BiggerPockets

Property Management | The Profit is in the details!

Monday, July 18

When investing in real estate, there are so many variables that can eat away at the profitability and it is often the little, minor details that can make a difference in helpng to keep an investment property profitbale.  So often, I see investors neglecting or allowing their management company to neglect the basics that can make a big difference.  Today, I am highlighting just a couple of those small details that can make a big difference.

I wanted to post this message on Friday but something made me wait through the weekend and that gave me a chance to take notice of two properties this morning.  Neither property is under management with our company - both are with different companies here in Memphis.  They both happen to be on my drive to Starbucks!  I pulled over and took these snapshots to use as training examples for our rental agents and even the crews that over-see our renovations.  Here are the pictures I took this morning:

If you look closely at the pictures you see lots of problems with both houses from broken blinds, un-kept bushes, trees so over grown you can't see the house, trash in the yards and grass over a foot tall!  Now, here is the real kicker...both of these properties have rents over $1100!  More than likely, there is a very big nut for the owner of these properties to cover while waiting on the property to rent. 

I do not have the details on either of these properties and for all I know the owners may not want anything done differently.  But they are pretty good examples of how paying attention to the details may get a property rented quicker, for a higher rate and to a tenant that will be attracted to working with a top notch management company.  If a tenant sees a dirty, over grown yard (and probably just as dirty inside) then they will know the level of pride that company takes in their property.  If the management doesn't care, why should the tenant?  A tenant/management realtionship that starts this way is destined to end badly and will cost the investor money over and over and over. 

Isn't it funny how little details can make all the difference!

Here are the numbers for June for Premier Property Management:

Investment Properties rented in June:                                51
Average Rental Rate:                                                  $   950
Average Property Deposit:                                           $1,050

We only offer two year leases and require additonal deposit and sometimes monthly rental rate for shorter lease:

Number of Properties with 2-Year Lease in June:                 46
Number of Properties with less than 2-yr lease:                    4
Number of Properties with more than 2-yr lease:                  1

Top Zip Codes for closings in June:
38141       10
38115         8
38116         7
38128         7

Out of the 51 rentals, 13 of the properties were being re-rented, while the other 38 were all new additons to the Premier Property Management portfolio.  Out of the 13 properties re-rented, 8 of them saw incereases over previous rental rate, while 1 remained the same and 4 decreased by an average of $25. 

We beleive the rental rates in the areas we manage are going up and that our rates are near the top of each area.  Nate is currently working on a report for us to present to all Premier Property Management clients on the past three quarters and the changes in rental rates for each of the zip codes that we manage investment property.  We will have that for you soon! 

Chris

P.S. - We love receiving emails like the one below...We will not always be perfect, but we want our clients to always know we are here working for you!

$4.8 Million Grant to Help Memphis Revitalize Blight, Fight Crime

Thursday, July 14

Billionaire Mayor of New York City, Michael Bloomberg has chosen Memphis as one of five cities whose Mayor's he is supporting through an initiative at his Bloomberg Charities.  The Grant is designed to assist Mayors who are in the first 18 months of their terms and are in unique positions to not only tackle problems but also have a willingness to work together to share what is working and what is not.

For investors buying Memphis real estate, I often tout the newly elected Mayor as a real positive for our city.  After 18 years with the previous administration, it appeared as if the city, its leadership and the spirit of the city itself had begun to stagnate.  Now we have life again and a belief that the industry leaders of the city will help propel Memphis on a new, brighter path.  If you are buying real estate for long-term buy & hold, this is music to your ears.

I am copying the full story. 

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Huffington Post - First Posted: 7/14/11 02:03 PM ET

ATLANTA (AP) — New York's billionaire mayor is handing out a combined $24 million in grants to five colleagues around the country to fund programs addressing various issues in their cities, from energy efficiency to handgun violence.

New York City Mayor Michael Bloomberg announced the grants Thursday as part of the Mayors Project, a new government innovation program at his charity, Bloomberg Philanthropies. The grants will go to the mayors of Atlanta, Chicago, Louisville, Ky.; Memphis, Tenn.; and New Orleans.

"Mayors are uniquely positioned to tackle some of our most pressing challenges," Bloomberg said in a statement. "The Mayors Project will fuel these efforts by spreading effective programs and strategies between cities and helping mayors work together in new ways around solutions."

Bloomberg formed his eponymous philanthropy organization to handle all his donations. Forbes ranks him as the 10th richest American, with a net value of $18 billion as of March.

In his inauguration speech, Atlanta Mayor Kasim Reed pledged to improve his city's approach to customer service and to help all its residents. He was sidetracked by the urgent need to balance the budget and tackle pension reform, but now plans to renew his focus on those original goals with help from Atlanta's share of the grant.

All of the mayors chosen are in their first 18 months of their terms in office. The money will pay the salaries of teams operating outside of city governments, who will help cities carry out and manage their plans with set goals to measure success. The project will also identify groups of cities interested in working together on particular issues to share best practices.

Each city chose two initiatives and will have three years to tackle them. Reed said Atlanta will use its $3.4 million to create a 311 phone system to improve customer service and to address homelessness and panhandling.

"After we really faced the challenges of getting our fiscal house in order, I wanted to focus on issues that have to do with the quality of life and how people think and feel and experience the city," Reed said in a telephone interview.

Memphis Mayor A.C. Wharton Jr. said his city's $4.8 million will help attract the intellectual capital he needs to lure investment without angering cash-strapped citizens.

"There has to be a degree of independence from the fiercely competing demands of municipal government," he said in a telephone interview. "I'm having trouble keeping parks open. I'm laying off people here. The unions are suing me. It's hard to reach into that same kitty and say: 'I want to dream big.' As good as that may be, that's just a hard sell."
Wharton will tackle two priorities: revive areas of Memphis cut off by highway construction and approach handgun violence as a public health crisis. He said the grant allows him to capitalize on existing momentum in his city.
"We've been on a roll here in Memphis," Wharton said. "The city is anxious. The people are ready for these big changes. We just haven't been able to really bring in the talent that we need to envision, develop and actualize these plans and take advantage of the rebirth of spirit that this city is now undergoing."

Chicago Mayor Rahm Emanuel aims to cut the amount of time aspiring entrepreneurs wait in line to start a new business, get a permit or obtain a new license, and will focus on significantly reducing energy use. Louisville Mayor Greg Fischer wants to partner with the city of Lexington to implement a new regional export strategy and improve public accountability. New Orleans Mayor Mitch Landrieu wants to reduce homicides.

Bruce Katz, director of the metropolitan policy program for the Washington-based Brookings Institution, called the initiative a great development.

"This is well-structured, resourced, bottom-up innovation that is reflective of the fiscal challenges that many cities face," Katz said. "The recovery is very sluggish. Job growth is anemic, and we're losing public sector jobs. The long-term effect of this is not just the individual innovations, but the ability to spread innovation across the country."

To Grow As A Real Estate Company One Committment Comes First

Wednesday, July 06

 

This year, MemphisInvest.com has seen unbelievable growth in our business.  Much of that growth can be attributed to little actions taken that had nothing to do with our ultimate business plan or forecasting.  Follow me for a minute as I show you exactly why our company closed 157 transactions with our clients in the first six months of this year for a whopping 127% increase over last year!

We spent much of last year as owners planning this year and each of the avenues in which we were going to grow our business.  We definitely planned an all out customer service blitz for our clients and making sure that they knew exactly what was happening with their portfolios.  It was an effort that was built throughout the company.  We talked about Customer Service so much the last two years, that it became ingrained in the very fabric of our company culture.  And what we saw happening was amazing.

I recently posted an article on the exact steps we took to get this growth and how those steps were really not meant to grow the company.  They were just the logical things you do when you want to be the best!

Here is a link to the article.

Any feedback would be fantastic.  In there I list a group of books that are very important to our company among others.  Don't hesitate to tell me the books that have made a difference in your company or growth.  I would love to start that thread!

Best of luck investing!

Chris Clothier

France chooses Memphis, TN. for Economic Partnership

Wednesday, April 20

Last week, Memphis Mayor A.C. Wharton and Maurice Leroy, French Minister of the City, shook hands on an agreement forging ties between Memphis and the city of Paris if not the entire country of France!  This was huge news for Memphis and a real boost for the perception of Memphis as there were other cities that cold have been chosen for the partnership, but Memphis stood above the rest. The efects it will have on the value of investing in Memphis real estate could be huge.

Memphis is the only Aerotropolis in the Western hemisphere and Paris is the only Aerotropolis in Europe which made the two cities perfect partners in seeking to  forge closer economic ties for growth.  With France looking to grow on the world economic stage, the agreement to share business, cultural, government and artistic ties is huge.  A lot of credit has to go the leadership of Memphis for making this happen as previous administrations in Memphis failed to improve the cities image.

This is only the latest in a string of big announcements from the city including the addition of over 5,000 jobs announced by companies like Electolux, Mitsubishi and Tennessee Brewing Company in the last 120 days.

Minister Leroy of France cited the infrastructure already in place in Memphis as well as his meeting with city leaders as the main reasons Memphis was chosen to help France strengthen its global stand.  The presence of FedEx, International Paper and St Jude Children's Hospital absolutely helped as well.

The deal that cuts international red tape for companies on both sides of the Atlantic seeking to do business in either America's Aerotropolis or Europe's Aerotropolis.  With an eye toward the future expansion of the U.S. economy and the micro-effect the imporving economy can have on cities, Memphis is in a great position to lead the country in growth and development.  Memphis is the undisputed center of U.S. transportation and disribution and being selected over other major U.S. cities adds to the creibility that Memphis is poised for huge growth and development.

If you are wondering how this helps real estate investors, I will quickly explain.  Investors are purchasing properties in Memphis at prices equal to and often below the pricing levels from 30 years ago.  That is 30 years of progress and appreciation being discounted to today's buyer. 
With the economic changes taking place in Memphis and the stronger, unified leadership currently leading the city, property values will absolutely solidify and begin increasing.  As Memphis becomes a bigger player on the international stage and attracts additional companies like the ones already announced, jobs will be added and people will absolutely follow the opportunity.  As the city grows, so does the demand for housing and as demand grows  - value follows.

Memphis is a fantastic investment opportunity as long as you invest with the right companies and in the right locations.  As I always say - Price Does Not Equal Value!!  There are a lot of factors to consider and I hope after reading this, you understand that a company like MemphisInvest.com has its finger on the pulse of the city and can expertly guide you to the "True Value" you are seeking.

 

Memphis City Leadership is a BIG Reason Real Estate Investing is so Hot!

Tuesday, April 12

So Memphis continues to pull itslef up by the bootstraps as the saying goes and a lot of credit has to be given to the newly elected leadership.  They may not be doing everything right and there are plenty of issues that I disagree with them on.  But, when it comes to boosting the cities moral and being a leader for change, I have to give the city leaders a great deal of credit.  They have really been on a roll atrtracting companies and money to the city. 

If you've heard Memphis Invest speak at various events around the country, you've heard us talk about the 'intangibles' that make Memphis investment properties unique when comapred to other real estate investing cities. One of the unique characteristics that makes Memphis a great city for real estate investors is the location and, because of location, the industries that support the city. Here is another great example of the tremendous economic growth that is expected for the city and how that growth effects real estate investors.

A Wisconsin based brewing company, City Brewing of La Crosse, announced this week plans to purchase the former Coors Brewing facility located on the western end of Raines road near Southeast Memphis. Not only is the location fantastic for the new entity, Tennessee Brewing Company, but it also pushes the revitalization of the cities industries closer to where investors are heavily rejuvenating neighborhoods.

"This project not only will bring 500 new jobs to the city, those jobs are located near Southeast Memphis and will help to continue the trend of revitalizing the Hickory Hill area as well" says Brett Clothier, co-owner of MemphisInvest.com. "Mayor AC Wharton called this move a first step in a continued push to revitalize this area and we manage several hundred investment properties for real estate investors in this area - this is a really good sign".

Tennessee Brewing company will be the new entity once the deal is completed and they plan on having 500 jobs once the plant is fully operational with an average wage of over $58,000. That is a fantastic development for investors who already own in Southeast Memphis and a reason to continue to invest in areas close to the plant such as East haven, Oakhaven and even into Whitehaven. These areas of Memphis have always been very stable rental areas for investors and now with a continued push for revitalization by the city and county governments, stability might lead to growth sooner than anticipated.

"We've been meeting with other business leaders and trade groups in the Memphis area and it seems we all have a similar strategy right now and that is accentuate the positive and definitely tout the enormous benefits of our city" says Chris Clothier, another co-owner of MemphisInvest.com. "We are attracting new investments in our city every time we renovate an investment property for an out-of-state investor and projects like the brewery and the $11 million that will be spent revitalizing it, only help us to show investors that the city and other industries are investing as well".

City Brewing is a privately held company that had $175 million in sales in 2010. It does third-party brewing, blending and bottling of beer and other drinks at facilities in La Crosse and Latrobe, Pa. and plans to do the same at the Memphis facility.

Real Estate Investing | Know who you are working with

Thursday, March 17

If you've ever listened to one of my webinars introducing Memphis Invest, you've me heard me say time and time again that this is absoutely a people business and has very little to do with the product.  That's speaking strictly from the providers point of view of course.  But what about from the investor's point of view.

Purchasing investment real estate in Memphis has always been about the value you get with the product.  Is the property located in the right neighborhood, is it priced at a truly valuable price point, are the numbers provided for you in line with reality?  It's also very inmprotant to remember that price is what you pay, value is what you get.  How do you protect yourself and make sure that you are getting the absolutel best "value" you can get when buying long-term buy & hold properties?

The above are all questions you have to ask yourself when decide to invest in real estate whether it's located in Memphis or any other city for that matter.  But, don't forget the most important question you can ask.  Who am I dealing with?

It's unfortunate that not every company in our particular industry is run by the highest level of professional and that might be putting it mildly.  Be sure that you ask the right questions and do your homework before proceeding with purchasing an investment property.

Here is a quick sampling of what I would ask:

1.  How many investment properties do you personally own?
2.  How many investment properties has your company purchased/sold this year?
3.  Can you verify your numbers?
4.  Can I speak directly to your referrals & testimonials?
5.  Who will I contact if there are problems with the purchase, rehab or management?
6.  How do you determine your stated property statistics & numbers?
7.  What happens if your numbers are wrong?
8.  How many years have you been in this business?
9.  Do you have any business referrals we can contact today?

Nine simple questions that can help you to make sure you are dealing with the highest caliber person or company possible.  If  the company you are dealing with cannot answer any of these questions honestly and quickly, then you do not need to walk away.  You NEED to RUN!

You see, the houses are almost all the same.  If you are following the right criteria and following your formula for success (see previous blogs!), then you know that the property you are interested in is going to be a winner.  Now make sure the company you are dealing with is a winner as well!

There are a lot of great investment property companies here in Memphis run by very good people.  It is not for me to decide or even tell you as a rental property investor who is good and who is bad.  What I can tell you, is that by asking the right questions and really paying attention to the answers you get, you can quickly get though all of the marketing hoopla and get down to real professionals. 

When you decide to invest in Memphis real estate or even that you are going to become a real estate investor in general, make sure that you do your homework, ask the right questions and be diligent.

After all, it's only your future.....

To all your success!

Chris