Kaizen or Crestcore Memphis realtors

19 Replies

Any recommendations on good Memphis Realtors working in a brokerage that does very good property management?

I should have clarified that the realtor works in a brokerage that offers good property management service.

Every investors experience will be different so there is no mgnt company that can technically claim one is better then the other. If you end up going turnkey you should stick with their mgnt company.  If you buy outside a turnkey then you should interview several companies. To me one thing I would look for are only companies that focus on longer tenant leases from the beginning.  The 12 monthvtemant lease is a failed model for our if state investors. Good luck 

Curt Davis, Real Estate Agent in TN (#00321765)
605-310-7929

@Curt Davis   interesting comment.. does your section 8 allow longer than one year leases?

or are you saying Section 8 is a failed model and folks should only go market renters with 2 to 3 year leases.

when I was working through my mid west OREO in 09  there in TN MS AL GA I would often ask the PM why are you only doing one year leases.  Answer because of hud or section 8...

curious your response if you care to.

We have absolutely no problem with 1 year leases through 2 PM companies in Memphis. In A grade areas we prefer them as we get a chance to look at rents annually and those sorts of tenants don't move around so much.  

(901) 264-8674

@Abdul Azeez , I am assuming you want to buy from a broker and let them manage it. This reduces the houses you can buy significantly. All you need is to find a good PM. I will Pm you some good ones. There are a bunch of good companies on here but they don't have to sell you the home as well.

(901) 264-8674

@Jay 

@Jay Hinrichs undefined

the management company we work with does not get any section 8 mostly Bc they can get the homes rented out for market rates and also get a good security deposit.  

Curt Davis, Real Estate Agent in TN (#00321765)
605-310-7929

Folks - To clarify my original ask, I am a serious out of state investor interested in building wealth one house at a time. I am talking to a few TK providers in the Memphis area right now but the market is tight for inventory. So, there are not lot of options available. I don't want to limit my deal pipeline. Another investor in the forums PMed me about him working with a realtor who has helped him. I am not looking at realtor vs. turnkey as either / or scenarios but just multiple avenues to source deals. Eventually the realtor that my BP Colleague referred me to did not work out because he wanted an exclusive agreement which I was not comfortable starting out with but that's a different story and I digress. So, at this time I am looking for both avenues - turnkey and realtor driven to help build my deal pipeline so that I can buy the right properties. Please let me know if you have any good contacts you can refer.

@Curt Davis Absolutely agree. If I buy turnkey it makes sense using their management company and I do prefer 2 year leases.

To add some perspective on why I am searching for two different avenues is this. I am talking to three TK providers right now and I don't seem to fit the "ideal" client definition. This is because I am probably a little bit more active than a fully passive armchair investor. As an example, whenever I get a deal, I personally run through my own APOD that I constructed based on Frank Gallinelli's book under different stress scenarios i.e. lowest rent to highest rent. I use a 12.5% vacancy as opposed to the TK provider's 4% vacancy because the way I look at it is on a 2 year lease, if you assume 2 months to source a tenant and 1 month of rental commission, it works out to 1.5 months per 12 year period or 12.5%. I am also uncomfortable buying at lesser than appraisal and one of the TK providers has been upfront about the fact that Appraisal could come 20% lower. When I factor in all of the above and under different stress scenarios and a 10 year APOD with an IRR view for holding period, I have got to turn around and ask what if I sold the property at the end of the holding period, can I walk away without bringing additional money to the table? It doesn't seem to work out that way for the pricing on the several turnkey deals I have seen out there. I am perfectly fine with a TK provider buying a property, putting work into it and selling to me at Market value because this is their business model and is their bread and butter. Everybody needs to make money. But, I am finding that the price offered is much much higher than Market value which a less educated buyer would readily pay but which I am finding a bit difficult to swallow even though I can afford it. This is where my formula above breaks down when I factor in holding period, low vs. high rent, vacancy and a 10 year APOD. This is the reason I want to source deals through multiple channels and see what works best.

I do wish I would get some good deals on TK and there are some very good ones out there. I sincerely wish we could come to a good agreement on pricing.

Originally posted by @Abdul Azeez :

Folks - To clarify my original ask, I am a serious out of state investor interested in building wealth one house at a time. I am talking to a few TK providers in the Memphis area right now but the market is tight for inventory. So, there are not lot of options available. I don't want to limit my deal pipeline. Another investor in the forums PMed me about him working with a realtor who has helped him. I am not looking at realtor vs. turnkey as either / or scenarios but just multiple avenues to source deals. Eventually the realtor that my BP Colleague referred me to did not work out because he wanted an exclusive agreement which I was not comfortable starting out with but that's a different story and I digress. So, at this time I am looking for both avenues - turnkey and realtor driven to help build my deal pipeline so that I can buy the right properties. Please let me know if you have any good contacts you can refer.

@Curt Davis Absolutely agree. If I buy turnkey it makes sense using their management company and I do prefer 2 year leases.

To add some perspective on why I am searching for two different avenues is this. I am talking to three TK providers right now and I don't seem to fit the "ideal" client definition. This is because I am probably a little bit more active than a fully passive armchair investor. As an example, whenever I get a deal, I personally run through my own APOD that I constructed based on Frank Gallinelli's book under different stress scenarios i.e. lowest rent to highest rent. I use a 12.5% vacancy as opposed to the TK provider's 4% vacancy because the way I look at it is on a 2 year lease, if you assume 2 months to source a tenant and 1 month of rental commission, it works out to 1.5 months per 12 year period or 12.5%. I am also uncomfortable buying at lesser than appraisal and one of the TK providers has been upfront about the fact that Appraisal could come 20% lower. When I factor in all of the above and under different stress scenarios and a 10 year APOD with an IRR view for holding period, I have got to turn around and ask what if I sold the property at the end of the holding period, can I walk away without bringing additional money to the table? It doesn't seem to work out that way for the pricing on the several turnkey deals I have seen out there. I am perfectly fine with a TK provider buying a property, putting work into it and selling to me at Market value because this is their business model and is their bread and butter. Everybody needs to make money. But, I am finding that the price offered is much much higher than Market value which a less educated buyer would readily pay but which I am finding a bit difficult to swallow even though I can afford it. This is where my formula above breaks down when I factor in holding period, low vs. high rent, vacancy and a 10 year APOD. This is the reason I want to source deals through multiple channels and see what works best.

I do wish I would get some good deals on TK and there are some very good ones out there. I sincerely wish we could come to a good agreement on pricing.

I would suggest if you are talking about a pipeline that infers you can buy a lot of houses.. IE 1 a month or 20 to 50 homes over the course of a few years.. And if that is the case then I would pick a market and give an agent who is a GREAT OREO agent an exclusive.. this will get you were you need to be vis a vi pricing.. In other words your going to have to roll up your sleeves if you want to hit the numbers your talking about.

I have clients of mine that I fund their purchase that have hybrid programs were they charge a flat fee... that includes sourcing ( at cost) rehab ( at Cost) and then there management fee.. this gives the out of state investor who has cash the about the best bang for the buck.. he then refers you to management and your on your own after that.. One of his LA clients has bought over 75 homes from him the last 5 years doing this.. that's about the best you will ever do being out of area. 

So if Memphis is where you think you want to be.. you may try this approach. 

@Jay Hinrichs Thanks for your note. What you are referring to are advanced strategies. It would be extremely presumptuous of me to make any claims about hitting double digit home acquisitions in a defined time period. To put it simply, I aspire to build wealth one house at a time so that after the next 10 years, I have more financial flexibility and freedom. I don't know what that magic number is i.e. 10 houses or 20 houses or 30 houses or maybe 0 if the first experience is a lemon. However, to get to that I need to go 1 house at a time. And for this, I am interested in understanding if in addition to TK providers that I am already working with, can folks on this forum recommend a few realtors who have a good relationship with property management to enable me to look at a few deals. The only reason I am even considering this second option is because I am all in for purchasing from TK provider if the property is offered at a Fair price but of late finding the prices to be hiked up too much and I am wondering if I could have a few options to make the best purchase decision.

Coming back to my main question, can folks send me a PM of good realtors in the area who have a good relationship with reputed property management companies?

I would not buy at or above the appraised value. I usually buy bank owned properties and they are typically priced at about half what the appraisal will be with a light rehab but that number will vary by market. If you find a good property manager then they should also have access to reasonably priced contractors. Sometimes they have their own maitenance on staff which can cut costs as well.

well if your not a volume buyer pretty hard to get folks to do all you will want them to do for one sale of a lower end rental... that's why turn key is the option.. homes are already done sitting there and if you don't buy it another would. as a broker myself I would not spend the time on someone like you frankly.. too much work too little reward..

you will want to find some beginner agent that is trying to get started.. the pro's in the business are selling to guys like Curt above or me or others who buy in true volume..

but I am sure you will find something that will work for you as a happy medium

 Ali Boone actually wrote a good blog article on how to be a good buyer.. if your 100 questions for a seller or turnkey they simply don't have the time to manage all your expectations .. if your a big buyer that's one thing.. one home at a time at those price points they go broke doing everything you expect them to do...

I fund 10 plus different turn key companies in the US in different markets.. and I see the huds 30 to 40 0f them a month and not all turn key are selling for way over appraisal MOST are selling at appraised values. because I am being paid off by LIma one or Colony or some other small mid west banks that I know won't make loans at over appraisal and on the HUD I see the buyers putting 20 to 30% down.. so the math works... do a little more turn key shopping Is my suggestion I guess.

Originally posted by @Abdul Azeez :

@Jay Hinrichs Thanks for your note. What you are referring to are advanced strategies. It would be extremely presumptuous of me to make any claims about hitting double digit home acquisitions in a defined time period. To put it simply, I aspire to build wealth one house at a time so that after the next 10 years, I have more financial flexibility and freedom. I don't know what that magic number is i.e. 10 houses or 20 houses or 30 houses or maybe 0 if the first experience is a lemon. However, to get to that I need to go 1 house at a time. And for this, I am interested in understanding if in addition to TK providers that I am already working with, can folks on this forum recommend a few realtors who have a good relationship with property management to enable me to look at a few deals. The only reason I am even considering this second option is because I am all in for purchasing from TK provider if the property is offered at a Fair price but of late finding the prices to be hiked up too much and I am wondering if I could have a few options to make the best purchase decision.

Coming back to my main question, can folks send me a PM of good realtors in the area who have a good relationship with reputed property management companies?

Abdul,

I would suggest starting with Crye-Leike and follow Jay's advice. Ask for their REO listing specialist and make sure you mention that you are looking for a listing Realtor who represents distressed properties AND that you want them to represent you as the buyer. That will move you to the front of the list because you are allowing them to make both sides on a deal. You can then give them your criteria about location, size and rent range and see what they bring you.

As for management, they are the largest retail real estate company by far in the southern part of the US and have a robust management company.  I can't say how good they are at management, but they will be perfectly capable and experienced.  They are a large listing company so they will have properties and depending on the area you want to buy they would be a good company to start talking to.

Other companies like Enterprise, Renshaw, Revid, MPM and even Crestcore all manage property for investors, they are all quality companies and all are licensed and able to show you listings as well.  I would add them to your list to interview.  You will get a feel for what you like and what you don't like by speaking with them.  

They are all perfectly capable, but again, I can't speak to their services and how good they are.  I think conversations with each of them would be a great start.  I have published on here a few times a list of good questions to ask and I'd be happy to shoot those to you if you would like.  

Premier Property Management of Memphis is our company, but unfortunately, in this case, we only manage properties that we purchase and renovate.

I think you are absolutely taking the right approach.  Review all of your options.  Educate yourself so you can make the best decision.  Buying Turnkey will come with a higher up-front cost.  How much higher will often be dictated by the level of service you are going to receive from that company on an on-going basis.  However, just because a company or property is higher priced does not mean they are better.  Make sure you make good notes and when you like something, make sure you ask other companies about their service or how they handle similar situations that you like and compare those answers.  There is a difference and before you pay more for a turnkey property, make sure you are getting the level of service you expect as an absentee owner and passive investor.

When you buy the properties yourself and hire out each piece of the process, you will pay less on the front-end, but most seasoned investors and even those offering their services piecemeal will tell you that over a relatively short period of time, the savings are lost.  Lost in time, lost in the inability to negotiate low enough prices and inability to hold each individual company providing service accountable.  

To be clear, it can be done.  And it can be done where you can find savings over buying TK.  You may be able to squeeze out a higher return on the same TK house by doing it yourself, but that will take some time and a lot of effort on your part.  And you have described yourself as an investor that wants to be more hands-on and more involved so the DIY process may be the best fit for you.  Just make sure you really refine your process for building your team if you go that route. 

Best of luck and reach out if I can help you.

@Abdul Azeez

Let me make sure you CLEARLY understand...... Just because a tenant signs a month to month, 1 year lease, 2 year lease, 3,4,5,6,7 year lease that does NOT mean they will stay and rent the property through out the lease. They can and will break those lease regardless of the amount of years you add to it.

The 2 year lease idea is a Great marketing tool for turnkey/PM companies.... Makes the investors to feel more at ease I got a 2 year lease signed YEAAAHHH!!! My property won't go vacant for 2 yrs and that will make my vacancy rate go down!!!! As Lee Corso would say "Not so FAST my friend" you can still experience vacancy and tenants can and will move regardless of what kind of lease they signed...1,2,3,4,5 year lease...

And it will cost you more money to try to find where they are sue them for breaking the lease trying to garnish them if you can find where there jobs or ne jobs are located and don't let them file Bank Ruptcy on you that's a nightmare, than just re-renting the location to another tenant and moving on.

Sorry to be the bearer of bad news... Regardless if you were in Memphis, B-Ham, Atlanta, Chicago, or where ever...

@Derrick Craig your correct any one can break a lease..

My partner in my airplane built a facility for UPS  ( a few million) 2 years later they broke the lease he had a 10 year lease..  I think  the big corps think they can walk over the smaller developer.. well Carl litigated it and won  but it cost him about 75k in fees up front to get an agreeable lease break fee..

really depends on your tenant... if your renting to folks that barely meet the 3/1 income thresholds then of course there is no reason to sue them they are pay check to pay check and they know it and they just up and leave.. with so many rental homes in these areas some with lease to them again this does not scare them... ERGO why so many put up with HUD.. at least with that you have a 90% chance of a full years of payments you may never collect your co pay but at least you can count on some kind of cash flow.

@Jay Hinrichs I think you are being presumptuous when you say "as a broker myself I would not spend the time on someone like you frankly.. too much work too little reward.." (or) "if your 100 questions for a seller or turnkey they simply don't have the time to manage all your expectations". You are making assumptions. All that I said was I want to buy at a fair market value. The deals I am seeing are around a 50 - 60% markup and I am just trying to understand if that is the right way to go when you go TK. Or are you recommending that that is how it is in TK land and I just need to suck it up?

@Chris Clothier I think I may have given a mistaken perspective that I am looking to do all myself. As I stated above, the deals I am seeing have a fairly large markup in TKs and I am just trying to understand if that is the way it is. I am certainly not looking to be completely Active investor especially in an out of state market. 

@Derrick Craig I understand what you are saying about multi year rentals but it just gives a bit of comfort seeing a longer term on a lease, that's all.

Abdul,

I may be presumptuous I can just tell you as a broker and by your responses and your way of delineating what your looking for you are a high touch client.

as opposed to say and OREO Broker can work with Chris Clothier and its one phone call and deal is done.. no other effort.. you would need full hand holding.  that's the only point I am making if you want the deals at the price the guys in the business pay for them then you need to act like them be cashed up like them and have exceptional knowledge of the area to know a deal by just looking at an address.

Again I doubt there is anyone on BP who funds more TK for TK providers than I do.. So I see the HUDS coming and going.. there is NO 50 to 60% mark up...

Average deal is  bought at wholes sale

40k

20k  rehab

  5k for me cost of capital

resell at

80 to 90 k   rents for 800 to 900  pay marketing agent ( maybe 5 to 6k) closing costs 1,500

NET 10 to 20k profit per deal.. sometimes as low as 5k.

you can save 5k they pay me  you cant buy it or rehab it any cheaper probably going to pay more. you save 5k marketing fee they pay.. so maybe you get in this deal for 70 to 75k all in .. so hardly a 50 to 60% mark up.

All I can think is your looking at Zillow and comparing C class bombed out houses with resales that may or may not be true comps.

You really should just go there and check it out it will drive you crazy trying to do this on the internet.

@Abdul Azeez

Based on what you're describing, it sounds like you're having a similar experience to what I initially had in Memphis.

In January 2016 I started actively searching for investment opportunities in the area as an out-of-state buyer (I live in California). I wanted a full-service company that could handle everything from acquisition to management.

I called a number of the Turnkey Companies and all of their offerings were at or above retail pricing and none of them provided sufficient cashflow after you adjusted their proformas to include appropriate cost estimates.

So I started to look for alternative options - specifically, I wanted a company that understood that as an investor I would 1) place a lot of offers on prospective properties while having a much smaller close rate than that of a traditional home buyer, and 2) after a property was under contract could provide thorough quotes and picture profiles for the prospective property at no cost to me during the inspection period (I scored it higher if the rehab team with internally or closely held since in those cases the quotes are usually more accurate). So I thoroughly interviewed the top 12 different property management companies in Memphis and I only felt comfortable that a handful of those were able to meet that criteria. Of those I decided to move forward with CrestCore because 1) the company owners have a good sized portfolio themselves and know the local market very well based on both professional and personal experience, 2) they have a good reputation on BiggerPockets (@Douglas Skipworth  frequently posts helpful articles and answers questions in the community), and 3) they seemed upfront and honest when I spoke with them.

Since I started working with them they have helped me add three properties to my portfolio. Their rehab costs have always been equal to or less than the quotes they initially provided and to date they have managed them with reasonable care. If I have any questions or concerns they respond quickly and resolve the issue fairly. While I can’t say that they are the least expensive property management company in town, I can say that I trust that they are working with my best interest in mind.

They have a team approach when it comes to property management so I would suggest first reaching out to Douglas as a starting point to get an overall feel for the company and then to Dan Butler to give you more specifics regarding the property management arm.

When I started with them, @Jimmy Kennedy (PM me for his contact information since it's restricted for posting here) was one of their in-house investor agents. As to your exclusivity agreement concern, he initially asked, but when I explained that I wasn't ready to sign one he said he understood and that we didn't need to set one up. I've worked with him to close all three of my deals there. He is exceptionally knowledgeable about all of Shelby County (both SFR and MFR), responds quickly (usually immediately or within a few minutes), and he works late (which makes things really easy for me in the PST time zone). He's got my vote of confidence. So when he transitioned to JASCO Realtors as an Associate Broker I wanted to keep him as my agent. He still works closely with CrestCore and it doesn't feel like anything has really changed (other than the letterhead on the offers).

Feel free to PM me if you have specific questions and I'd be happy to share more of the experience I've had working with CrestCore and Jimmy.

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