Why Memphis

There’s a lot more to like about Memphis besides the great real estate prices.

Home to Elvis’ Graceland, the Blues Hall of Fame, and the World Champion Barbecue Cooking Contest, the city of Memphis is a cultural hotspot brimming with revitalization and growth. Strategically located on the Mississippi River, the “bluff city” is home to more than 1.3 million residents, several colleges and universities, and thousands of companies large and small, including multiple major corporations that have been bringing jobs and innovation to the city for decades.

On the other hand, the low home prices and high rental rates helps to make Memphis a great housing market for investors. Combined with the diversified economy, strong job market, and excellent quality of life, Memphis may offer the perfect winning trifecta for rental property investors looking for steady cashflow.

Why Invest in Memphis Real Estate

Highlights

  • #1 Fasted growing industrial Market in USA
  • Logistics Hub with the busiest air cargo airport in USA
  • 3rd largest rail center in USA
  • 3rd least impacted market in USA from COVID-19
  • Top 10 Market in USA for appreciation
  • Top 10 Market in USA for tech jobs
  • 2nd Busiest Medical Device Manufacturing center in USA
  • Landlord friendly laws
  • Low taxes and property insurance
  • Warm mild climate reducing risk of freezing pipes, flooding, and tornados
  • Tenants are responsible for the yard work, all utilities, and bring their own appliances

Appreciation

  • 2.5% YoY over the last 30 years
  • 3% YoY over the last 10 years
  • 5% YoY since 2016
  • 12% in 2020

Population

  • Top 50 Largest Metro
    • Memphis metro population of 1.3 million (43rd largest metro in US)
  • High growth rate
    • 2.3% projected population growth through 2023
    •  30,000 new residents moving to the area over the next few years
  • Memphis is diverse
    • African-Americans 47% of the population
    • White Americans 45%
    • Hispanics and Asians 7.7%
  • Young renter population
    • Median age 36.5 years, younger than both state and national population
    • More than 40% of the people living in Memphis are between the ages of 25 and 54 years.

Job Market

  • According to Bloomberg, Memphis is the #1 metro area in the U.S. for job creation when compared to the average area employment rate over the past 10 years.
  • GDP of Memphis surpasses $72 billion, growing by nearly 50% since 2002.
  • Jobs in Memphis increased by 1.4% over the last 10 years, outpacing similar sized cities such as New Orleans, St. Louis, Raleigh, and Minneapolis-St. Paul.
  • Major employers in Memphis include FedEx, International Paper, AutoZone, ServiceMaster, and Mueller Industries.
  • Other major employers based in the Memphis area include American Residential Services, First Horizon National Corporation, Perkins Restaurant and Bakery, and Mid-America Apartments. The Federal Reserve Bank also has a major branch in Memphis.
  • Through last year, small businesses in Memphis accounted for 29% of the area’s economic output.
  • Memphis Daily News reports that Greater Memphis is a hotbed for high-demand jobs including those in the information technology (IT), healthcare, engineering, business and financial operations, and transportation and moving sectors.
  • It’s not only white-collar jobs that are in demand in Memphis. The Mississippi River, five major freight railroads, two interstate highways, and Memphis International Airport – the second-busiest cargo airport in the world - make Memphis a transportation and distribution hub where blue collar workers are always in demand.
  • Nearly 85% of the residents in Memphis hold a high school diploma or higher, while more than 25% have a bachelor’s degree or an advanced degree, according to the U.S. Census Bureau.

Real Estate Market

  • The median value in Memphis is just $88,300 (as of Sept. 2019).
  • Over the past 12 months, home values in Memphis have gone up by 5.9% while the average days on market have consistently trended downward since 2016.
  • With a median list price of $69 per square foot, asking prices for homes in the City of Memphis run nearly 30% less than the greater metropolitan area.
  • Median listing price is $109,900 and median selling price is $110,000, an indication that buyers recognize the value of real estate in Memphis.
  • Average days on the market is 57.
  • Bidding wars are very common on new listings.

Strong Renters’ Market

  • Median rent in Memphis is $950 per month, up from $888 one year ago.
  • Rents in Memphis are nearly 25% lower than the metro area and almost 30% lower than the national average, indicating a strong possibility for continued rent increases.
  • 42% of the households in Memphis are renter-occupied.

Landlord-Tenant Laws in Memphis

We advise our investors to get familiar with the landlord-tenant laws of the state they want to invest in. In Tennessee, landlords have the liberty to charge any amount for a security deposit. Also, the landlord-tenant laws of Tennessee provide support to landlords making it possible to evict, within a reasonable timeframe, if needed. For instance, a landlord may give a Tennessee tenant quit notice that leaves the tenant just 14 days to pack out before eviction is filed if the tenant has repeatedly bridged the rental agreement or done an act that affects safety and health (note that a notice must have been issued to the tenant after the first violation). Reedy and Company has a dedicated in-house collections department that is in place to manage this process for you, alongside an in-house legal team.

Centrally Located

Memphis is the distribution center for the USA because we are located in the center of the US based on population. Transportation companies can reach more people over night than in any other city which makes Memphis ideal for large companies like FedEx, Amazon, Nike etc who rely on shipping packages 365 days a year.

Low Supply

Pre-2008 Memphis saw roughly 4,000 new construction properties come available per year. Since then, this number has dropped to roughly 1,000 with most of these properties being over $300,000. This means the current houses under $300,000 have a great chance of increasing in value because there is limited new supply.

 

If you’re interested in Memphis investment properties, Reedy and Company is here to help! You can rely on our team of experts to guide you to the best real estate investments available, so you can always get the most value for your money. Reedy and Company provides a full service package to our investors, and helps them reduce management problems by offering in-house maintenance and rehab crews, a quality leasing team, collections department, excellent and dependable communication, and full accounting.