Interested in buying an investment property in the Memphis area. What are some good areas I should look at for appreciation and rental income?

Asked by allison, Cedar Park, TX Thu Nov 22, 2012

~150-250K. Good neighbourhoods/ communities. Good schools.

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Alex Craig, Agent, Memphis, TN
Tue Nov 27, 2012
I would agree and disagree with rhm739. He is making assumptions about what seems to be a negative experience with the company he did business with and assumed all turnkey companies are the same way. Yes, there are some companies that will promise the world and make a huge profit. Single family investment properties is up and down. Through the 20 that I own, I have had my fair share of evictions over the 5 years since I have gotten started. I tell everyone, if you are going to buy just one property, then you would be best served calling a Portfolio Manager and investing in traditional products such as stocks, bonds, mutual funds, etc. Now if you can stomach the ups and downs of single family investment and you wish to build a portfolio of no less then 3 properties and truly understand the investment return is not only cash flow, but equity pay down through rents and massive tax deductions, then you have the right mind set. To many people think they can buy 10 properties and quit their job--not the case. I actually suggest paying down the debt (that is what I do). I also suggest having $1,500 in reserves for each property at all times. As for a profit margin, your turnkey provider should disclose this if asked. 5 - 10k is acceptable (keep in mind, a 10k profit could mean they secured a deal b/c of a certain relationship at a local bank that helped them secure a property not on the open market). I do know some make way more then that.

I still say working with someone who owns properties is key. You would not invest your money with a brokerage house is the guy handling your money was not invested in the financial markets, real estate should be no different. If not working with a turnkey company, I would work with a Property Manager. I would say most areas to invest in Memphis are terrible. The entitlement mentality here is unreal. Stick to Cordova and Bartlett and you will be fine. Don't get obesesed with buying at a discount. My most recent purchase for my own portfolio, after renovation, I am going to be at 90% LTV, but cash flow is going to be $550 a month.

My suggestion is if you work with a turnkey provider, order a independent home inspection and appraisal to make sure you are not paying over market.
2 votes
Tom Cullen, , Honolulu County, HI
Fri Mar 29, 2013
Oh, almost forgot.

The property manager before the last one fled the state, ALLEGEDLY, with tens of thousands of dollars in security deposits. Had to fire him as well.

The property manager before that guy, rented out my best property to a lady (works for the IRS!) who had 3 evictions in 2008. Judgements out the keister. I had to take these jewels to court twice in 9 months to collect the rent. Ended up evicting them. This property manager was actually surprised when I evicted them and tried to talk me out of it!

0 votes
Who was the PM who fled the state?
Flag Fri Mar 29, 2013
Tom Cullen, , Honolulu County, HI
Fri Mar 29, 2013

I think the cardinal rule of never being a LONG DISTANCE land lord (unless you get stuck and have to), and to invest LOCALLY is true. That is the main lesson I have learned.

You get taken advantage of. By property managers, lawyers, tenants, vendors...etc. Might as put a sign on your back that says "KICK ME".

As for the properties I still own. I evicted the last renter and sold it on a land contract. No leases, no rent to own. I required a down payment equal to one months rent. No option period. Make the payment (equal to market rent), and you can stay. Monthly payment of 1200 is amortized over 30 years. Comes out to a sales price of $144k on a $100k property! No property manager bilking you for repairs, maintenance, stealing $3500 in option money when you fire them.

That's what happened to the last property. It was an RTO. with a $3500 option and 3 year option period. Tenant/buyer couldn't make payment, and didn't want to lose the option money. Stopped making payments. RTO agreement was in the property manager's name. TB claimed that made the agreement invalid since the PM was not the owner. They are suing for the option money. Court date is April 4th. In the meantime, the property manager gave me no final accounting, no keys, and kept the option money. I reported them tot he state RE commission, they did nothing.

This is the kind of crap that happens to out of state investors in Memphis.

0 votes
Alex Craig, Agent, Memphis, TN
Fri Mar 29, 2013
Tom -- a lot has changed in the market. I think most investors found that there are a lot of ups and downs investing in a lot of areas of Memphis, including many of the areas I know you were in. Personally, I have been successful investing in the suburbs of Memphis where the mind set, mentality and values are much different then most of the areas of Memphis. Check out the house I just bought in the link below. I rented it out for $1,800 and had multiple applications on the house, most very strong. But, I am "all in" the house for a tad over $150,000. The house next door sold for $199,000 and most recently one street over for $219,000. The key is finding responsible individuals that give a crap about their credit. Areas such as Lakeland, Bartlett, parts of Cordova, Collierville, Germantown and Oakland have worked well. Take a look at our site http://( and you will see we have changed our core philosophy. Since we changed 90% of business to high end properties, we have had 1 eviction in 2 years on these types of properties. Returns over a 2 year period are about 10% on these homes. Not as sexy as quoted returns by other property sellers who quote 14 to 16%, but I think you know more then anyone that there is a high risk when investing in many areas of Memphis with a high renter population.
0 votes
Tom Cullen, , Honolulu County, HI
Thu Mar 28, 2013

I did just what your are planning to do. Don't do it!

Out of state land lording is a mistake.

email me.

Btw, I HAVE NOTHING TO SELL! I am not an agent, property manager...etc.

I am a real live investor.

I fell for the "invest in Memphis cash flow properties" marketing hype.

Four years, four property managers, three evictions, and two rentals with all appliances stolen when the tenant moved out, I learned my lesson.

There are better ways to make cash flow in Memphis or anywhere else than being a remote land lord.

TC, Hawaii
0 votes
Mark Stauffer, Agent, Oakland, TN
Thu Feb 21, 2013
Great advice Alex! Yes, get an appraisal!!
0 votes
rhm739, , Memphis, TN
Tue Nov 27, 2012
Here's my advice: Don't buy houses through an investment company! They will spin tales of gold and wealth and long term investing vs. short term all while managing to find you the very best deal they say is out there. The truth of the matter is they will do what is called a double closing, thereby selling you the house at the same time they purchase it. They essentially will sell you the house at a minimum $10,000.00 markup and often times more. The only person getting rich is them. I spent several years under the thumb of one of these very very wealthy individuals who trust me is nice to your face but the only thing he really sees is dollars. I suggest finding yourself an up and coming real estate agent who will work their but off for your business, As far as getting a property refurbed, if your not local it's very easy to get someone to oversee it for you for a small fee. If you would like to contact me feel free to do so, just reply to my answer and I'll respond. I think I might be the only person who answered that isn't trying to make a buck.
0 votes
Shared Independent living is a form of renting to a group of individuals that pays rent individually. I do this with Battered Females, Disabled Vets, etc. Here's the math. Now this is in a low income area... NOT A WAR ZONE, but a low income area 3 beds 1 bath. $500 x 3 beds = $1500 a month paid by Non-Profits. That's just 1 property... Everyone can't do this because you need to have a super relationship with Non-Profit Organizations. Your rent is Guaranteed every month. The property is inspected by the organization, which assure you that your purchase price and rehab money was well spent. Property manager can't fold, because he has to keep that relationship good with you and the organizations to keep tenant flow. This is my niche and it's working. I do have case studies and proof...
Flag Wed Feb 8, 2017
Ok.. There is good and bad investment everywhere, even in Memphis. My answer to that is to deal with someone that you feel good about and that is also not there just to sale it to but see to getting you the right type of tenants. Have them to send you video case studies of actual rehab and finished product. Don't invest in property anywhere with out getting video, not pictures, get video on the actual rehab in phases. For example, I invest Memphis with much success because I video the entire process from the time the dumpster hits the ground. This assures me where the money is going. I know my strategy, what my investment goals are, and I know where to go in order to get my rent on time.
Now that Rehab is out the way, lets talk about tenants. I have a thing about chasing rent and evictions. I don't do that anymore. Does anyone remember the Sit-Com Golden Girls where there were 4 women sharing 1 house... That's called shared independent living.
Flag Wed Feb 8, 2017
Hi thanks for your post here. I am just starting to look for some properties in Memphis

I have bought 1 house in Detroit and want 2 or 3 more to start. If I need to get a property refurbed do you over see it ? I have been in contact with an Agent Jimmy Kennedy who is going to video some properties for me to see. I am interested to get a reply from you, Sincerely, David Vincent
Flag Thu Apr 17, 2014
Alex Craig, Agent, Memphis, TN
Fri Nov 23, 2012
Hi--I can help you find properties in Memphis, either properties with tenants in place or properties that need a little renovatoin to make rent ready. I own 20 properties myself and manage over 200. I think Bartlett, TN (suburb located right outside of Memphis) is one of the best areas to invest; tenants are more stable and some good things are going on in the city that make it attractive. It is my opinion that you would be best served by working with individuals who actually own properties or at the very least manage properties. Property owners truly know the financial impact of vacant properties.

Alex Craig
Memphis Turnkey Properties
0 votes
Denise Richa…, Agent, Memphis, TN
Fri Nov 23, 2012
High Point Terrace is an excellent area for appreciation and income. You might also look at the downtown Condo Market.
0 votes
Jing Roachell, , Memphis, TN
Thu Nov 22, 2012
Jing Roachell with Crye-Leike REALTORS, #1 company in mid-south,the biggest company in Memphis.

Memphis is wonderful and please come in person to feel the beauty, feel the huge rental market and feel the great home sales for your rental properties.

For your rental home area,
Homes in a nice community with nice schools in Memphis
Homes in only one tax area with no city tax and easy to get into higherway to work
Homes in lower city tax area with nice location
Homes in a great location in Memphis with everything ready for you in less than 10 minutes.
Newer built homes that renter is willing to pay more money each month.
An upgrade old home with nice school district..........

Email me with questions for you and your friends.
Plese give Jing A Ring for all your real estate needs.

Happy Holiday!


901-758-5641 FAX
901-674-9036 CELL
0 votes
Michael Bell…, Agent, Memphis, TN
Thu Nov 22, 2012
Your question prompts several more. What types of properties are you looking for, single family, duplex, multi-family? Are you anticipating buying at the low end, putting some capital into it or them to bring it or them up to certain standards and then renting it or them out? You indicate that you may be looking for a long term hold. Are you going to manage the property? What kind of return are you anticipating? Do you have staying power? Are you buying in cash, or are you going to require some type of financing?
If you would like to discuss your plans and what's going on in the Memphis area, I would be more than happy to talk with you, maybe I can help.

Happy Thanksgiving!

Michael Bellaire, Broker, ABR
0 votes
Laron A Jones, Agent, Germantown, TN
Thu Nov 22, 2012
38138 Germantown, 38134 & 38135 Bartlet, 38017 Collierville, 38018 & 38016 Cordova, 38119 & 38117 East Memphis, 38125 Southeast Memphis, 38116 Whitehaven, 38103 & 38104 Downtown area. With your price range you should have no problems finding rental properties in nice nieghborhoods here in Memphis. If you Need an Agent I will be glad to assist you further. Thanks In Advance, LaRon A Jones & Kaizen Realty.
0 votes
Todd Berry, , Memphis, TN
Thu Nov 22, 2012
Afternoon, fellow Texan! There are several great areas in Memphis. Feel free to give me a call anytime and we can figure out the best fit for you!

Todd Berry
0 votes
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