How to Determine if a Memphis Rental Property Is a Good Investment - article banner

Memphis is an excellent real estate market for investors who want to buy rental properties, and it’s growing in popularity. We have a number of out-of-state investors coming into the area, and we’re even attracting interest from outside the U.S.

It’s no wonder. The market is crazy right now, no matter where you are. Memphis offers a lower price point for entry. You can buy an investment home here for a lot less than you could in Las Vegas, California, or anywhere on the eastern seaboard.

When you’re looking for a great Memphis investment property, you need to know what that means for you. It starts with your investment goals.

Evaluate Your Investment Goals

Every investor has their own reason for investing. They have their own ideas about what they want to accomplish and how. You need to know your own investment goals before you can determine if a particular property is a good investment for you.

Before you begin looking for investment opportunities, make sure you know what you’re hoping to accomplish this year, next year, and in the next 10 years. The best property to buy will depend on whether you’re looking for cash flow, in which case a multifamily property is probably your best bet, or long term appreciation, in which case a single-family home in an established neighborhood might deliver what you want.

Decide what you want and figure out what makes the most sense financially for you now and in the future.

Memphis Rental Property Location and Tenant Pool

You don’t have to be an experienced real estate investor to know that location matters. It matters to buyers and it matters to tenants.

Most of the renters in Memphis want to be close to work, schools, and shopping. Many of the millennial tenants moving into Memphis want a walkable neighborhood. Tenants with families will be looking at the school district and retirees will want a low-maintenance home close to recreation, entertainment, and dining. Look for a property that’s accessible and easy for commuters, students, and families. Buying something too remote will only result in a long vacancy or a lower rental value.

Well-Maintained Properties are Always in Demand

It’s often tempting to buy a “handyman special.” After all, the price is usually attractive, and you can get excited about putting your own touches on the home. But, you’ll want to collect rent as soon as possible. Buying a home that isn’t in great condition means that you’ll have to sink a lot of resources into it and spend a lot of time fixing it up. Not a lot of investors can afford that. Look for a well-maintained property that tenants will find attractive and appealing. Talk to a Memphis property manager so you’ll know if any repairs or updates will be needed before you list it on the Memphis rental market.

Run Your Numbers to Know if the Investment is Right

Location and condition are critical when you’re choosing an investment property, but something that you absolutely can’t work around is your financial position. You have to make sure the property you’re considering will make you some money.

Take a look at what you’ll spend on it and what you can expect for rental income. Your property manager should be able to conduct a comparable market analysis that tells you what kind of rents you can expect. Compare this to the expenses you’ll face, including vacancy time, repairs, insurance, taxes, and management fees. Make sure you’re comfortable with the cash flow that you’ll earn. No one invests in property to lose money, and in Memphis, you shouldn’t have to.

Memphis rental propertyThese are just some of the things that will tell you whether you’re investing in the right Memphis rental property. We can help you establish a rental value and estimate the repairs and vacancy time you’ll be facing. Contact our team at CrestCore Realty.