New Investment Properties for Sale

Greetings! Just posted 3 new investment properties for sale in Jackson, Mississippi (Yes, I had to spell Mississippi out loud while I typed) of which generate strong investment income (18% CROI). You can check them out here, as well as download the “deal sheet” just below the photo on that page.

Appreciation is Back! Or, is it?

Interesting happenings this week in the Memphis real estate market. One of our clients had submitted six offers on deeply discounted income properties through our private HUD contact. We’re happy to say that two of our client’s offers were accepted and they’ll be closing escrow on Friday. With regard to the other four properties, HUD gives preference to owner occupants… so, we did not get those properties for our client as there were owner occupant bidders on those properties. Why should you care?

Ya see, it’s no secret that the Memphis real estate market is “hot!” and very competitive for investment income via single family residences. It has been competitive for a while now, but up to this point, the competition has been almost exclusively between cash flow investors. This same dynamic is also happening in other parts of the country such as Southern California, Arizona, Nevada and Florida. Investors are seemingly “frantically” trying to scoop up everything that comes on the market. Competition (especially “frantic” competition) drives values up, as evidenced by the double-digit appreciation in the last eight months or so of the aforementioned markets. However, appreciation created through investor competition can be misleading. In many cases it represents a bubble, and in almost every case it’s extremely fragile appreciation, at best, should the appreciation stick.

I certainly believe real estate appreciation will be back, but it’s not going to be driven by investor competition alone. True appreciation on single family residences is driven by “Joe & Betty Homeowner.” What I’m getting at is…  that nothing significant has really happened in our economy that makes home loans easier to get, nor has anything happened to positively affect this country’s high unemployment. It’s access to money and jobs that enable ”Joe & Betty Homeowner” to buy homes. Until we experience a shift in those two areas, I don’t see the current trend of “appreciation” as cause for any real alarm.

I’m still very selective on what I purchase for myself and my clients. I’m not going to get caught with my pants down by over-paying for investment income properties just because other “investors” are frantically buying. However, having lost four properties this week to owner occupants (Joe & Betty Homeowner), the market has caught my attention. Was it a fluke? Or, was it a sign of what’s just right around the corner? Time will tell. And of course I’ll keep you posted. Either way, though… appreciation (real appreciation) will be back. Maybe six months? Maybe six years? Nobody knows, and if anybody does tell you that they “know,” keep your hand on your checkbook and proceed (or retreat) with caution. What I do know is, as long as your investment properties are producing positive cash flow… who cares when appreciation comes back?

The only question you should be asking yourself right now is…

“When appreciation does come back, how many single family residences do I want to be owning at that time?”

Food for thought…

Memphis Investment Property Tour

FYI: Our Memphis Investment Property Tour for August has been rescheduled due to our poor planning around Memorial Day Weekend. The new tour date is set for Sept 6th & 7th. If you’d like to attend, or get more information, please submit your information here for details. And “Yes!” It’s free!