Why Memphis?
At Meridian Pacific Properties, we extensively analyzed US government data for the 366 largest US metropolitan regions (MSAs). We approached our investing as if we were evaluating a stock - we wanted a 1) quality stock that 2) preserved capital and 3) offered the highest returns.
In order to evaluate top investment property markets, our top three considerations were:
Rent Ratio in the median price point = High Returns
Economic Infrastructure = Quality Stock
Market Stability = Capital Preservation
The data we researched to determine the best investment property market included:
- 30 year median home prices
- Appreciation projections
- Rents relative to home values (the rent ratio, or its inverse, the gross rent multiplier)
- Rent history and trends
- Real estate market stability
- Stable air and trucking freight economy (FedEx, etc). See map below
- Regional unemployment rates and employment trends
- Major regional employers
- Economic forecast
- Home valuations relative to median incomes
- Investment property tax rates
- Insurance rates
- Flood zone characteristics
- Weather and geographic factors (e.g. tornados, hurricanes, earthquakes, earth movement potential, cold weather)
- Availability of qualified property management
- Income property availability
While no one region ranks at the top of these categories, overall, the southeastern states ranked in the top 10 in all of these categories. After additional regional research, we determined that the Memphis,TN MSA was the best investment property regional area.
Why not other areas?
- The West Coast (especially California) and the eastern coastal areas from New Jersey to Massachusetts tend to have low rent ratios (low rents relative to expensive home prices).
- Nevada and Arizona continue to have instability in their economies
- Florida and the costal Gulf states have prohibitively high insurance costs
- Texas has extremely high income property taxes
- The northern states have additional expenses related to cold weather in the winter, and many have struggling economies
Current Memphis Market News
Home to FedEx and the world's largest freight airport, Memphis is also located in a key strategic shipping area of the United States (within 2 days driving of all major US metro cities).
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The simple answer - because the numbers work. When we studied over 366 metropolitan statistical areas for the best investment property criteria, Memphis came out as a top performer in a variety of key areas.