Analyzing neighborhood micro-trends means you need to track the housing recovery rate, check gentrification indicators, study demand, and look into local risk factors. The Memphis real estate market is never stagnant, which means buyers need to learn how to follow ever-shifting trends to get the most out of their investments.
The Memphis Flyer states that around 80% of renters are unhappy with their living conditions. This means there are plenty of opportunities for investors to come in and turn things around for the better.
Here at Memphis Investment Properties, we know how to stay on track with these micro-trends, and we can help you learn it for yourself. We’ve put together this guide to give you a set of practical steps you can take to safely get started with Memphis turnkey properties, whether you’re an out-of-state investor or not!
Create a Clear Market Boundary
The first thing to do is to figure out your investment boundary. How far away from the property will you analyze these micro-trends? Going only by zip code zones leads to a fuzzier picture of micro-trends in the area and can offer too many variables for concrete information.
Instead, create a boundary using parameters that will have more significance to your potential new investment, such as:
- A 10-minute radius around the property
- A block group
- The area’s school district
- A collection of similar streets
Zooming in this close gives you the perfect foundation to focus on what really matters to the property in question. This kind of block-by-block investing offers concrete evidence you can then use to further your efforts without wasting any time or money.
Track Distress and Recovery
Distressed housing often goes through ebbs and flows in property appreciation trends. It’s your job to check how well a particular neighborhood is doing when compared to its neighbors.
Track information such as:
- Foreclosures
- Tax-delinquent properties
- Vacant homes
- Abandoned homes
- Short sales
Stabilization of a neighborhood isn’t always a linear line. Ups and downs are normal, so keep that in mind as you weigh your interests.
Jumping in during a state of recovery can be appealing, but sometimes investing during a time of distress can boost the neighborhood in the right direction. This could lead to the entire area rising in value and appeal, which then means your investment could change people’s lives for the better.
Analyze Sales Momentum
Understanding the momentum of housing sales in the area can give you a better idea of what to expect for your investment. At the moment, Memphis houses are on the market for an average of 73 days, which gives it a moderate sales pace.
It means that there’s room for momentum to get even better, but there’s no worry about the real estate market being too slow for new investors.
Check Gentrification Indicators
Gentrification is often seen as a boon for investors. It means a lot of upgrades are coming to the area, and that can be appealing for potential new tenants. It’s also a good indication that growth is on the way.
Common gentrification indicators to check for include:
- Many new businesses, especially ones aimed towards wealthier clientele
- Improved public transit
- Aesthetic renovations
- Shift in demographics
- Installation of new parks and bike lanes
Look Into Local Risk Factors
Something all investors need to keep in mind is the local risk factors of their chosen investment area.
What are the neighborhood crime rates like? What are the school district ratings when compared to other nearby districts? What is the risk of flooding throughout the year?
Some risk factors, such as weather issues, can increase the cost of repairs on your investment. Others, such as school ratings, can alter the kind of tenants who want to live within your property.
Build a Real Estate Scoreboard
With all of this information at your disposal, it’s time to write it down in a way that clearly shows you the micro-trends and value of the area.
A great foundation for a real estate scoreboard goes through the top concerns and rates each section on a scale from 1 to 5, with emphasis on the good versus the bad. Make notes for signs of positivity and negativity that you noticed during the research stage.
For example, when comparing distressed neighborhoods, a positive sign could be that the vacancy rate is getting smaller. A negative one is that foreclosures are accumulating again.
Other concerns to debate on your scoreboard include:
- Demand
- Risk factors
- Local improvements, or lack thereof
- Stability
With these notes on micro-trends and ratings on your scoreboard, it’s easy to see where you should make your investment in Memphis.
Frequently Asked Questions
Is Memphis Growing or Shrinking?
At the moment, Memphis is shrinking when compared to other Tennessee cities. The area needs new investors to help bring the spark of excitement back into this iconic and beloved city.
Why Are Houses So Cheap in Memphis?
Memphis houses are more affordable right now because of a lower median income and higher distressed neighborhood rates. Due to these issues, Memphis needs help from out-of-state real estate investors to get the city back to the beauty and cultural significance it once had.
What Are the Nicest Places to Live in Memphis?
Some of the most desirable neighborhoods in Memphis still retain more traditional market rates. These areas include:
- Germantown
- Collierville
- East Memphis
- Arlington
- Harbor Town
Get Expert Advice on the Memphis Real Estate Market
If you’re an out-of-state investor looking to dive into the Memphis real estate market, you need a trusted Memphis property company to help you get the most out of your time and effort.
We hope you’ll consider working with Memphis Investment Properties. With our Memphis turnkey properties, your job as an investor is made easier than ever. We take care of those tricky details so you can focus on more important things. We’ve been in the real estate business since 1979, so we know the local Memphis market inside and out.
Reach out to us today, and we can help you make certain your investment outshines the rest!