If you are considering investing in real estate as an alternative to investing in mutual funds, bonds and stocks, you are not alone. The fact is that investing in real estate can be highly profitable due to things like tax benefits, cash flow, asset appreciation and more.
And just how many times have you heard that location is everything in real estate investing?
Memphis is one of the hot markets this year, and this is projected to continue into 2019 and beyond. These are some reasons that make Memphis such a great investment destination.
Reasons to Invest in Memphis Real Estate:
· Connectivity with other states.
Memphis is a mega distribution hub with seven state highways, three interstate highways, and eight federal highways, making the move to the rest of the country easy from the air cargo hubs, waterways, and railways.
· Memphis area has a high property appreciation index.
In fact, the city ranks #1 for property appreciation, according to Moody’s Case-Schiller Index. The median home value in Memphis is $82,600 and Zillow predicts a further rise in the coming year.
· Favorable landlord-tenant laws in Memphis, Tennessee.
Prior to buying a rental property, it’s important to know the landlord-tenant laws of that state first. In Tennessee, the landlord-tenant laws tend to favor landlords. For example, the law doesn’t limit the amount you can ask for a security deposit. Also, evicting a tenant is relatively easier.
· Jobs are expected to grow in the future.
Many companies are setting up base in Memphis. Organizations like Mitsubishi and Electrolux are opening manufacturing plants in the city. The influx of these companies not only brings a positive outlook on the Memphis real estate market but also brings a large number of jobs as well.
· You can buy a house for a low amount in real estate auctions.
It’s cheaper to buy a house than to build one due to the large percentage of foreclosures and discounted properties. In Memphis, out of 10,000 homes, 4.2 homes are foreclosed. This is greater than the national value of 1.6 and greater than the Memphis Metro value of 3.1.
· Volatility is low in Memphis real estate.
Memphis only has a few quarters in which property values reduced in the last 20 years. Between 2007 and 2009, for example, when the entire country’s real estate market crashed, Memphis property values only declined by only three to four percent. On the other hand, the rest of the markets in the country were down by a whopping fifty percent or more.
· Memphis real estate has a good rent to price ratio.
On a $100,000 property, for example, the rent will come to around $1,000. This means that you stand to make a higher return on your investment.
Other reasons to invest in Memphis real estate market are:
- Memphis a great place to work and live in with a growing and diverse population.
- Memphis is home to cultural festivals, BBQ contests, parks, and Graceland.
- The Mississippi River, Memphis international airport and many railroads are found here.
- Memphis is a place with great jobs and transportation and an excellent place to live in.
- Memphis has a rich history that stretches back decades.
- It is located in the southwestern part of the state of Tennessee.
- Memphis is regarded as the second largest metro area in the region.
With that in mind, now you have to make another important decision: which neighborhood is the best.
Top 5 Memphis Neighborhoods to Buy Investment Properties
Residential areas in this quiet suburb are sprouting ‘burb-style’ apartment complexes. You’ll also find a mix of mid-sized and massive homes as well.
Cordova lies east of Memphis, north of Germantown, south of Bartlett, and northwest of Collierville.
It’s a great place to live, work and play. For nature lovers, they will certainly appreciate the jogging trails, hiking, horseback riding, wooden terrains, and fields.
Here is an overview of the investment properties in Cordova:
- Median Property Price: $173,000
- Traditional Rental Income: $1,029
- Traditional Cash on Cash Return: 2.19%
- Traditional Cap Rate: 2.19%
This is perhaps the most diverse neighborhoods in Memphis. The neighborhood, which stretches from East Parkway on the east to I-240 on the west, is home to haves and have-nots, quaint apartments and gorgeous old houses, and people of every sexual orientation, political background, and ethnicity.
This hip area in the city core – known as the funky, artsy area – is diverse, thriving, and vibrant – a real taste of Memphis.
Here is an overview of the investment properties in Midtown:
- Median Property Price: $162, 000
- Traditional Rental Income: $778
- Traditional Cash on Cash Return: 1.5%
- Traditional Cap Rate: 6.1%
A few blocks from the calm quiet of the Mississippi River, you’ll find bustling Downtown.
Downtown Memphis, home to the Beale Street Entertainment District, is popular with locals and tourists. It sits in stark contrast to the more central, slower-paced neighborhoods thanks to picturesque landmarks, iconic restaurants, and bustling nightlife.
Here is an overview of the investment properties in Downtown:
- Median Property Price: $240,000
- Traditional Rental Income: $875
- Traditional Cash on Cash Return: 0.9%
- Traditional Cap Rate: 5.0%
This is mostly a residential, working-class neighborhood. The area features trendy shops and mom-and-pop coffee shops, as well as 1920s-style bungalows that give Cooper-Young a relaxed, laid-back vibe.
Here you will find a thriving LGBTQ community, hipsters, artists, and young progressive families with kids.
Here is an overview of the investment properties in Cooper-Young:
- Median Property Price: $179,950
- Traditional Rental Income: $769
- Traditional Cash on Cash Return: 1.7%
- Traditional Cap Rate: 3.2%
The idyllic community of Germantown is worlds away in atmosphere. Located just east of Memphis, Germantown features a full complement of locally owned eateries, boutique-shopping areas, and master planned neighborhoods.
Here is an overview of the investment properties in Germantown:
- Median Property Price: $338,450
- Traditional Rental Income: $1,381
- Traditional Cash on Cash Return: 12.6%
- Traditional Cap Rate: 5.25%
Sure, knowing the best areas in Memphis to invest in is a great step to take prior to spending those investment dollars. However, this is only one factor to consider. Among other things you will also need to do is find the right property. The right property can make all the difference.