Housing-News-Report-July-2017

HOUSINGNEWS REPORT

SPOTLIGHT: MEMPHIS

MEMPHIS AVERAGE HOME FL IPPING PROFITS AVG GROSS FLIPPING PROFIT AVG GROSS FLIPPING ROI

You’re selling a single family house like a one unit apartment complex. It’s the exact same thing. Selling a house on the income approach.”

$45,000

$40,000

$35,000

$30,000

$25,000

$20,000

$15,000

$10,000

EDDIE SPEED FOUNDER, NOTESCHOOL

$5,000

$0

a block-by-block approach to identifying potential properties.

adds up to lower returns and it worries me to get in at the top of the market.”

“I can remember looking at BPOs in Memphis and I remember a Memphis asset that appraised for $8,000 and rented for $800 a month. That’s a few years ago, but that market extreme is not uncommon in Memphis,” said Speed, the founder of NoteSchool. “People are buying cash flow and are buying on similar cap rates to what apartments trade for.” Before the market crash, Speed said the Memphis market was suffering from a terrible blight. Then the crash happened, resulting in a large number of defaulted loans, creating a market inefficiency which was a perfect scenario for investors like the Clothiers to step in and provide turnkey properties for investors. “You’re selling a single family house like a one unit apartment complex. It’s the exact same thing. Selling a house on

“People who invest in Memphis need to be careful what part of town they’re buying in. Neighborhoods change in just a couple of blocks,” she said. Kramer believes there are still deals to be found in Memphis due to the quality of the turnkey providers and their property management, although with so many turnkey providers competing in that market she believes the margins are being squeezed and the potential rental returns rates are coming down. “The amount of investors chasing a smaller pool of properties has driven down cap rates and possible profit,” she said. “The turnkey providers have been successful in marketing the area to foreign investors, and you have the west coast investors there as well. All this

Kirkland agrees that doing one’s own independent research is essential before purchasing a property. “You must have independent verification of whatever you’re getting,” he said. “People that do not live in the area need to be careful in dealing with property they’re not used to dealing with. It’s all about location, location, location. If you think the cost of education is expensive, imagine the cost of ignorance.” Buy for $8,000, Rent for $800 To investor Eddie Speed, entrepreneurs like Clothier are filling a void by introducing the turnkey property into the marketplace, and as a result bringing up the housing standard for neighborhoods and putting money into the local economy.

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JULY 2017 | ATTOM DATA SOLUTIONS

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