Mid south Home buyers - memphis TN

45 Replies

Hello,

I have been reading and looking into this website and I was wondering if anyone has done business with them or know anything about them?!

Thanks

@Juan Calvo

Afternoon.  I have two houses with them, am in the process of buying one and on their waiting list to buy another.  I really like the quality and standardization of the final product.  They have a team who is experienced and knows what they are doing.  I strongly recommend them for a turnkey home.

Send me a message if you are interested in more info and I can provide you all the details you would like. 

I agree with Stephen.  Look at the others also don't go with the first one you see.

I have talked to all of them I know of out there and actually drove around town with a few of them. 

Bottom line is you need to complete your due diligence and find the company that meets your requirements.

I am baffled that there is a waiting list.  I have several homes available with no waiting list. Make sure you purchase a home that is NOT if the Frayser 38127 neighborhood.  There is not enough " experience" in a team to help someone have long term success in this area.   You will have long term disaster there and it doesnt matter how nice the home is renovated. Make sure your looking at homes in the $75k range or higher. 

@David Hutson I am surprised you are buying from a TK company considering you have done most of them on your own.

Medium buymemphisnow stacksCurt Davis, Buy Memphis Now | [email protected] | 605‑310‑7929 | http://www.BuyMemphisNow.com

Yes, unless you want to deal with a lot of issues stay away from 38127.  There are lots of properties.

@Curt Davis

 I'm about 55%-45% that I have bought myself vs turnkey.  It's been difficult finding good homes that are correctly represented and then getting agents/sellers to follow through and call me back or hold up their end of the agreements. 

I have been buying a house a quarter out there and it's difficult to continue while working and taking care of my properties in CA so turnkey has been more appealing. 

I often pay a little more for the house but if all the work is really done, meaning to me that there is no deferred maintenance and the rehab looks good to a well qualified tenant, and is in a good area it is less work and stress down the road. 

I'm definitely keeping my eyes open for good homes on my own but there is almost always an issue.  I recently bought what I thought was a good deal through an agent in 38128.  The house had a new tenant with a two year lease and a large deposit.  While pricewise I got what I think is a good home in a good area, the tenant moved out a month later with no notice,  Disappeared overnight.  He didn't destroy it but I had to spend about $500 to clean the carpets and the house, cut the grass and misc small stuff.  It was just rented again to a new tenant at a lower rent and a cost to me of a half a months rent up fee.  I'd do it again in a heartbeat if I saw a similar home though.

Some of the turnkey companies out there just make it so easy for me, give a very good return and I don't have to worry about repairs every month or two so I'll continue with those when I can't find other homes.

@Juan Calvo : I have used them for 6-7 properties and have found them to be very reliable and honest. They have a top notch team and really know this market, so the whole process is very smooth.

This said, in terms of investing with them in Memphis, please be aware that you're renting to blue collar folks. This means there's a possibility that due to seasonality or part time work, they might be late on rent, etc... The folks at MidSouth (or more accurately the part that does the property management) do their best to work with the tenants and get them caught up on rent, but i've had a couple of instances where the tenants fell too far behind on rent and disappeared. That cost me a bunch of money in terms of lost rent and some damage to the property which obviously affects my returns.

I have not had any major issues in terms of maintenance and repairs (the longest i've had a house bought with them is 3+ years now).

Hope that helps!

I can only speak for the people at Mid South Home Buyers; they are good people, they try hard, know what they are doing and run a ethical and good business.  Also, you know by their model that they are going to be around in 5 years. That is everything you want when looking for a TK provider. 

As J.C. said in his response, things have happened, but that is a possibility when owning rentals. Anyone who has owned rentals long enough will tell you, there will be ups and downs. Personally, I think someone needs to own a property for at least 5 years before making an evaluation of the investment. The first tenant could go bad, but the second tenant could stay 5 years. Or the first tenant could stay 3 years, but the second tenant may be a dud. Things will happen when people live in your home. They will lose jobs, get better jobs and want to upgrade, transition back into a home owner, die, go crazy, get divorce, disappear, etc. The value in your TK provider and the PM company is performing when things go bad. After 5 years you have probably had a couple of tenant turns, you understand the turn cost, you have a feel of how your manager operates and how hard they are working for you.  At this point, you are starting to get a feel of the returns to expect. 

That being said, you can evaluate our TK provider within the first 18 months. If you have a ton of maintenance, then you simply bought a property that had lipstick put on it.  Even if the first tenant is not stellar, if the follow up communication is poor, then that would be a red flag. 

Medium turnkey logoAlex Craig, Turnkey Properties | [email protected] | 901‑848‑9028 | http://www.memphisturnkey.com

Juan,

I have bought two turnkey properties from Memphis Turnkey Properties. Alex Craig. My experience with him and his companies has been a great one so far. I was of coarse leery about buying out of state for my first rental properties. But his expertise in his market has made it truly passive and a comfortable experience for me. When finally deciding to get started, for me it was about finding the right partner to work with. Of coarse talk to other providers but I think you should have a conversation with Alex as part of your search for the right partner. Good luck.

Originally posted by @Juan Calvo :

Hello,

I have been reading and looking into this website and I was wondering if anyone has done business with them or know anything about them?!

Thanks

 no, but i've used a turnkey company who does not post here and they have done a fantastic job for me. PM if you want names and info. 

Originally posted by @Curt Davis :

I am baffled that there is a waiting list.  I have several homes available with no waiting list. Make sure you purchase a home that is NOT if the Frayser 38127 neighborhood.  There is not enough " experience" in a team to help someone have long term success in this area.   You will have long term disaster there and it doesnt matter how nice the home is renovated. Make sure your looking at homes in the $75k range or higher. 

@David Hutson I am surprised you are buying from a TK company considering you have done most of them on your own.

 I avoid frayser like the plague. 

Originally posted by NA C.:

@Juan Calvo : I have used them for 6-7 properties and have found them to be very reliable and honest. They have a top notch team and really know this market, so the whole process is very smooth.

This said, in terms of investing with them in Memphis, please be aware that you're renting to blue collar folks. This means there's a possibility that due to seasonality or part time work, they might be late on rent, etc... The folks at MidSouth (or more accurately the part that does the property management) do their best to work with the tenants and get them caught up on rent, but i've had a couple of instances where the tenants fell too far behind on rent and disappeared. That cost me a bunch of money in terms of lost rent and some damage to the property which obviously affects my returns.

I have not had any major issues in terms of maintenance and repairs (the longest i've had a house bought with them is 3+ years now).

Hope that helps!

 tennessee is a landlord friendly state thankfully.

Just went and reviewed their stuff. Looks nice. Looks like killer cashflow also. That's the cashflow i locked in a few years back with another provider. Most turnkeys are NOT still providing that cash flow anymore. Looks like these guys are. I may have to make a trip back to memphis shortly and meet with them. 

One more thing. When I asked Midsouth for referrals to other turnkey providers because I wanted to invest outside Memphis, they recommended Alex Craig who is also a TK provider in Memphis (as well as little rock). Goes to show you how honest a guy Terry Kerr (owner of Midsouth) is!

I am a broker and have bought over 300 homes in Little Rock & surrounding areas of central Arkansas. I took a quick glance at the local Little Rock area turnkey provider (which I had never heard of until the above post). I see that their properties are mostly in bad areas and they are selling their homes to "investors" for more than twice what the house is actually worth, even fixed up. The rents posted are way way higher than the areas command.  There is no way it is sustainable.  If you buy one of these, I can almost guarantee that the tenant will leave & trash the place because they somehow got suckered into paying rent that is twice what their neighbor is paying.  So if you are buying one of these houses from out of state, CAVEAT EMPTOR.  I have had a suspicion that turnkey guys were a complete ripoff, and now it looks like that is confirmed.  That being said, maybe I should enter the turnkey business.... If there are so many out of state people lining up to buy overpriced houses in crappy areas, I can find 10 a day.....

I just came back from visiting Midsouth last week. I was impressed by the staff and the product. I only talked with Terry briefly but I can say that he seems to be a straight forward stand up guy. Im looking forward to doing business with Midsouth. 

@Eric Pinter thank you for your concern. If I were going to slam someone, I would reach out and learn about their model. It seems like your thought is that TK is a ripoff, yet their are so many investors on BP that are successful with it. Even on this thread, there are people talking about their success, including one of our clients. I would at least understand the model before I bash it as a whole.  Are there bad ones, yes, no doubt.  But their are a good ones too and I think we are excellent at what we do and provide excellent customer service.  The mark of a good business, especially in Real Estate, is sustaining during the ups and downs, which we have done and growing the business with referrals and repeat clients. There are a lot of investors who went bankrupt and a lot of TK providers that are no longer around. I am glad to say we grow and evolve every year.  I can type a manifesto of why my Little Rock & Memphis company is successful at providing investors the services that individuals without the experience would have trouble doing.  Understand that when done right, Turnkey providers are selling homes that position investors for maximum cash flow, in other words, equity does not do anyone any good if corners are cut during the rehab that will cost deferred maintenance.  A TK company with in house management will operate different with their owners as their is a long term relationship and decisions are made to maximize the investor return.  In other words, the goal is to maximize returns to the client. 

I think our Little Rock investors would disagree with your statements as we have been in Little Rock for almost 4 years as TK provider, but local investors since 1997.  My cousin heads up the operation and currently owns a portfolio of 27 homes in Little Rock. I am currently getting approved with Bancorp South to add to my Memphis portfolio to purchase in the same exact areas that we are selling our investors.  Lets address a few things you have brought up:

Value: 95% of our investors utilize conventional financing through lenders of their choice.  The lender orders appraisals to which we have 0% control over the values they bring back.  When we purchase the property, our lenders at Simmons Bank and Bancorp also order appraisals.  Our banks appraisals and the lenders appraisals are in no way related, yet the values come back very close to each other each time. We have not yet had to adjust a price or kill a deal because of value.  While the value of the house can be determined by an appraisal, the value to the investor is not whether or not they buy the house for $80,000 or $90,000. A $80,000 house with a 13 yr old HVAC system and 15 year old roof is not as valuable to an investor who has a 30 yr mortgage payment as a $90,000 house with new roof and HVAC. 

Sustainability: It has been working for my cousin since 1997.  Most of our business is referral and repeat business. We also have a group of local lifelong LR residents ready to come on as clients. The property is rehabbed to minimize turn cost and maintenance.  Vinyl plank flooring instead of carpet in high traffic area stands up to wear and tear, new roofs are on most of our houses, new HVAC are in most of our houses, thus reduces the out of pocket cost.

Tenant Leave & Trash: Has not happened yet. We do property inspections. I am actually surprised how well that most of these are kept.  I operate in Memphis too and personally think we are getting a better tenant pool in LR.

Rents to High: We quote a rent range and while I do not have the stats on how often we get the top of market, I would guess 90%, if not higher. We are beating local landlords because they are operating their business the same way they did when they first got into the business. Talking to local other local property managers, we quickly determined that they were not aware of demand for rental homes increasing.  We certainly saw the supply of quality rental homes were few in LR.  Most of the inventory looked like tired rental homes that had not been updated in years.  We came into the market and offered retail ready upgrades with a good amount of the homes having granite counter tops and tile back splash.  The end result is a problem we are having of renting out the homes before they are completed.  The common these we hear is that this is the nicest home they have lived in.  All tenants are underwritten, thus have to qualify with income, rent history, background and credit. Did you read that rents are up 11.4% in Little Rock year over year?

I am in Little Rock once a month and would be happy to walk you through one of our renovated homes and explain how are successful at what we do. I certainly think given your comments on a public forum, that we deserve the opportunity to speak with you in person. I think what you will learn is that local Little Rock Realtors, PM's and investors are way behind the curve on the evolution of the rental business. 

Remember, the biggest part of TK success is working with the right company who knows how to maximize cash flow for its investors.  It sounds easy, but it's not.  If it were, all the TK providers who went out of business would still be around.

Hopefully I hear from you and we meet in person. I like Mylos in the Heights for coffee, they have a good pour over that I enjoy.

Medium turnkey logoAlex Craig, Turnkey Properties | [email protected] | 901‑848‑9028 | http://www.memphisturnkey.com

Well well well  @alexcraig this guy is not from Little Rock, i think hes from Frayser and he's trying to pay you back for all those comments about Frayser. Hey i will say this as a blanket statement we all have some deals that didnt go as we planned. Its how we handle the fallout, and move on. Sears, Apple, Comcast, Coca-Cola, etc all have complaints and the complainer thinks he or she is right all the time. However sometimes we have to agree to disagree. I sit on here and see how most of us complain about poor people and less than stellare tenants when that very tenant pool may have gotten us started. All boats rise with the tide. Does some areas have more challenges than others? Yes the problem is that problem areas need more budgeting allotted for vacancy, physical presence, and a company thats willing to buy in. Most people that lose doesnt reach the economies of scale that allows that. 3 or 4 properties in an area like Frayser will kill you. In order to make it work the amount of properties has to justify the resources youre willing to allocate to these areas. There are some old men in theae areas that have accumulated 20 properties or so over their time and most are paid for and will kill an outperform the average investor with that invest in only so called a,b areas. 

hahaha not trying to start a silly internet war.  BP is a great site and not a place for bashing.  i agree, i could have stated my case a bit more eloquently earlier.  what i write is not an attack or a personal affront.  it is my opinion.  i will try again here:

to be fair, i think it's perfectly acceptable to offer a counter opinion and a bit of a warning to a newbie investor who is asking for honest and unbiased advice (which was the beginning of this post).  someone selling an investment should be able to handle a bit of healthy skepticism of their model if they are trying to sell others on the model for their own gain.   i have nothing to sell here.  i don't even work with clients at all.  i only deal with my own properties for my own gain.

while in law school i became fascinated with various turnkey investor schemes that ended up exploding and taking down numerous innocent parties. i have looked at thousands of pages of filings with courts and the arkansas securities department when they've gone after these kinds of schemes.  again, i don't know you personally or the inner workings of your business, so i am not pointing any fingers.  however, i am keenly aware that certain types of investment schemes (for lack of a better word) tend to end badly....occasionally with out of state investors holding the bag with a loan they've guaranteed on a house that is truly worth maybe half of what the appraisal says (btw, i am not a fan of appraisals...).  i've talked to the bankers who ended up taking huge losses trying to recover the assets.  so it's not, as you say, that i am "behind the curve"....  i am very familiar with the model.  i simply think that there are flaws which, when exposed to a newbie investor, may make them think twice about what they do with their $ and credit.  and BP is a perfect place to have all views out in the open, even when those views aren't of rainbows and butterflies.  if you're interested, i can point you in the direction of some of the cases/filings.  they make for a thrilling late night read over a cup of mylo's coffee (although i myself am not a fan of their coffee...i am a bit of an espresso snob)

it seems you have a great business model - for you - which is what counts - for you.  i know many investors from places like california that get googly eyed at the cash flow available from properties in little rock and similar types of cities.  but those are on paper... i have owned hundreds of properties and i know better.  in real life, those paper deals seem great, but they're not.  more power to you if you can make $ doing it.  

i see on your page that you show properties renting for $1050 that should legitimately rent for $650-$700.  i have owned (and may still own) houses on the same streets on your site, so i know the areas.  no sane person would ever pay that kind of rent for any house in some of those areas, and no sane person would ever buy houses in some of those areas at those prices - no matter what kind of countertops the house has. and to then base the "value" on that super-inflated rental price and market those prices/rents to out of state investors who have no way of knowing better? brilliant? maybe.  setting people up for failure? possibly.

i would never outright bash a profitable business.  but do i have my doubts about how great it is for all parties?  yes.  should you care what i think? probably not if you are making money.  should newbie investors care what i think? up to them, but i would be remiss if i didn't at least put it out there for them to weigh the options and decide for themselves.  i have nothing to gain by doing it. 

i do know that i love buying houses at foreclosure auctions when investors (turnkey as well as others) fail and can't deliver what they've promised with their elaborate guaranteed returns/rents.  i see it a lot. and i get great deals on their houses when it all blows up.     

"There are a million ways to make a million dollars."  -EP (i just made that up, but i think it's catchy)

I had an opportunity to meet Terry Kerr a few months ago while doing some consulting work for a large PM company in Memphis. I was given the opportunity to view his business fully and interact with his staff and a consultant he had working for him at the time. I must say, that everything about that experience was a positive. He runs a tight ship, has an amazing team of people working for him, and strives to makes sure that everyone involved in the deal feels satisfied with not only the experience, but what they make financially.

Additionally, in our one on one conversations about the systems of his business and his vision, I was left with a feeling that TK genuinely cared that his investors were greatly satisfied. Turnkey targets a specific type of investor and it isn't suited to everyone's needs. Memphis can be a strange market when evaluating, is very blue collar, and tenants can be more difficult in the experiences that I have had in that market.

I am in no way affiliated with TK and these are just my insights after having met him, seen his business, and hearing him speak at the REIA. Hopefully my insights are of some help to the OP.

@Eric Pinter thanks for the clarification. I certainly am not trying to start an online war my response was simple explaining what we do as your post was negative and I needed to respond as I have an internet following and following on BP.  These post are searchable on Google and such uninformed, one sided post needed a response. BTW, I mean that with no disrespect to you and do not mean that to be an attack statement to you either. Jamie Hoffman is a our primary property manager and I know him and his dad have a fantastic reputation in Little Rock. Roy Rainey sends us some homes to buy from time to time and he will secure management on those homes. I think he was a little skeptical at first too, but after managing our homes he even admits our model works of providing premium rental homes and getting the top of market rent. I would say Roy is probably the largest PM in LR. This is certainly not a scheme as we have very personal relationships with our clients and will soon being doing a annual event where we invite our current clients into our market for a weekend real estate event that will have featured guest to speak about what is going on in the market, future opportunities and threats within the market and general networking.

I think an 8 to 12% return is reasonable and that is what we are putting on our sites. I personally own some properties that return much higher and I have owned properties that have finished in the red. That is the nature of single family investing and why I suggest to our clients if you are going to own only a couple of properties, then it is best to invest in a REIT.  Also, we tell our clients that if you want to sell in 5 to 7 years, then expect to break even as LR and Memphis are linear markets.  With a 30 yr mortgage, the first 5 to 7 years there is not much equity pay down. 

Out of state investors should get excited about cash flow in markets that can provide it.  But single family investing is more then simply cash flow.  My take on it is that it is one of the few, if not only, where one can secure a asset for 20 to 25% down and have someone else (bank), take on the rest of the risk. With that 20% down payment, they can secure cash flow, the ability for the tenant to pay off their investment, the investment appreciate and the ability to secure tax breaks. Although I prefer all my individual properties to finish in the black every year, that is simply not possible when you figure in a perfect storm of vacancy, maintenance and capital expenses all in the same year.  Last year on one of my Memphis homes, I finished upside down by $400, but the principal pay down by the tenant was around $2,500 and I know the property grew in value by 3%. I was able to depreciate the property around $3,000 and I had the interest deduction.  Because of a new furnace and a few other odds and end, the property did not cash flow. 

While the cash flow is great, I tell all my clients to get as many properties as possible and work on paying them off 1 at a time. That is widely a very unpopular strategy for the most part. My feeling is get your first 10 paid off and then strategically pull equity out to either do capital improvements 15 to 20 yrs down the road, buy more property or invest somewhere else since the equity pull out is tax free. Again, what other investment can provide this?  I have two 10 year mortgages and barely cash flow (if any) on those, but the pay down is around $850 a month. Also have a few 15 yr mortgages, same deal, little more cash flow, but good equity each year.

Bottom line, while I see what you are saying, but I do not think you fully understand the difference between the TK hucksters and the well organized TK businesses that are interested in a long term business model and not a fad business.  Most TK operators I have read about are not well organized and are certainly not good at running a business as they are simply house flippers, not long term strategic real estate advisers for their clients. I would say it is safe to say that most TK providers do not even own their own portfolio. I know for a fact of a few Memphis providers that do not have portfolio of homes. As for me, I am simply operating a business where I am incorporating my experiences as a landlord since 2007 into my business. I have been successful and I can help our clients be successful. 

I do not need to read the filings on shady Real Estate operators; I think it is well known that Real Estate is a perfect platform for people to be taken advantage. Simply stay up and watch infomercials or search Trump U.  People tend to flock to real estate because it is easy entry and provides hope to those who either hate their job or want some sort of lifestyle they are not able to get with their current job. I know first hand, it is not like that and RE, just like anything else is a long term wealth tool.

Lastly, I can understand why someone local would look at what we are doing with a raised eyebrow as we brought a new business model to town and those who do not understand the model will by nature be suspicious. 

I would still like to meet you the next time you are in town. I really not sure what it would accomplish, but maybe we could learn something from each other or maybe you simply walk away with a different perspective of what we do.  I am pretty sure Roy Rainey did.

Medium turnkey logoAlex Craig, Turnkey Properties | [email protected] | 901‑848‑9028 | http://www.memphisturnkey.com

@Eric Metz

@Eric Pinter

Eric Mentz, thanks for sharing.

Eric Pinter, I think this is the key component which makes successful TK companies with long term visions successful.  Eric Metzs comment was perfect when talking about Terry Kerr. TK is more then just selling a house. It is certainly a service driven business. Good TK providers have to be profitable to be able to staff accordingly to service their clients.  It would be really hard do be able to be successful and service our clients without a job supervisor, investor coordinator, sales and service, real estate agent and a full office staff where the PM employees cross over to the turnkey side of the biz.

"Additionally, in our one on one conversations about the systems of his business and his vision, I was left with a feeling that TK genuinely cared that his investors were greatly satisfied."

Medium turnkey logoAlex Craig, Turnkey Properties | [email protected] | 901‑848‑9028 | http://www.memphisturnkey.com

@Michael Mcghee your post made me laugh. I think you are right, it is all those negative Frayser comments coming back to bite me.  I do want to point out that most of my post point out that people can be successful there. I know James Martin and Terry Kerry have been successful in 38127. @David Hutson owns in Frayser and the last time he and I talked, he was doing well.  While we dropped 10 or so Frayser properties from management over the past 3 years, we still have 3 properties left in Frayser that we manage that operate like an "A" property.  Tenant pays like clock work, has been there for several years and takes care of the home. Those people all bought for under $40,000.

Frayser is a huge area that has population of around 40,000 people. Those people need a place to live too. Personally, I am not fan as I have not had good experiences out there when I first started and I simply made a decision not to operate there.  Especially after I was given a house for free, held it for 18 months and lost money over that 18 month span upon sell.  I sold the house for less then what I just paid for 4 tires on my truck. Ouch!  Frayser is a niche, it is either your niche or it is not.  I have had my worst experiences in vandalism in Frayser.  James Martin went to the house I sold for cheaper then my tires and I think the only thing left was the 4 walls and front door.

Long story short, Frayser is a challenge, but just like any other investment, with the right team, you can make it work. The area is what it is, but people live there and those people need houses. Screen well and manage right for max profits.

Medium turnkey logoAlex Craig, Turnkey Properties | [email protected] | 901‑848‑9028 | http://www.memphisturnkey.com

@Eric Pinter I wanted to address this in a separate post. Which property do we have at $1,050 that should rent for $650 to $700? All I can do is back it up with a lease and some background info. If the owner is on BP, I can tag the owner. You said those rents are not sustainable, but being there since 2012, we have had tenant turns and re-rented within our range.  Also, this is not some made up marketing line, but we really do rent out a lot of homes before the rehab is completed. 

I do think you could benefit from meeting me in person the next time I am in LR. If we are getting $1,050 and you are getting $700, then I would think you would be very interested in meeting with me. I know I would want to know how to get $400 more a month in cash flow. 

Medium turnkey logoAlex Craig, Turnkey Properties | [email protected] | 901‑848‑9028 | http://www.memphisturnkey.com

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