The Mid-Southern states, including Tennessee and Arkansas, are prime locations for investing in turnkey properties. But why do you ask? These states are known for their great hospitality, good food, and nice weather. With this being said, there are a couple of other reasons why to invest in properties in this region, but first, let’s define what a turnkey property is.
A turnkey property is a fully renovated home or apartment building that has been recently renovated and is move-in ready. More than likely, these types of properties do not require a lot of major renovations or repairs. If there are repairs, some of these include: repairing plumbing and electrical systems, installing new AC units and furnaces, repairing flooring, etc. Additionally, turnkey properties can be used to be lived in or can be rented out by the owner to receive additional income from renters.
A turnkey property is great for investors who either prefer to handle the renovations themselves, or who live out of state and in more expensive parts of the country, and want to receive the most profit for their buck without having to do much work. This type of property is also usually located in an up-and-coming area and is turned around for a higher profit so the investors can make a profit. Lastly, something to keep in mind is that when you are purchasing and investing in a turnkey property, it is important to examine all of the details.
First, the Mid-Southern region of the US has not had an increase in land prices within the last year or so compared to other states. Especially when it comes to purchasing and investing in residential housing, the Mid-South is perfect as these states offer a wide range of landscapes, from mountains to flat ground, as well as well-known landmarks and popular cities like Little Rock, Memphis, and Nashville. According to Land.com’s Network listing data, the average price for residential properties in these states fall about 30-40% below the median average price per acre for land that is for sale that is listed nationwide. Additionally, the Mid-South has a lot of farmland and this type of land tends to be found in places like Arkansas due to the diverse terrain of the land.
Second, when thinking about purchasing a property or land, Mid-Southern states tend to have a better gross profit margin when purchasing a property. A gross profit margin can be defined as the percentage of revenue that remains after subtracting the cost of the renovations (where needed) and other necessary expenses. Then, the total number should be divided by the number of net sales. Additionally, a higher profit margin means higher profits.
So, when purchasing a property in the Mid-Southern region, the initial purchase cost is low. Once the property is put back on the market and “flipped”, the purchase cost will be significantly higher, which makes the profit margin high. Ultimately, this is to say that when investing and flipping a property in this area, your gross profit margin should be between 20-30%, which is significantly higher than other parts of the US.
Lastly, Mid-Southern states have a low property cost. Home values across the US vary, but when it comes to the Mid-South, their property costs are a lot lower (roughly $131,000-192,000) than the national average, which is roughly $295,300. Additionally, in these same states, the mortgage rates are also significantly lower than the national average. For example, in Little Rock, Arkansas’ mortgage rate is at a record low is under 3% for a 30-year mortgage loan. Furthermore, even without a considerable down payment, the monthly cost of homeownership in these states can be significantly cheaper than renting a property.
Looking for the perfect property or land to invest in? Memphis CashFlow can help! Memphis CashFlow specializes in providing turnkey investment properties in Mid-Southern states to real estate investors. Our organization handles real estate investments, investment property renovations, and property management services. We list properties that can immediately have a cash flow! If this information resonates with you and you would like to start building your wealth in real estate, contact us today!