According to the Memphis Area Association of Realtors, the average sales price for homes in Memphis declined by 1.5% in April 2023. Despite this downturn, this figure is still well below the 4 and 5% average price declines for the rest of the country published by various sources. Memphis offers great potential for those wanting to make some money out of the property market if you know the best ways to maximize your Memphis real estate investments.
Keep reading for a snapshot of the best ways to invest in this growing city.
Try Your Hand at House Flipping
House flipping is a popular subject of reality TV shows and a fun way to make some money out of real estate.
Refurbishing a run-down property can bring much personal satisfaction. It may also yield handsome profits if you know what you’re doing.
You’ll need abundant financial resources if you want to try out this type of real estate investing. Things can and do go wrong during the process, delays are inevitable, and you could end up losing out.
Keep in mind that you need a lot of experience and financial know-how to succeed at house flipping, and while it’s still a popular choice for real estate investors in the US, profits are at an all-time low.
Buy REITs
Real estate investment trusts allow you to get involved in the real estate world without owning any physical real estate. These companies own commercial spaces like office and retail buildings, hotels, and apartments.
You can claim your income from these investments when needed or reinvest to watch your profits grow.
REITs are a varied and complex phenomenon and can yield good returns, but it’s best to speak with a financial advisor or real estate broker when choosing the right one for you.
New investors do best when they stick to publicly traded REITs, as it’s difficult to value the private variety. You can invest in these via brokerage firms by setting up a brokerage account.
Another option is to invest in a fund that’s involved with many REITs, such as a mutual fund with shares in multiple REITs. This gives you exposure to a diverse variety of real estate.
Join a REIG
Real estate investment groups are small mutual funds that buy into rental properties. For instance, the REIG buys or builds a multi-family property and then allows investors to purchase one or more housing units to join the group.
As an investor, you can own one or more units of living space, but the REIG manages them all and takes a percentage of the rental in return. In essence, they fulfill the role a property manager would if you owned the unit outright.
When you buy into an REIG, the lease is in your name, and a portion of your rental income goes toward a fund to guard against vacancies. In this way, you’ll receive some income between tenants.
For some real estate investors, REITs and REIGs don’t allow them enough control over how they earn an income from rentals.
Consider Memphis Real Estate Rentals
Renting a property you own outright is the best way to keep tabs on how it’s managed and control your income and expenses.
There are two ways to earn money directly from Memphis rentals:
Rent Out a Part of Your Home
Across the USA, demand for rentals is still far beyond the available supply and rentals remain high.
If you have an unused room in your home or an ADU in your yard, you can earn some extra income from it by renting it out to someone in need.
This is one of the easiest ways to experiment with real estate investing without any capital outlay and can help you pay some of your bills too.
If you aren’t keen on a permanent tenant, you can always consider the Airbnb route. Remember, you need a permit to offer short-term rentals in Memphis, so be sure to inquire about these requirements first.
Buy a Rental Property
For those who own a second home, this is an easy route toward becoming a real estate investor. If you need assistance paying a second mortgage or don’t use your family vacation home very often, it makes sense to earn some extra income this way.
Property prices are starting to decline after the mad rush of the last two years, making it a little more affordable to invest in Memphis real estate.
If you decide to buy an investment property, be sure to enlist the help of an experienced broker. These experts will help you choose a home in a highly desirable area, where you can maximize the return on your investment.
Many people view owning a rental property as a type of passive income, but in reality, there’s a lot of hard work involved.
You’ll need to see to maintenance and repairs on the property, make sure you keep your tenants happy and handle any queries they may have. Some real estate investors consider this a time-consuming chore that’s hardly worth the money.
If you’re a prospective or current Memphis real estate owner who wants to make the most out of their investment by renting it out, you should consider hiring a property manager.
Making the Most of Your Memphis Property
An experienced property manager helps you enjoy the benefits of a truly passive income from your rental properties by relieving you of all the time-consuming aspects of being a landlord.
We can assist with all your investment property needs, including tenant screenings, property maintenance, and rent collection. Get in touch to discover how we can help you with your rental properties.
