MidSouth Home Buyers

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Brandon Riahi
Investor · Dallas, TX · Member since 2015 · 27 posts · 28 votes
10y

Sure - I may be out of town so here is something that may help ...

These are general rules we use but not set in stone. Since there is so little time to react after they send out their email; here are the general rules we use to decide quickly.

  1. Must have more than 1250 sq/ft. Very large homes usually mean more people and high wear. Very small homes are less marketable.
  2. Home must have 1 ½ or more bathrooms. 1 bath limits rental pool.
  3. Home must Cash flow at greater than 1%. For example: Home rent $850/ Home cost $77,700 = .011 or 1.1% When we see this % drop below 1% we stop buying in this area. If no areas are at 1% or greater, build up cash reserves as there will be a real estate correction soon to take advantage of. We prefer 1.1 or greater as this creates a larger buffer.
  4. Home should cost less than $100,000. This will stretch your dollars and help diversify among more homes.
  5. Breaking the rules: We will only break a rule if the % return is crazy good. We say one with 1 bathroom but with a return of 1.6 although we did not end up getting it. We don't break the return rule.
  6. Additional rule : Do a Yahoo search "Memphis poverty zip codes" or something similar (select images) to help you select your target zip codes when you see them posted. Do this before hand mainly to determine if there are zips you want to avoid or at least areas within those zips.

Hope this helps

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  • Petru Popovici
    Investor · Littleton , CO · Member since 2014 · 30 posts · 10 votes
    10y

    Just wanted to give everyone an update, I have 4 properties through them and was in the process of buying another one through them. Until about maybe 6 months ago I would say I was pretty happy. Until then I had just one tenant move out after a year and they did about 800 in damage...which actually Midsouth was nice enough to split with me. I had one lady file for Bankruptcy and I was receiving two months of her rent from the bankruptcy court. Since about 6 months ago I have had a few more problems. Another tenant moved out without them knowing. So when they went into the house he had cause about $3500 in damage and was 2 month behind on rent. I did have his $1025 deposit but unfortunately the rest I will have to hope I get through collections. Seems unlikely though since he is a truck driver and hard to track down. Also I stopped receiving my bankruptcy check from the lady that had filed for bankruptcy. I also seem to have a problems constantly with the houses, I think I have had the HVAC repair man come out at least 5 to 6 times and just this morning I had a $524 bill for a pipe breaking.

    Don't get me wrong I think the Property management team is great. They are fast to respond and always explain everything to me. Maybe I have just gotten unlucky, not sure if anyone else has had any issues. I have had the homes just about 2 years and the first year was great. The returns where just as advertised. But within the last year I have had many issues. I would love to buy some more. But at this point I am going to wait and see if things get better before I purchase another one.

    If anyone has any questions please feel free to message me.

    3Reply
  • Charles Wilson
    OP
    Hearne, TX · Member since 2014 · 68 posts · 20 votes
    10y

    I would go with Memphis Invest.  I have worked with these guys and they are great to work with.  Yes the properties are going to cost more but the quality of the property and tenants out weigh the cost factor. It is like pay me now or pay me later it is all in what is left at the end of the year.

    0Reply
  • Dean Hulsing
    New to Real Estate · International · Member since 2015 · 30 posts · 5 votes
    10y

    I have also heard that Memphis Invest is better to go within regards to quality and tenant selection, thanks for the input.  

    0Reply
  • Daniel Cruz
    Knoxville, TN · Member since 2013 · 100 posts · 24 votes
    10y

    I am a Memphis Invest (MI) investor since 2014 and they are pretty headache free and your rep is pretty easy to get a hold up. MI ensures you are up-to-date with what's going on with property and are easy to work with.

    Here's my experience:

    https://www.biggerpockets.com/forums/223/topics/177843-am-i-successful-or-am-i-an-example-of-what-not-to-do

    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    Terry Kerr and his operation is top notch and by the comments on the thread, it seems that the operation is agreed upon to be a good.  Some of the areas can be challenging, but that is the deal with C class homes. I imagine they get a lot of applications as they offer a great looking and well rehabbed property, probably the nicest in the niche market he operates within and tenants want to live in those houses, but the tenant pool is not as good. These  types of homes are attractive as they offer a lower cost of entry and higher potential return on money.  You have to figure out what type of investor you want to be.   

    901-848-9028
    0Reply
  • Account Closed
    New York City, NY · Member since 2015 · 38 posts · 14 votes
    9y

    @Douglas Skipworth, thanks for providing a lot of helpful info on these threads on Memphis, always insightful to read about a specific market from a property manager who's knowledgeable in the area. I noticed that you mentioned that owners who wants to sell a turnkey property within the first couple of years of the purchase is bad for the investor. Was just wondering why that is? Thanks again!

    1Reply
  • Account Closed
    New York City, NY · Member since 2015 · 38 posts · 14 votes
    9y

    @Petru Popovici, thanks so much for sharing your experience! I sent you a personal message. Was wondering if you have any additional updates on your experience. Do you have a few mins for a quick chat?

    0Reply
  • Douglas SkipworthBusiness Member
    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    9y
    Originally posted by @Account Closed:

    @Douglas Skipworth, thanks for providing a lot of helpful info on these threads on Memphis, always insightful to read about a specific market from a property manager who's knowledgeable in the area. I noticed that you mentioned that owners who wants to sell a turnkey property within the first couple of years of the purchase is bad for the investor. Was just wondering why that is? Thanks again!

    As you'll find from reading more posts on turnkey, the properties are typically sold at or above full market value.  That poses a problem when an owner wants to sell within a couple of years of purchase since most turnkey markets are not seeing much appreciation.

    Investor's Guide to Memphis Real Estate
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    1Reply
  • Vivek Khoche
    Investor · San Jose, CA · Member since 2017 · 343 posts · 102 votes
    9y

    @Account Closed- My two cents on selling in cash flow markets- It's like a tattoo, haven't figured out exit. Makes harder if you pay over the price.

    Good Luck 

    Vivek 

    0Reply
  • Ryan GoodPro Member
    Richland, PA · Member since 2015 · 24 posts · 4 votes
    9y

    @Curt Davis Hey Curt what is your concern with 38127 zip? I'm currently on the wait list to purchase. 

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    9y

    It is not only one of the worst areas of Memphis but also the country. You will lose long term in that area. Higher crime. Turnover, vacancy, low income, etc...  if you were to just put down another $4,000 you can go from a home from $60k to $80k and it would make a huge difference.  You are looking to do business with a solid company , just don't make the mistake of purchasing cheap, you will regret it. There are others who would disagree with me and that is fine as they also sell or manage in that area. Long term failure is what you will statistically expect.  I can also speak first hand as years ago we used to sell homes there and the results are the same then as they are today. 

    Curt Davis - KAIZEN Realty538 Reviews
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    3Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    9y

    also do not be fooled into thinking that and management company in our area "specializes" in doing a great job managing in not only 38127 but low income in general. Many of the TK companies who also own their own mgnt company won't take on homes in this area, that should be a good enough reason alone to stay away. 

    Curt Davis - KAIZEN Realty538 Reviews
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    3Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    9y

    @Ryan Good

    What are you doing on a waiting list? Lets connect !!

    Curt Davis - KAIZEN Realty538 Reviews
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    1Reply
  • Willie Brown
    Investor · Imperial Beach, CA · Member since 2017 · 25 posts · 21 votes
    8y

    If anyone wants to sell their Midsouth homes I'd like to buy them off you. Huge fan of Midsouthhomebuyers. 

    2Reply
  • Lynn MontangPro Member
    Real Estate Agent · Portland, OR · Member since 2014 · 42 posts · 23 votes
    6y

    Wondering if anyone has any updates on their experience with MidSouth Home Buyers to share.  We are about to purchase a property through them.  Looks like we are overpaying for the property but the numbers still work (as long as there's no damage/vacancy).  This will be my first investment out of state.  I typically enjoy managing my own properties and have amazing tenants, so hearing about damage and vacancy really makes me nervous. 

    2Reply
  • Erica Allen
    Grand Rapids, MI · Member since 2019 · 19 posts · 4 votes
    6y

    Lynn Montang did you end up purchasing with Midsouth? If so, how has it gone?

    Thanks.

    Erica

    0Reply
  • Al Lee
    Member since 2019 · 22 posts · 10 votes
    6y

    @Curt Davis - Mentioned to avoid zip code 38127 previously.  Looking at the properties MidSouth has on their web site, I notice a lot are in zip code 38127.  Is that a zip code that still should be avoided now in 2020?

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    6y

    @Al Lee

    Zip codes have not changed that much here in my opinion. 38127 in general is a tough area, even more tough for the out of state investor and that is bc the out of state guy is buying the home at market value. If it was owned by a local investor who purchased and fixed it up without markup from a sales company, they would be into the home for much less making the risk to reward much better.

    If someone can afford to do 20% down on a $70k ish 38127 home, fork over another $4k to get into the $90k range, the quality difference is much better.

    Just my .02

    Good luck 

    Curt Davis - KAIZEN Realty538 Reviews
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    1Reply
  • Al Lee
    Member since 2019 · 22 posts · 10 votes
    6y

    @Curt David 

    Great advice, will definitely consider avoiding the 38127 zip code if possible, if not will go in for the higher amount.  

    Thanks

    Al

    0Reply
  • Lynn MontangPro Member
    Real Estate Agent · Portland, OR · Member since 2014 · 42 posts · 23 votes
    5y

    @Erica Allen We did end up purchasing from Mid South and are in contract to purchase a second property.  I still feel like it's too soon to be completely comfortable, as we definitely overpaid for the property. Year one has been flawless. But if you need a short term out, this isn't the investment for you. For long term, Midsouth knows what investors are looking for in return, and as long as everything moves along with no hiccups its a win for Midsouth the flipper, midsouth the prop mangangment, win for the investor, and win for the tenant (as the tenant gets basically a brand new house and affordable rent).  We just toured Memphis last week and the houses that they flip are all nice looking.  Super small, but nice.  The neighborhoods are... how should I say... transitional.  We just hope more flips will happen to some of the properties surrounding our purchases in the coming year(s). Hope this was helpful!

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    5y

    You say you overpaid. Did the home appraise lower then the sale price and you brought the difference?  Almost every home sold by a turnkey is for long term buy abs hold investors so yes, should you have to sell very shortly after purchase you hope to break even at best. 

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    0Reply
  • Al Lee
    Member since 2019 · 22 posts · 10 votes
    5y

    I'm still on the waitlist for Mid-South, been well over a year.  Due to Covid their backlog has been extended, hopefully they will be contacting me in a few months.  Glad your experience so far is positive.  

    1Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    5y

    Why are you waiting? Find another person or conpany with homes available now. 

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    1Reply
  • Damon Wong
    Investor · Hermosa Beach, CA · Member since 2016 · 44 posts · 13 votes
    5y

    Just bought a SFH rental from Mid-South Honebuyers and less than 12 months the tenant stopped paying, refused to leave, and now we're 5 months waiting for eviction process. I asked about their 1-year fill guarantee and 90-day vacancy guarantee, but they told me they don't apply. They offered to buy the house back from me for price I paid plus some lost rent (even though market value is still a bit higher).

    Very disappointed not in a bad tenant but the passiveness of the property manager. Month after month they continued to tell me the tenant will pay and strung out the eviction notice longer than should’ve. The communication I’ve had with them make me doubt their commitment to me as a buyer/client/customer/landlord.

    Maybe I’m one bad example of hundreds others, but needed to share with the community

    3Reply
  • Rene Pepin
    Investor · Woodstock, GA · Member since 2017 · 9 posts · 1 vote
    4y

    @Damon Wong

    Hi Damon, any update on your SFH rental with Mid-South?

    0Reply
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