renting.
So, let’s look at the top 3 Memphis neighborhoods for real estate investments:
1. Midtown
- Median Property Price: $162,000
- Traditional Monthly Rental Income: $778
- Airbnb Monthly Rental Income: $1,948
- Traditional Cash on Cash Return: 1.5%
- Airbnb Cash on Cash Return: 10.0%
- Traditional Cap Rate: 6.1%
- Airbnb Cap Rate: 15.2%
- Airbnb Occupancy Rate: 64.9%
Midtown is one of the most affordable neighborhoods for Memphis investment properties, with an median property price of $162,000, which still offers excellent COC (10.0%) and cap rate (15.2%) for Airbnb. The Airbnb occupancy rate is quite high at 64.9%. Midtown is a lively area with many cultural, entertainment, food, and drink options for any taste. Overton Park, located in Midtown, hosts the Memphis Zoo, the Memphis Brooks Museum of Art, and the Memphis College of Art in addition to a nine-hole golf course.
2. Cordova
- Median Property Price: $195,000
- Traditional Monthly Rental Income: $1,017
- Airbnb Monthly Rental Income: $2,166
- Traditional Cash on Cash Return: 2.5%
- Airbnb Cash on Cash Return: 10.3%
- Traditional Cap Rate: 6.9%
- Airbnb Cap Rate: 15.3%
- Airbnb Occupancy Rate: 46.7%
Cordova also has cheap properties with median property price just below $200,000. Airbnb promises very good returns in this neighborhood. Unlike Midtown, Cordova is a suburban area which has something for both nature-lovers (fields, wooded terrains, horseback riding, and biking, hiking, and jogging trails) and urban populations (shopping centers, retailers, restaurants, cafes, business, and office spaces).
3. Downtown
- Median Property Price: $240,000
- Traditional Monthly Rental Income: $875
- Airbnb Monthly Rental Income: $3,057
- Traditional Cash on Cash Return: 0.9%
- Airbnb Cash on Cash Return: 10.7%
- Traditional Cap Rate: 5.0%
- Airbnb Cap Rate: 15.3%
- Airbnb Occupancy Rate: 53.4%
Although a bit less affordable, you should also consider Memphis investment properties in the Downtown area as the expected monthly rental income from Airbnb according to Mashvisor is above $3,000. This is the most diverse, lively, and eclectic area in Memphis. A home to art, music, dance, and theater options, it is a cultural hub. In addition, it hosts several museums and historical places.
After hearing all that, you must be attracted to the idea of buying one of Memphis investment properties. If so, check out Mashvisor to find analytics on numerous properties in all major Memphis neighborhoods.
