Los Angeles, CA · Member since 2016 · 21 posts · 5 votes
Hi All,
I recently went to my first meeting at the Los Angeles Real Estate Investors Club (LAREIC). They had a guest speaker from a turnkey company named Memphis Cashflow. His name is Clifton Stone, he is their Director of Operations and Investment Advisor. I live in Los Angeles so I am looking for investment opportunities out of the area. I searched the forums and found information about another Memphis based turnkey company, Memphis Invest but I didn't see any posts on Memphis Cashflow. Just wanted to see if anyone has used Memphis Cashflow. Thanks.
I used to live in CA and invested, and hired, various TK providers in Memphis and literally ALL of them are not doing anybody a favor. They sell the properties to out of state investors at about 30% above market value. I just recently moved to Memphis and I can now verify the real scoop. If you bought from a TK provider and NEED to sell at current market value you will be out of luck. You will definitely lose a large amount of money you have invested. It's all about the exit strategy and not paying for future values as things will go wrong along the way.
I have provided my story aka "the saga" of my experience here (see below link to the thread) and helped several out of state investors already. Would love to hear back from any of you that I haven't already connected with. My future work will be to help other out of state investors so that the same $%^*+@# doesn't happen to them as I have had my share. I will be partnering up with successful and honest individuals from the Memphis Investors Group (MIG) in a business where we can negotiate on behalf of the investors in order to get fair market deals with true insight. Please check it out and let me know what you think.
Memphis Investment Properties, LLC and Memphis Invest are the two I know of. I've used Memphis Investment Properties, LLC (James Wachob) and have no complaints. I don't recall hearing anything about Memphis Cashflow.
August Faustino
Do a search on BP and also include Marathon management company and see what you can find. Marathon is the PM arm of Memphis Cash Flow.
Good luck on your research.
Henry
Thanks for info Eric Hyde and Henry J. I never thought I'd consider investing so far away from LA or in turnkey but this seems like a viable way to get started.
I have been working with midsouth home buyers and have only great things to say about them. I believe that they are a bit smaller than Memphis Invest and defiantly give a very personal experience. I couldn't give them a higher recommendation. I have heard good things about Memphis Invest though.
Please visit memphis and meet some turnkey providers.
Memphis neighborhoods can be challenging for out of state investors to figure out
Please do your due diligence
Thanks for the warning AJ Singh
The Memphis Cashflow presentation was quite good, I don't want to get ahead of myself, I think you are right, I should definitely go to Memphis and see the area and meet different turnkey providers and property managers before I really consider it.
I agree with @AJ Singh. If you have the time, make a trip out. Yet again, I can speak for midsouth and they would love to take you out for a tour. I had a very trusted friend who did that and based on his recommendation I am very confident in the areas they pick, but I actually have not made it out there myself.
Full disclosure, midsouth does have a referral bonus. Regardless of the bonus, I would recommend working with them, but, shameless plus, if you decide they are a good fit, tell them I sent you!
@August Faustino- Search BP hard and understand the TK operations. It does not matter how you buy but check what are you buying and what you can sell. The TK you mentioned are not on BP or at least I haven't seen them on BP. I have met clifton and he is a nice guy. I believe OP of the post purchased from them and should be able to confirm that.
Hey @August Faustino, I met James from Memphis Investment Properties back when I was interviewing TK providers and I've been investing with him ever since. When you're investing out of state, it's all about having a great team and they have everything from acquisition, rehab, property management, to appraisers under the same roof. I like to visit Memphis when I can and I would highly recommend a visit.
Thanks @Vivek Khoche good advice, I will do more research. I searched BP, didn't find anything about Memphis Cashflow but found other turnkey providers. I was surprised I didn't find Memphis Cashflow, I'd think a turnkey provider would want to have a presence on BP.
for now, "everything under one roof" is one of my my criteria for a TK provider. I believe that it properly aligns all parties' interests and just like shopping at Costco or sams, you can typically get a volume discount because the provider is probably robust enough to have the volume and infrastructure to offer economies of scale. Not all TK providers function that way.
Hello @August Faustino there are several great turnkey providers in Memphis. I suggest you fly over to Memphis to really check out the neighborhoods and decide which type of neighborhood class you are comfortable with investing in (A, B C neighborhoods). Additionally when I was looking for my Property Management team 2 years ago I flew over to Memphis and visited as many TK providers and PM's as I could. You can really learn a lot by just walking through their building ect..
August Faustino my husband and I bought a few homes through Memphis Invest. And we couldn't be more happy with our Return and the whole process through them. We have never encountered any problems. I would recommend looking into MI turnkey company. Good luck in your search!
Hi @Rhea Jackson, that's awesome, I guess its not all too good to be true. I was so skeptical of turnkey but it seems to work for folks. Thanks for the referral. Something came up more recently, that is a little more local and I'm looking into it, but I'm considering Memphis or other cash flow markets for the future. Thanks!
Thanks @Sean Tagge, that makes sense to really shop around and see all the options and make an informed decision. I may be investing in something a little more local now but I'm keeping my eye on other markets for the future, Memphis seems like a good one. Also, the bbq sounds awesome, lol.
@Greg Downey, that totally makes sense. For Memphis Cashflow, he emphasized that they sell you the property and offer property management services which really peaked my interest. If they sell you the property and then manage it, its in their best interest to be on the up and up. Another thing Memphis Cashflow mentioned was that their property management fee went down, percentage wise when you have more than 4 properties with them. It also decreased again when you have more than 10 properties. That sounded good to me, because they are trying to get repeat business and they have to do a good job for you or you wouldn't continue to do business with them.
Memphis Cashflow sounds really good. What are the price points that they are working in? MSHB (whom I am more acquainted with) is in the $55k-$110k range just FYI. That can be worth considering when looking to balance out a portfolio ie lower end, middle and higher end properties.
I do NOT recommend Memphis Cashflow or Marathon Management. We bought three properties through them two or three years ago. All were represented as B class properties. We later found out that while the houses themselves may have been B class, two of them were in more like C areas. Not war zones, but not what we were expecting or what we would have bought had we known more about the neighborhood (one PM we tried to switch the properties to later wouldn't even take them on because they don't like sending their people in that area). Should we have done a better job researching neighborhoods? Yes (tip #1: google maps doesn't always give the full picture when it comes to determining the quality of a neighborhood). However, we still feel like they misrepresented the properties.
We were also not impressed with the quality of the rehab. One property, which was supposed to have had a new HVAC, had to have multiple HVAC repairs within the first couple of years.
Marathon was horrible. Their tenant screening process was either non-existent or just really lax. We had two evictions in a row on one property. I can understand the occasional eviction, but two in a row? And watch out for the wording in their management agreement. It was something to the effect that their fee was "X% of monies collected". When we had to evict a tenant for non-payment of rent, the security deposit was forfeited since they defaulted on the lease. But when Marathon returned the security deposit to us, it was minus X%. I asked why we didn't get the full amount back (after all, we're the ones who still have to pay the mortgage), and the response was "our agreement states we keep X% of ALL monies collected, not just of rents collected." I've never before or since heard of a PM taking a fee out of a forfeited security deposit. Technically, yes, it was there in the agreement, so legally I suppose they were covered, but I still think it's sleazy and out of the norm.
Between repairs, evictions, vacancies, vandalism during vacancy, and turn over costs, we lost money on the houses we bought from them. As a caution on turnkey investing in general, realize that you are basically paying retail cost for the property (sometimes more!). Don't assume that if you want to sell the property that you'll be able to sell it for what you paid, especially in a market like Memphis where a large portion of the buyers are investors. Ask me how I know.
Between repairs, evictions, vacancies, vandalism during vacancy, and turn over costs, we lost money on the houses we bought from them. As a caution on turnkey investing in general, realize that you are basically paying retail cost for the property (sometimes more!). Don't assume that if you want to sell the property that you'll be able to sell it for what you paid, especially in a market like Memphis where a large portion of the buyers are investors. Ask me how I know.
I can't speak about the company in question but in general, I would say that everybody reading this should take note of this experience for several reasons. One is that you as the investor need to put your own boots on the ground before making the final purchase. The cost of the flight and hotel is way less expensive than a poor investment. Secondly, most turnkey providers are selling at or close to market value. They are in the business to make money so why would they sell for too much under when they could retail it out on the MLS! With that in mind, I personally would not buy from a turnkey provider and if I was going to, there is only one or two people on BP that I would trust to get the job done right for me (I won't mention who they are as to not solicit within the forums.).
Sorry for your poor experience Linda, but I hope you learned a valuable lesson.