FEEDING THE SINGLE FAMILY RENTAL BEAST
NEW HOME PRICES RISING
Changing Location Changing market locations for SFR acquisitions may not seem like a good choice for a company like Memphis Invest given that its brand is intrinsically tied to a specific geographic location, but that’s exactly what the company has done in recent years, according to partner and vice president of sales and marketing Chris Clothier. “We’ve expanded into new markets,” he said, citing Dallas, Houston, Oklahoma City, Little Rock and St. Louis as some examples. “We like the tertiary markets. We like Knoxville. We like Kansas City.” More than 14,000 single family homes purchased in the Kansas City metro area in the last two years are nonowner-occupied, representing 28 percent of all home purchases during that time, according to an ATTOM Data Solutions analysis. That was the sixth highest share of nonowner-occupied home sales among metropolitan statistical areas with at least 40,000 home sales in the last two years,
behind Detroit, Michigan (47 percent); New York-Northern New Jersey (41 percent); Memphis, Tennessee (37 percent); Birmingham, Alabama (32 percent); and Oklahoma City, Oklahoma (30 percent). Memphis Invest buys and renovates homes before selling them as turnkey rentals – mostly to individual investors, and Clothier said the company has held fast the property and neighborhood box it buys in — even as the cost of that type of product has skyrocketed. “Our average price point that we work in each city is 30 to 50 percent higher than it was 24 to 36 months ago,” he said, noting that has changed the company’s value proposition to the end-user investors. “Whereas a few years ago it might have been easy to talk to an investor about building up a portfolio of cash-producing properties … now rather than cashflow you’re investing for long-term return.” Clothier added that cash flowing SFR properties are still “there, it just
comes with more risk,” particularly for newer investors.
“This is definitely a market for experienced investors. They are carefully choosing every asset they are buying,” he said. “This is not a great market for the beginning, first time investor … this is a market where those investors are going to be hurt.” Despite the higher price points that are drying up strong cashflow opportunities for the types of properties Memphis Invest purchases, the company continues to close more deals, according Clothier. He said the company is on track to purchase more than 1,000 homes in 2018 — the first time it closed that many in a year — and just recently went over 5,000 properties that it manages on behalf of clients. “There is plenty of demand for what we do,” he said, adding that the typical investor Memphis Invest sells to is a 40- to 50-year-old executive, many using
NOV 2018 | ATTOM DATA SOLUTIONS
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