14 Jan 2011
- Written by Carlee McCullough
Let’s consider the one investment that has been beat up over the last few years, real estate. Real estate is an area where you can get more for your money depending upon the appraised value and the selling price. For example, you can buy a property in Whitehaven for $50,000. If you improve the property with repairs and upgrades, then the value can rise to upwards of over $100,000.
Although building permits remain down by over 20 percent and there has been a backlog of bank-owned properties on the market, this is a prime time to seek investment properties. Overall, the housing picture in Memphis is improving. Many deals can be found at a percentage of the rebuild cost. Nationally, Memphis real estate has been considered undervalued and therefore can be considered a good investment.
We’ve all seen the real estate “get rich quick scheme” infomercials on cable. Some of us have even purchased the books and compact discs. Typically, wealth is created by methodical research and planning, not whims and schemes. Now is the time to prepare for real estate investments.
First time homebuyers
Prepare your credit for this major purchase. Although there are all types of “owner financing” and/or “lease to own” options, be careful of the fine print. You may wind up throwing away a huge down payment if you cannot get financing in the required time. Therefore a traditional mortgage is recommended in this case.
Owning your own home and passing it on to future generations is a major step in the right direction for wealth generation. When making a purchase for investment, perform your due diligence to compare the appraised value versus the purchase price. A great buy would be a home with equity built in upon the initial purchase. But the second option would be to purchase a home that has the potential for equity with a few repairs and upgrades.
Second property buyers
Your next purchase will be your investment property and should be revenue generating. You can plan to rent the property or flip the property. Because of the economic climate, today flipping is not a real viable option. So our focus will be on rental property. This second property can pay for itself with a great tenant or place you in financial jeopardy with the wrong one.
If there is a mortgage on the property, we recommend you have reserves on hand of at least 6 months of rent. This is just in case you get a tenant that refuses to pay and the matter has to be handled expeditiously in court. Our goal is a positive cash flow on this property by getting a great mortgage on a bargain property matched with a dependable renter.
There are quite a few resources that will show available investment properties in the area.
Multiple Listing Service (MLS)
Currently in Memphis, there are approximately 985 properties listed on the MLS consisting of single family dwellings, multi-family, and condos/townhouses listed under $50,000. Most real estate agents can narrow the list as requested for your specific purchase. You may want a particular community or price range. This list is very comprehensive. Contact a local real estate agent for access if you don’t have access yourself.
Both the City of Memphis and Shelby County Land Bank have properties for sale as well. These governmental entities are interested in placing these properties on the tax rolls by getting them into the hands of the community.
City surplus properties
For any number of reasons, the City of Memphis may acquire real estate. Contact the Manager of Real Estate, Deborah Daniels, with the City of Memphis at 901-576-6330 for a list of available properties.
County surplus properties
The Shelby County Land Bank is responsible for the acquisition, management and disposal of county-owned real estate. Contact the department’s real estate specialist, Mike Blackwell, or the manager, Bill Goss, at 901-545-4900 or go to the Web site www.shelbycountytrustee.com for a listing of surplus properties.
Keep us posted on your progress.