Live Webinar: The State of the Memphis Single-Family Home Investor Market
Increasingly, we have been getting inquiries about what is happening in the Memphis real estate market and what the outlook is for investing there. Here are our top four current observations:
- April rent collection was at 99.2% and leasing continues to be strong
- Real estate in Memphis remains a stable investment vehicle and is well-positioned for the future for a multitude of reasons
- Experts believe that nationally single-family rentals will be the first investment class to stabilize and recover from the pandemic
- New construction homes are in high demand nationally – further strengthened by the pandemic
Here the Top 6 Questions and Answers: (click on the question to be directed to the video timestamp)
1. [timestamp 36:20] What law(s), if any, have been enacted for the state of TN, Memphis or Shelby County which affect (i) collections of rents, (ii) recovery of renter non-payment and (iii) enforcement of rental agreements and evictions?
There was an eviction moratorium that was extended to May 31st, mostly as a practical matter since the courts were closed. All these terms are in full force – no abatement of rent. Hasn’t been an issue because everyone’s paying their rent. In this market, not an issue.
2. [timestamp 38:40] Has Memphis or Shelby County enacted any COVID related “Landlord-Tenant” local requirements that differ from any stipulations mandated by the state of Tennessee?
There are no government regulations that are hurting landlords at this point. All terms are in full force.
3. [timestamp 48:30] In checking the initial 2017 cost of our homes (in both Northern MS and Memphis), compared to the current quoted internet values (over that 3 years), the prices appear down about 10-15%. With the market being “hot” now, does that “acquisition price vs present internet value” comparative surprise you? Is it inaccurate?
When we look online, we usually look on Trulia, Redfin, Rently, Realtor.com, and Zillow. Sometimes prices are accurate or wildly inaccurate. If you’re interested in getting an accurate understanding of what home values are, we can perform what’s similar to our own version of an appraisal using similar comps of certain properties in specific areas. We will do an analysis for you and give you what we think is the actual value of the home. We caution people from using things like Zestimate – they’ve actually come out and shared that they are only accurate to a point but there’s limits in what those softwares can accurately calculate. For example, being that Mississippi is a nondisclosure state, many sales are not posted, nor do they have to be. So, Zillow sometimes doesn’t have any data on such homes. Thankfully, we have licensed realtors on staff that can pull this information for you. It would surprise us to find that properties are 15% lower today than 3 years ago. It’s certainly possible, but we’d love to first analyze that. In general, we saw about a 5-6% increase in value last year.
4. [timestamp 31:46] What has Meridian been experiencing with lenders/banks over the last few months? Are investors still able to leverage their investment dollars?
The lending space has certainly been going through interesting fluctuations in the past several weeks. Some lenders are no longer offering asset-based loans/products on SFR properties, for the time being. Conventional financing (Fannie/Freddie) are making their qualifications stricter and rates may be higher – however, it’s important to shop around for lenders as we have still found lenders with rates as low as 3.75%.
5. [timestamp 32:37] As leases near expiration, are you seeing tenants looking to extend their current leases rather than moving?For a couple of months, we found that many tenants wanted to extend their leases as they did not prefer to leave their current “home base” while the pandemic was in full swing. Recently, however, we have found that tenants have been expressing interest in actually purchasing their rental property – which is a great opportunity for investors to sell at a low transaction fee and flip that into a new home using a 1031X. Many tenants, since they are high-quality, are qualified to buy and often do because they have such a positive experience with Meridian.
6. [timestamp 33:25] Do you think it is wise to place your loan in forbearance if you are planning in refi in the future?Our thought is to check with your bank very carefully with regard to their forbearance process. Unless you have a real financial need to place your loan in forbearance, we feel that it is often not worth the risk to your credit.
Follow the link below to read the full letter of our observations on the Memphis market, the resale market, and the prospected outlook of new residential construction. http://meridianpacificproperties.com/memphis-real-estate-update-amidst-covid-19-may-2020/