Rental Homes Encroaching on Housing Market

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Based on an analysis of all home sales recorded in Memphis and Shelby County last year, 25 percent of purchases were made by investors. Of these sales, 42 percent were purchased by out-of-town owners, where the tax bill is mailed to an address outside of Shelby County.

Local investors made most of their purchases in low-income areas such as Frayser, which had the most investor purchases in the county with 403 sales, accounting for 52 percent of total home sales in Frayser in 2016.

Large hedge funds such as FREO Tennessee LLC, also known as Progress Residential, purchased the bulk of their investment properties in outlying areas of the county, primarily in Arlington, Cordova and Bartlett.

Roughly 8 percent of last year’s investor purchases were recorded in Cordova’s 38016 and 38018 ZIP codes.

The Franklin Farms subdivision in Cordova had 20 investor purchases last year averaging $115,414. Of the 553 properties in the subdivision, 13 percent appear to be non-owner occupied rental units.

10200 Morning Hill Drive (Chandler Reports)

FREO Tennessee LLC currently owns 27 homes in the subdivision and purchased five of the properties in 2016, including 10200 Morning Hill Drive, which was purchased for $119,000 on Aug. 6, 2016. The 1,300-square-foot home has a tax appraisal value of $119,900.

While most homeowners believe rental properties decrease home values, particularly when the properties are not managed properly, we are not seeing a major negative impact of home values in heavily investor-owned areas.

Average home sales prices in Franklin Farms have increased 7 percent since 2014 from $119,000 to $127,000 in 2016, and are up to $154,000 through the first quarter of 2017.

FREO Tennessee LLC currently owns 636 residential properties across the county with more than $276 million in mortgages on their rental units.

To download a Neighborhood Profile Report for your neighborhood visit

Email to get in touch with Wendy Greenlaw, business development manager at Chandler Reports, a division of The Daily News Publishing Co.

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