3 Reasons to Buy Memphis Investment Properties in 2021
The city of Memphis is known for many things: barbecue pork, the blues, Elvis’ Graceland, but it is also home to one of the most affordable real estate in the country. With this being said, investors are flocking to Memphis to take advantage of this hot commodity. Let’s take a look at the top 3 reasons why buying investment properties in this historical city is worth your dime.
Top 3 Reasons to Invest in Properties in Memphis, TN
1. Affordability
Memphis has so much to offer, especially when it comes to investing in properties. According to Zillow.com, the typical home value of homes in Memphis is $118,296, which is significantly lower than the state average of $167,700. Also, the cost of living in Memphis is about 24% lower than the US average. Additionally, Memphis home values have gone up about 16.2% over the past year.
Memphis has an average housing affordability index of 76 out of 100. An affordability index is defined as a measure of an average person’s ability to purchase a particular item, in this case, a home. An affordability index uses the base value of 100 to represent the position of someone earning a population’s median income. Values that are ranked over 100 indicate that the item/home is less likely to be affordable and values that are below 100 indicate that an item is more affordable.
This means that the city of Memphis is one of the most affordable places to own a home in the United States. These statistics are hard to ignore and make Memphis the perfect place to buy properties to invest in.
2. Profitability
Due to the affordability of the housing market in Memphis, investors are able to buy properties that are affordable and rent them for a significantly higher price. In return, this will provide the investor with a considerable amount of money in their pocket. The average rent price is about $887 per month and the rent prices are increasing about 7% year after year. Also, about 43% of the households in Memphis are occupied by renters, with 56% of households that are lived in by their owners.
Additionally, a normal Memphis investment property has an average cash on cash return of 3.47%. A cash on cash return measures the cash income earned on the cash invested in the property. However, with this being said, the cash on cash return can be a little higher depending on what part of Memphis the property is located in.
It is also important to note that Memphis’ real estate inventory is starting to decline due to more people moving to the area. This is a good thing for investors since Memphis properties are in high demand, the more profit the investors will make on the property.
Furthermore, the city of Memphis offers a steady job market, a diverse economy, and a great quality of life, which are some selling points when looking to invest in properties in this area.
3. Opportunities for Airbnb
Since Memphis is a Southern-staple city, many people like to travel there to visit. With this being said, Memphis is a prime city to invest in, especially for Airbnb opportunities. Due to the fact that it is a tourist destination because of the rich history and well-known attractions, investing in properties to rent out as Airbnb’s are great ways to make extra money with minimal work. According to Memphis Travel, about 12.4 million people visit Memphis each year, and is expected to keep increasing year after year. In 2018, about 87,000 guests who traveled to Memphis stayed in an Airbnb. Additionally, nowadays, Airbnb’s tend to be more popular than hotels due to the fact that it provides a “home away from home” feeling. Currently, Memphis has a little over 500 Airbnb properties.
Some of the most common areas to invest in a property, specifically for utilizing it for an Airbnb, are:
Furthermore, Memphis’ Airbnb’s average cash on cash return is about 8.45%, with an occupancy rate of 61%. This
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Looking for the perfect property to invest in? Memphis CashFlow can help! Memphis CashFlow specializes in providing turnkey investment properties to real estate investors, specifically in the cities of Memphis and Little Rock. Our organization handles real estate investments, investment property renovations, and property management services. We list properties that can immediately have a cash flow right into your pocket! If this information resonates with you and you would like to start building your wealth in real estate, contact us today!