Difficulty selling rental properties at loan amount
Real Estate Consultant · Memphis, TN · Member since 2015 · 70 posts · 82 votes
Difficulty selling rental properties at loan amount
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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votesI was not involved in the sale of these properties, but have sat back and watched this thread for the better part of a day and what fascinates me is how easy it is to get the result you want from other people. The thing that makes BP so great is that you can get unfiltered advice and usually from people that, besides a picture, are anonymous strangers. That is also the bad part. Due to no filter and anonymity, sometimes the comments are just thrown out there without any real thought about facts and details. It is unfortunate, that after @K. Marie Poe stopped asking questions, no one really picked up where she left off. It was obvious that things did not add up from the original post to where the thread took off.
This is not about should you buy Turnkey or not. This is about the basics. This is about buying smart and being honest here on BP with all of the details and sharing ALL of the pertinent data if you truly want the users to help you. @Jay Hinrichs, you're getting a couple of votes or that last post, but as much as I like you, I'm not one of them. You make a lot of assumptions in your response and you castigate @Curt Davis when he is the only poster on here actually trying to help Sabrina achieve her original question. He is the only one being honest about her options and solutions and the realities of her situation. Yet, you knock him for his honesty about what it would take to sell to a turnkey company and then you knock him for his honesty about the value of her properties and the fact that blaming will not get her closer to her goal.
I would think that many of the smart investors and commentators on here would really want all of the data and details before really coming to a conclusion. Big props to @Michael Lauther for his straight forward and pragmatic comments about buying midwest turnkey properties and the way you have to be brutally honest with yourself if you are going to be successful.
As for Turnkey, who cares about that debate? No one is going to change their minds on this and that is ok. As for your comment @Cal C., I own a turnkey company and I will gladly share this thread. For most of us running reputable companies, we love having these types of threads shared because they really help to define the good and the bad in both turnkey companies and investors.
Here are a few facts that were left out that are easy to know if you are familiar with Memphis. Why they were left out of the original post, I have no idea, but when put into context, a lot of commentators may feel differently.
1. There was an AFFILIATE company out of Los Angeles who worked very hard to get Memphis companies to sell properties to their clients. First red flag - They charged people money to be a part of their group and then those people would get access to their turnkey properties. Second red flag - They pushed the no-money out of pocket investing, positive cash flow, sit on the couch and collect mentality so any investor coming through them was set up for failure from the beginning. Jay, you have harped on this topic and here is a real life example of a buyer who bought through them and how their expectation was not met - but does that mean someone got screwed?
2. The company selling these properties is not a big company and they do virtually zero marketing. They rely solely on affiliate relationships for sales. The owner is a very good real estate investor and a fantastic business man with a great reputation. He does not sell on customer service, he does not sell on great management - hell, he doesn't even sell on doing extensive rehabs. He sells based on being a small company with low overhead a small management company and they do low-end rehabs to sell properties below market pricing to investors.
3. @Alex Craig is spot on with his analysis of the renovations done to these properties. They are not extensively renovated and still have deferred maintenance to this day. I am quite sure the same holds true with Lazini and the poster already said that the Chelsea Hill property had to be boarded up because it was being vandalized.
I was not there when these properties were sold. But, I am familiar with what was going on at the time and how companies were selling including the Affiliate company in LA. I am very confident that none of these were sold as short term investments. I am quite sure they were absolutely sold as long-term buy and holds beyond a 10-year hold.
Now lets look just real quickly at the houses themselves and the posters original post.
The outrage from BP posters came from this investor being taken advantage of by a Turnkey company who overpriced the properties, lied about value and did shoddy work. This company does not have a reputation for those things...
All three properties were purchased in early 2010 (this data comes from the assessors website so if it is wrong or Sabrina says she paid more....I'm just listing what is on the gov. site):
3381 Kings Arms purchased for $76k
3958 Chelsea Hill purchased for $35k.
9265 Lazzini Cv purchased for $70k.
Again, that is from the property assessors website so perhaps they are wrong, but this is exactly the way the sales were recorded. Perhaps the affiliate company and the turnkey company both mislead the buyer about the amount of work that was done or the amount of deferred maintenance needed, but I highly doubt these properties were sold at or above retail value. Maybe Chelsea Hill was sold as a great area of town, which again, would be wrong, but like I said, they don't look overpriced to me based on what I know about Memphis. And at $35,000 I have no idea how a buyer can think they are being over priced. @Ben Leybovich, there is your under $50,000 pig property that is almost impossible to have success with as an out of state investor.
Are the properties any good? Chelsea Hill is an area of town that we do not want to buy or manage. Kings Arms is a nice area and a good property. Lazzini is in a nice area and also a good property, but is an abnormal property at 2 bedrooms in a 3 bedroom area.
So I don't think any of these properties are sold too high. Not for the area of town and not for the work or lack thereof that was done. Only the OP knows what her expectations were for renovation.
What about the claim that they were listed at 25% below market value with no bites? I know other posters thought that was a little odd. Well, here is what the MLS shows:
3381 Kings Arms was listed at $109,900 that is 44% increase in 5 years!!! No way that property is listed at 25% below market value. IN fact, it was overpriced. It has been dropped to $99,900 and as was pointed out by Alex, it may still be slightly over-priced considering the lack of retail updates. But if it is sold at $89,000 based on lack of upgrades, that is still a capture of equity or appreciation, whatever you want to call it and would probably be slightly below retail value based on the lack of updates.
9265 Lazzini Cv. was listed on the MLS at $95,000. It is no longer listed, but again, at 95,000 that is not 25% below market value. That is at a whopping 34.7% mark-up and priced right at max value for that property in that area. It may be priced perfect or may need a little less to move to a retail buyer.
3958 Chelsea Hill does not show to have been listed on the MLS.
So were they ever listed at 25% below market value? Doesn't look like it, but that is the claim that sent BP into a frenzy. How can these properties not sell at 25% below retail value and not get a bite unless this buyer was screwed by a company? Or, they are not listed on the MLS.
OP claimed that selling all three as a package was preferable and that she just wanted to get out of them at break even or possibly a little profit. It sounds like Chelsea Hill will be the challenge for a package. Curt Davis has offered to help with that multiple times here on the thread and was even asked by Linda Pliagas to reach out and try to help you. He has done that. He has stated that he thinks he can help you break even at worst. At least give him some props for trying to help and offering to help if he can based on the original post.
I get how BP works. I have been posting and writing articles here for almost 6 years now and understand which comments to laugh at and which to really dig into. The best way to make BP work is to be willing to be honest and ask for analysis and advice based on all the facts. These properties were bought with no money down from an affiliate and from a vendor who is usually pretty up front that he does not believe in over renovating and likes to keep prices low.
To me, it sounds like a bad deal all the way around, but not the way the OP has described and certainly not the way the thread took off. It sounds like she wants to move on to other investments, but her long-term properties in Memphis are not going to let her realize a big profit. If she truly wants to sell, then with all the details on the table, there is bound to be a buyer on here and a solution that can help her get out of the properties at a break even if not a little profit.
299 Replies
- Developer · Nashville, TN · Member since 2016 · 484 posts · 406 votes8y
TK's are in business to give you cash-flow. We tell all of our investors up front, that if they're looking for appreciation, they're looking at the wrong product. Yes, Indy is going through a renaissance, and there is opportunity for appreciation, but it is only a bonus if it happens. A TK product is for investors who are sick of the rollercoaster of the stock market, have busy lives (and don't want to rehab), and live in areas where they cannot achieve the same price-to-rent ratios.
- Rental Property Investor · Bartlett, TN · Member since 2013 · 404 posts · 421 votes8y
Wow, this thread is lonnngggg but has a lot of good info so I'm going to chime in also since I just got back from Memphis on Saturday night. I spent last week there looking for a handful of homes. For those who say there is no appreciation in Memphis, I thought the same thing but I don't believe it now. I have purchased 16 homes of varying quality over almost four years. It's crazy what people are asking for properties out there today, and the rents haven't gone up much. It's hard to get good deals like I was able to over the past few years.
I do buy primarily from turnkey companies, knowing that I will hold them for a long time, but that is my goal. Long term investing. Yes, I'm often paying almost full retail but as long as they manage them well I don't complain. I met with more than five providers that I talk to on a consistent basis and their returns are significantly lower for the very few houses they have available.
I have purchased from wholesalers out there but after I pay someone 15% to manage the rehab, since I don't live there (from CA), plus the rehab I don't get much equity compared to turnkey and I think the turnkey was rehabbed better than what I have paid for.
I talked to the few wholesalers I normally deal with and they didn't have anything good. The number of homes they actually had was really low compared to any other time I have talked to them.
I did go to the Auction at Comfort Inn on Thursday to look for deals and there were a few there. The only thing is you have to compete with Memphis Invest, Mid South Homebuyers, Rent to Reward and all of the other people/companies there looking for deals. There were 12 other people/entities bidding on a total of nine homes.
Overall I noticed there are not as many homes available and everyone is looking for homes to rehab. The wholesalers are passing them on as quick as they can get them, the turnkey companies are struggling to maintain a decent inventory to keep up with demand and the homes I saw on the MLS (MARS) were mainly overpriced. It's a good time to have many homes there. This is the first time in four years I have gone out there and not purchased/contracted for a home while on ground. I do have a few leads but who knows what I will actually purchase.
If you are new to the area or looking to buy, like all of the others have stated, do your due diligence. I have always recommended visiting the Memphis area to see the quality of homes, what areas you are comfortable investing in to meet the agents, turnkey providers or whoever else you are working with out there while actually standing in front of a house you are interested in purchasing. I spent about $1,500 for five days and it's well worth it. You will learn so much more from people if you actually visit. I always learn a lot from the people I talk to.
- Real Estate Consultant · Memphis, TN · Member since 2015 · 70 posts · 82 votes8y
@Account Closed
Glad you had the chance to check everything out by driving through areas, getting information from TK providers, and researching online but it is not the same as actually living here (ask me how I know this!). I did the same as you in 2010. Real estate is all about the exit strategy. I predicted back in 2010 that I would hold onto my properties for a long time "since it's all about the cash flow" but the reality was different for me having to deal with excessive repairs, non-paying tenants (that TK providers didn't collect), rent-ready repairs and loss of further rent, entity maintenance, etc. If at the end of the year you look at it, there were much higher expenses than you took in, it's hardly worth it. And you may be doing well in the first few years but after about 7 years, you end up putting a lot of cash back into the properties for high ticket items including new HVAC, flooring, windows, etc. One will need a lot of reserves for it. In hindsight, I wish I had never invested in literally any of my rental properties (I owned in other states, too) and I would have a pretty big fat bank account. If there is anything else, like a secret :-), please let us know!
- Rental Property Investor · Bartlett, TN · Member since 2013 · 404 posts · 421 votes8y
I don't think I will have the same issues you had. I have been watching this post since the beginning. I do have two houses that I have continually had issues with. One cost me $40k and one was brand new at $155k. It's mainly the management that will make or break you. I have also been managing homes for 17 years so maybe that gives me an advantage.
I spend hours every week looking at Memphis, talking with TK providers and PM's. Besides the two I have issues with my numbers are pretty good overall. I always account for PM, vacancy, repairs, taxes and insurance before buying and then ensure the PM is good. (I have fired one PM out there though.)
At four years there it's worth it. I wouldn't change what I did if I could go back. No matter what class of home you buy you will always have repairs. I'm guessing you have to replace the HVAC, flooring and windows in your own home as well. If you budget for it and actually set the money aside (don't spend it) then you should be covered at year 7 when you have these issues.
Another thing to do is check into pricing when talking to PM's and other BP people. See what they charge or have paid. That's one of the reasons I fly out there a few times per year. I want to see what is going on and how I can improve on what I'm doing. If you meet with those back there who are agents, TK providers, investors, etc you may be amazed at what they share. I learned a lot this past week and even passed on some helpful tips.
I know you had a very bad experience. I think if everyone else were to use your example as the worst case scenario and follow some of the tips above it should reduce the odds of it happening to someone else. You had one of the worst experiences that I have seen posted about here. I don't believe that there aren't the high number of issues with TK providers. Most try to do a good job. You know up front you are paying full/about appraisal price so make sure the quality of the home reflects it. If the numbers work then buy a house knowing you won't make your costs back for a few years. It's not a short term game. Buy houses at the auction and sell them off after if you want a short term gamble. I have bought four there this year and will be continuing to purchase four homes a year there until the numbers don't work.
If everyone else decides to invest somewhere else I'd be happy because then I could buy a lot more homes there :-) But seriously, $75k homes are selling for $85k in days. A good deal last week was about a 1% price to rent ratio. Three years ago I could get a rehabbed home for 1.25% ratio. Small percent difference but the cash on cash return is significant.
- Wholesaler and Real Estate Broker · Indianapolis, IN · Member since 2009 · 438 posts · 293 votes8y
Usually the 3rd through 5th year is where the TK model falls apart.
The honeymoon ends when you have your first bad tenant that
damages the house, etc. Most TK companies charge about $20K over what you can get the same house for.
I buy houses back from unsuccessful TK investors often. Even from yours, Hank.
- 8yAlex CraigBusiness MemberReal Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
@Andy Rumple what happens after year 3 to 5 when you get the bad tenant or does that not happen to you? What do you do to turn the house around? How many times have you done this?
Also, what makes an TK transaction any different then an normal real estate transaction. What makes what you do so much better then buying TK?
- Wholesaler and Real Estate Broker · Indianapolis, IN · Member since 2009 · 438 posts · 293 votes8y
Because most of you guys crank the price too high and prey on newbies who do not realize it.
If you are the exception ignore this. But most TK providers should remain silent.
- 8yAlex CraigBusiness MemberReal Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
@David Hutson we have met a few times and there is no doubt, you are doing what it takes to be an successful investor. You are educating yourself and becoming an market expert. You have bought TK and non TK if I am not mistaken. Next time you are in town, you should look up Sabrina so that she can learn from another out of state investor doing it with an high level of success. Look up the local news site, one of my houses was on it. A totally unavoidable situation. This crap happens. When it does, time to put the big boy pants on and move forward.
- Rental Property Investor · Bartlett, TN · Member since 2013 · 404 posts · 421 votes8y
@Andy Rumple, from what I have seen in Memphis , buying 16 homes there in less than four years, is that yes, you pay full price for a TK home. I don't see many people who have been asked to pay more than the appraised price. I work with a lot of other investors there and haven't seen any appraisals come in by more than a few thousand dollars. When that happens, all but once the TK provider has lowered there price. Basically, when you are buying TK you are usually paying the full price for what should be a fully rehabbed home. That is where newbies run into issues. They either don't get a home inspection, don't fly out to look at the home or don't do research on what they are buying. I'm not going to say that all TK providers are great and trustworthy but I meet with 6-7 of the well known TK providers each time I go out to Memphis and believe most of the TK providers try to provide a good product. I have moved my properties from one who I didn't feel was managing the homes with my best interest as the primary concern. If companies do not do a good job I would expect that they would go out of business.
@Alex Craig, Thank you for the kind words. I appreciate the comments.
I have met with Alex and in my opinion he is at the top of TK providers in Memphis. His rehabs are high quality and in quality areas. His prices are reasonable and I would expect his homes are never above an appraisal. What I really like about the properties Alex has is his high standards for property management. He is the only PM I know there who actually has a checklist and does inspections with tenants at move in and move out. Most will provide a list to the tenants and have them return it at a later date. As an investor and a property manager I know that the only way to know whether the house is in good shape or if there are issues is to walk through the home with the tenants when they are first moving in and when they move out. I don't like that many PMs will allow the tenants to do a walkthrough on their own. Every market is different so I can't see that it's wrong but here in CA I ALWAYS do a move in and move out inspection with the tenant.
@Sabrina Brown, I would be happy to discuss this or any investing topics on the phone or meet you for coffee or a smoothie on my next visit out there if you are interested. I was just out there and met with TK providers, PM companies, RE agents, talked to my wholesalers and met with a few other investors. I usually try to meet and talk to as many people as possible. Feel free to contact me as I would like to have a conversation if you would like to.
- Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes8y
The TK providers are flipping houses to newbie OOS investors. They would certainly go for maximum profit if they can. That is their business model. Very profitable.
It would be better if they can disclose relevant info, without misleading newbies into traps.
it seems that they have marketing people in CA helping them marketing it. That is borderline illegal. In ca, any sales or marketing of RE requires license. I doubt that those marketing people are licensed.
I have seen many people on BP, who will jump out each time TK is discussed and defend it. Testifying that they are doing well with TK. @Hank Keller is one of them.
@Hank Keller could you disclose your relationship with TK providers and is there any financial incentive involved in your relationship with them? If you have no relationship with the seller (TK provider), your opinion is legitimate. If you are with the seller, then you are not qualified to provide any suggestion to potential buyers.
- 8yCurt DavisBusiness MemberFlipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
I can tell you for absolute certain that the legit marketing companies, all their sales ppl are licensed realtors as everything is done legal. Commissions are paid to their broker and put on the hud at closing.
Curt Davis - KAIZEN Realty538 Reviews - Real Estate Broker · Redwood City, CA · Member since 2014 · 679 posts · 888 votes8y
That is good to know. as long as everything is done legally with full disclosure. Buyer is also responsible for being vigilant and realistic.
I was checking at Memphis. The northeast area is fairly pricey, over 200k. Less than 1% rent.
It seems all the cheap houses are in areas with schools at 1-3 ranking.
Which area do you provide your TK houses?
- 8yCurt DavisBusiness MemberFlipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
We sell tk homes in the average price range of $70k-$110k. We try to stay away from Frayser 38127 as well as South Memphis 38106 and a few other areas. We do a lot in Whitehaven, Pkway Village, SE Memphis, Hickory Hill, Fox Meadows, Raleigh, Col Acres areas. At times we will do some nicer in Cordova and Bartlett.
Curt Davis - KAIZEN Realty538 Reviews - Flipper / Landlord · Tyler, TX · Member since 2016 · 255 posts · 126 votes8y
You all make this to damn complicated. Its up to the buyer to do their due diligence. If they get stuck on a deal that is their fault not the TK companies. Everyone is out to make profit period. These expensive *** properties I don't see how yall even make money off. Like seriously, seems like yall are over paying on these things just because they rent good. Hell no! I would never. I buy cheap properties that can be flipped quick and you will recooperate your money in less than 4 years. But I'm in Texas who knows what yall got going on in other places.
- 8yAlex CraigBusiness MemberReal Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
Avg gross profit in Memphis this year is $8,600 a deal. All commissions on the sale are placed on the HUD and paid to a broker. 95% of items on the inspection report are repaired. HVAC equipment is registered with the manufacture so that the client gets the full warranty. Appraisals are ordered by the lender through an independent company separate from the lender. Full Scope of work is given. The in house warranty is signed with the contract by both parties. Property management is licensed through a broker. Repairs on client homes get before and after pictures, along with original vendor invoice and material receipt. And then there is the internet for buyers to verify.
Doesn't get any more full disclosure then that.
- Real Estate Consultant · Memphis, TN · Member since 2015 · 70 posts · 82 votes8y
Thank you for providing the details of full disclosure. One of the biggest challenges I have found is to get correct market value on properties. If one takes the last 90 days of sold properties within a small radius, it will include properties that are purchased on an as-is basis with lots of rehabs, hence at a much lower price, and properties that are sold at higher than market value to out of state investors, as well as include retail and investment properties. As I am now local, I have seen the difference street for street, or even "TK house" vs. owner occupied, which changes the value door to door. Anybody doing research on the internet will not know the difference, including lenders. When it comes to an exit strategy, which every investor should have prior to purchasing, they will not get the true picture. I found many TK provider properties that sell way above market value. These buyers are usually out of state investors paying cash and not requiring an appraisal because there is no lender. I think this is the type of investor that TK providers are targeting... What are your (or anybody's) thoughts to this?
- Rental Property Investor · San Francisco, CA · Member since 2017 · 26 posts · 6 votes8y
@Sabrina Brown I am in the SF Bay Area and interested in OOS TK investing, so I'd like to know what you could offer that would be a value-add over what current TK companies are providing. For me, the most important thing is transparency, and I don't mean a lot of fine print; it's understanding what I, as an investor, want to know throughout the lifecycle of my engagement with you, and providing that information in a simple user interface.
- Real Estate Consultant · Memphis, TN · Member since 2015 · 70 posts · 82 votes8y
I currently don't have property contracts for sale. The recent properties I looked at didn't make sense for investors. As far as my value add concerns, at the moment and until I have property contracts for sale, I can assist looking at the information provided by others and give honest feedback to the best of my knowledge and capabilities. I have already helped several investors by pointing out wrong information on datasheets they were given by TK providers. As I have continued doing my research and have gotten more involved in the Memphis market, I am seeing more and more challenges with this market. TK providers buy back properties from these failed out of state ventures at below market value and then sell them to newer out of state investors at above market values, which skews the market values on both ends. Personally, I would not recommend anybody to invest in Memphis unless they know the market real well and DO NOT deal with TK providers. Otherwise, there is a high chance that one would get in at too high of a purchase price that they can hardly ever recoup down the road.
On another note, I have been told by a couple of long term local investors here that "one would need to stick with buy and hold properties for at least 10 years". I find this statement a bit misleading because if a property generates large losses in multiple years, hanging on to a property even longer would just not make sense. You may just want to cut your losses as soon as possible rather than continue pouring more and more cash into a property that you will never recoup. And the longer one holds on to such property, the higher the chance you will incur additional capital expenditures (i.e. new HVAC, new water heater, etc) that, again, won't get you to recoup any of your losses no matter how much you might increase your rents. And I can substantiate that from my own experience.
- Rental Property Investor · San Francisco, CA · Member since 2017 · 26 posts · 6 votes8y
Great info. Thanks @Sabrina Brown
- Real Estate Consultant · Memphis, TN · Member since 2015 · 70 posts · 82 votes7y
Update on one of the properties:
I have rehabbed one of the properties that turnkey providers sold me and that were "managed" by several of the local known larger companies. These companies performed repairs at the property before at a high cost to me but either the work was never performed or the quality of the work was so poor that I had to reinvest in the same work at an even higher cost because these companies would drill holes into brick or walls that were not necessary causing more damage, including drafts and room for bugs to come into the house. I obtained three quotes from licensed electricians that were certified by BBB and within minutes they all came to the conclusion that the prior electrical work was not performed up to codes (they found a minimum of 5 code violations in the area of the electrical meter alone). These prior companies should not even be in business for one, that they are often not licensed, perform sloppy work gouging customers with high prices, and they are taking advantage of out of state investors knowing that the investors wouldn't know because they are far away. I only found out because I now live in Memphis and in one of the investment homes that I had to fully rehab from scratch again - three times previously from poor management and bad tenants with multiple evictions these management companies didn't do anything about to prevent.
This proves once again that most of the turnkey providers are not in the business to help the investor, they are in the business to prey on out of state investors because their business concept would not sustain locally. If it did, they would be advertising locally at investment market values, not 30-50% above, adding to the high crime rate in Memphis and code violations.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Sabrina Brown:
Update on one of the properties:
I have rehabbed one of the properties that turnkey providers sold me and that were "managed" by several of the local known larger companies. These companies performed repairs at the property before at a high cost to me but either the work was never performed or the quality of the work was so poor that I had to reinvest in the same work at an even higher cost because these companies would drill holes into brick or walls that were not necessary causing more damage, including drafts and room for bugs to come into the house. I obtained three quotes from licensed electricians that were certified by BBB and within minutes they all came to the conclusion that the prior electrical work was not performed up to codes (they found a minimum of 5 code violations in the area of the electrical meter alone). These prior companies should not even be in business for one, that they are often not licensed, perform sloppy work gouging customers with high prices, and they are taking advantage of out of state investors knowing that the investors wouldn't know because they are far away. I only found out because I now live in Memphis and in one of the investment homes that I had to fully rehab from scratch again - three times previously from poor management and bad tenants with multiple evictions these management companies didn't do anything about to prevent.
This proves once again that most of the turnkey providers are not in the business to help the investor, they are in the business to prey on out of state investors because their business concept would not sustain locally. If it did, they would be advertising locally at investment market values, not 30-50% above, adding to the high crime rate in Memphis and code violations.
How is it going living in Memphis big change from Socal.. still enjoying it.. ?? there is no question do it yourself landlording is the most profitable and you only have yourself to answer to.. wish you the best outcome.
- Real Estate Consultant · Memphis, TN · Member since 2015 · 70 posts · 82 votes7y
Thank you so much, Jay. I absolutely LOVE living here in Memphis. The last/my first two years were a bit tough to get my feet off the ground, especially since I was still facing the after effects of being scammed by the Memphis locals for so long. In the meanwhile, I have indicted one career criminal who I was going to do business with but found out immediately after arriving that it wasn't going to happen for me to go to join bad guys. When I found out that he had scammed so many other investors and locals with little money, I knew I needed to make the first step. Several others have then piggybacked on my case and with that, we got him put in jail. Unfortunately, out of a 10 year sentence he may only serve 2 years, and then maybe another 3 months in MS where he was on probation. He also has been convicted in AR previously, so not sure what's going to happen there. Going through this process took a big junk out of my time to focus on building my business. Then I had to get the house in order that was supposed to be fully fixed up for sale that I then decided to move into. Flaky contractors slowed down that process, again taking time away from me building my business. I then made the decision to just "breathe" and work for a large corporation in Memphis on a project basis for a year to save up some money and get to know the community. They were going to put me on another project last November but I declined so I could finally focus on the 2nd step of the full rehab of the property. Thought it would only take a month but turned into two months of working 7 days a week, which then literally canceled my Christmas and New Years. During that time though, I started applying for a certification as minority women-owned business and hope it will wrap up soon. My goal is to revitalize neighborhoods to allow locals to buy properties at adequate, not inflated, market values and be independent, with reducing crime in mind. This involves meeting with city and county personnel to find out what's available and how to get a hold of these blight properties. Many in my large local investor network are looking forward to fixing up properties but there seems to be a shortage of availability in their circles. I hope that I will be able to provide them with opportunities to jump on board with me with the promise to help LOCALS ONLY. After having gone through the pains of being and out of state investor and now living here in Memphis, I saw and learned from locals enough to know that in order to reduce crime we need to utilize our local community members. Too many large corporations and foreigners have purchased our properties and leave us with not only huge code violations and neglect, but attract crime and other scam companies taking advantage. Honestly, I am tired of it and I need to inform officials so we can reverse the negative trend. I definitely have my work cut out for me but I realized that I can't move forward in business unless I can incorporate my passion to help locals. Memphis is just small and large enough to be heard and make a difference. Please keep your fingers crossed that this time I am able to go stronger and better because I don't know how many more times I can start over again. :-)
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Sabrina Brown Women owned business is a smart move especially in and around the construction industry.
I provided the seed capital for a WOB that got into traffic control business and that was 20 years ago or so.. and they are still at it.. talk about passive once you own one and get say a utl contract.. not a huge money maker but very steady.
Also being in the underground business bidding on city and county jobs.. my sister in law owns their construction company and that has led to 25 years in one city.. its worth pursuing for sure if your going to stay and work there
- Real Estate Consultant · Memphis, TN · Member since 2015 · 70 posts · 82 votes7y
The certification process feels like a colonoscopy, intense FBI investigation, IRS audit, and mental evaluation combined but I know that if I work with other WOB I don't have to check into their legitimacy. Did you know that Memphis is the #1 city in the US for WOB???? That's probably the only #1 we are going to have but with all of the competition I had no choice to go that route. I can do whatever I want and need to do with my business, whether I utilize the WOB or do private contracts. I like that I am not limited and in fact it opens up more avenues than I otherwise could given that I don't have a spouse partner or anybody else in my business.
- Investor · Parrish, FL · Member since 2014 · 120 posts · 115 votes7y
I just read this crazy long thread from beginning to end and WOW! I had a few turnkey providers on my radar in Memphis for recent out of state purchases but I have since crossed them off my list. I'm sure there are deals in Memphis, even if you buy over 100k, which I would, to avoid many issues. But it seems that Memphis is a highly rental heavy demographic and selling retail at the end isn't ideal, compared to other markets. I'm sure it can happen, but just not ideal.
I'm looking at a few other markets that have both cash flow and appreciation benefits, along with a solid exit strategy for down the road.Great thread, and really impressed with
@Jay Hinrichs comments, viewpoint, and outlook. I listened to your podcast in the past and recently re-listened to it. Great job diving in! I'd love to connect...
Best of luck to all!
Greg
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