Updated over 1 year ago on . Most recent reply
tenants breaking leases and excessive damage make it hard to be profitable
Hi,
I have two houses that I purchased from Memphis Investment Properties (M.I.P.) who still manage them. Property one is a 3 bdrm 2 bath with a garage that rents for $1,350 and property two is a 3 bdrm 1 bath, driveway parking, that rents for $950.
Before I bought the houses, M.I.P., provided a proforma on each property. They allowed in the proforma for a 3% maintenance. The proforma's would have been accurate but, what they didn't allow for, is the turnover cost between renters that left excessive damage. Also, the vacancy rate was understated.
My first house had a tenant in it when I bought the house and they just up and left and left the house in rough shape. Then my second house which was freshly turned had a tenant that up and left after a couple of months and caused excessive damage.
On the first property, we sued and won a judgement of over $6,000 but I have not seen a penny and it's been over 18 months since the judgement. We sued on the second home but don't have a ruling yet. Now my first property currently has a tenant that is not paying rent, so we started the eviction process. I expect that I may have excessive damage on this home as well.
Out of 4 tenants, only one has abided by the lease.
Am I just unlucky or is this what I can expect in this market?
I was really excited to be a real estate investor but having 3 out of 4 tenants break leases and cause excessive property damage as well as unexpected turnover cost from excessive damage, is making want to get out.
Thank you for your any input you would like to share.
Damon
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The only people that win with turnkey investments are the turnkey companies. If these homes were such great investments, they would keep them for their own portfolio.
When you purchase an investment, calculate your returns based on actual performance. Forecasted performance is your best-case scenario and shouldn't be relied on, particularly in a tougher market like Memphis.
- Nathan Gesner
