Getting burnt out // Thinking Turn Key with MidSouth....

OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

9y

Lane Kawaoka mahalo for the response. I am actually moving back home to Oahu in the next 12-24 months. Do you own properties on Oahu? We are looking to take over my mother-in-laws property management business and real estate clientele eventually while building a portfolio of investments.

Paul Wurster

Investor · San Antonio, TX · Member since 2014 · 129 posts · 79 votes

9y

MidSouth was a great starter drug for me. I have two houses with them and then I did a bunch on my own. Now I am looking at going back with them.

Domonick S.

Rental Property Investor · Los Angeles, CA · Member since 2016 · 30 posts · 3 votes

8y

Aloha @Derek Okahashi, I agree with everything already stated above. I own one SFH with Midsouth and have been very pleased with what I purchased. They are very upfront about what to expect so there are really no surprises. My favorite aspect is how responsive their entire team is. The only con is the waitlist. I have been waiting to purchase a 2nd since last June. I am stationed in Hawaii and will need a property manager for my home once I leave summer 2019. Let's connect sometime. Would definitely like to share our stories and ideas. Coffee on me brother, Mahalo!

Rob Hakes

Murray, UT · Member since 2016 · 162 posts · 166 votes

8y

@Derek Okahashi

Derek,

Depending on how many houses you want, you will be wise to look at other turnkey options because of the waiting list. I got on their list last June, with no target date yet in sight. Their 5 month waiting list is turning into a 9-12 month waiting list. And because they are having to push the purchase prices up in order to keep up with demand, there is a good chance you will have a low appraisal and have to cover the difference out of pocket.

I found a lot of success with Spartan Invest, and have two houses with them. I posted about my experience under 'Another Spartan Invest Turnkey Case Study' I share all the numbers and details.

Good luck

OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

@Rob Hakes thank you for the advice. I will look them up. Another company I have heard decent things about is Rent to Retirement but I ave not done my own due diligence.

One of the things about Memphis invest and Memphis in general, I think it is hard for people who have never spent time there, to realize how rough of an area most of Memphis is. I have a few people in my life who are from Memphis and after consulting them, they begged me not to invest in Memphis. Then I looked at some of the crime rates and asked more questions and realized they may be on to something. My step-uncle's mom died in Memphis after being attacked with a baseball bat in front of her home. She was in her 90's. The home "appraised for $50k" but they could only sell it for about $15k.

Ali Boone

Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes

8y

Hey Derek! Turnkey sounds like it might be great for your situation. Any reason in particular for focusing on Memphis as the market to buy in? Is it just because you've heard good things about MidSouth?

OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

Originally posted by @Ali Boone:

Hey Derek! Turnkey sounds like it might be great for your situation. Any reason in particular for focusing on Memphis as the market to buy in? Is it just because you've heard good things about MidSouth?

Thanks for your comment. I am not really focused on Memphis but back when I wrote this post I was interested in Mid South and they do a lot in Memphis. I also met someone with properties in Memphis so it was a topic of discussion. I have actually been looking at South of Nashville areas, Augusta, GA, and Phoenix.

What is Hipster Investments all about?

Carrie Carlton

Investor · Nashville, TN · Member since 2016 · 88 posts · 66 votes

8y

I lived in Memphis in 2007 to 2008 in the Midtown area. I loved Memphis and really feel it gets a bad rap. I am sure there are bad parts, but I wouldn't completely dismiss it. I am making a trip down there in May to scope it out for myself.

Tom Ott

Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes

8y

Originally posted by @Derek Okahashi:

@Rob Hakes thank you for the advice. I will look them up. Another company I have heard decent things about is Rent to Retirement but I ave not done my own due diligence.

One of the things about Memphis invest and Memphis in general, I think it is hard for people who have never spent time there, to realize how rough of an area most of Memphis is. I have a few people in my life who are from Memphis and after consulting them, they begged me not to invest in Memphis. Then I looked at some of the crime rates and asked more questions and realized they may be on to something. My step-uncle's mom died in Memphis after being attacked with a baseball bat in front of her home. She was in her 90's. The home "appraised for $50k" but they could only sell it for about $15k.

How is investing in Memphis going these days? Sometimes I wonder if it has gotten played out due to the high number of investors? I could be way off, just wondering.

Elizabeth Wilson

Real Estate Investor · Memphis, TN · Member since 2016 · 940 posts · 695 votes

8y

@Derek Okahashi I'm biased because I live, work and invest in Memphis, so I think the city has lots to offer. :) and yes, @Carrie Carlton Midtown remains one of the most vibrant and desirable living/investment areas in Memphis. It has grown tremendously since you left. Try to come back on a Weds and join us for Coffee with Investors at 7:30am at City and State on Broad

However, Memphis does have some incredibly rough areas and higher crime and taxes than I'd like. However, I've been blessed to have gotten to live in a variety of places and countries and I'd be hard pressed to think of any city of size that didn't have rough areas or crime pockets.

The key with investing anywhere is to get to know the place and don't just rely on Google maps or comps. While TK is more passive than other forms of REI, it still requires making knowledgeable decisions about your investment.

@Tom Ott - Investing in Memphis is still going great! Tighter market like the rest of the country but with there are still opportunities if folks are willing to look/wait on them. Hope the same is true for ya'll in Cleveland.

OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

@Carrie Carlton @Elizabeth Wilson

My coworker who was born and raise in Memphis did show me that MidTown was one of the few areas with moderate crime. She pulled up a map and everywhere where the turnkey investments were was in the red on a crime map. I don't think these TK companies typically have Mid Town properties. And the example about my uncle and his mom being assaulted to death in Memphis... they just wanted to be done with the home and sell it and even though it appraised for 40 or 50k, they had to let it go under 15k.

I live in Alameda, CA. Cross a little estuary and in 1 mile you can go from nice town to rough area. It happens in a street or two in some places. I get it. I just think people should be more cautious about Memphis turn key than they are. That goes for homes from any provider in that city and probably goes for turn key in any area.

OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

@Tom Ott yeah wouldn't know. I know a guy who found an awesome deal a couple of years ago in a hot Oakland, CA market and now cashflows 4k a month off of one multi family he got well under market. As you know better than I do, it can happen. I just arrived at a place where TK is a hard sell in the neighborhoods i've seen them farmed.

Jessica S.

Little Elm, TX · Member since 2015 · 15 posts · 9 votes

8y

We also own two houses with Midsouth and have been satisfied. We would own more but their wait list is very long so you can't buy very many with them. We had to branch out to other markets to deploy capital faster. The only thing I would caution is that, even though it is "turnkey," you must still actively hold any turnkey provider accountable. I find that managing our turnkey properties is still work. You are "managing the manager," essentially. But overall we are still glad we went this route, and we will continue to buy from them. They stand behind their word, and that means a lot in this business.

Jonathan Castillo

Austin, TX · Member since 2017 · 17 posts · 4 votes

8y

Hey @Ali Boone and @Lane Kawaoka given that you both have done TK as your investment strategy. I was curious to know what level of equity you purchase at. I am currently exploring this as I am a working professional and want a foundation of something to rely on as I get into doing something on my own later on with out or state investing. However, my concern is overpaying in equity value the norm? or paying at / below equity the norm?. I've seen some that the comps come about 10k less but they aren't properties with tenants in them and my thought is if its appraised at 10k less then I have to make that difference up in my cash. Thanks

OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

Originally posted by @Jonathan Castillo:

Hey @Ali Boone and @Lane Kawaoka given that you both have done TK as your investment strategy. I was curious to know what level of equity you purchase at. I am currently exploring this as I am a working professional and want a foundation of something to rely on as I get into doing something on my own later on with out or state investing. However, my concern is overpaying in equity value the norm? or paying at / below equity the norm?. I've seen some that the comps come about 10k less but they aren't properties with tenants in them and my thought is if its appraised at 10k less then I have to make that difference up in my cash. Thanks

Jonathan this is a great question. As I stated in an earlier comment or two, a step uncle of mine had to sell his later mother's home and although it was appraised at 40 or 50k (i don't exactly remember), it sold below 15k. So I think numbers in Memphis (or other crime ridden areas) can be hard to read. I also met a guy who purchased tow properties from Mid South and he was happy that his homes appraised 10k more than they purchased them. Given my uncle's situation, idk if that 10k in equity really means anything were he to try and sell.

Grant Rothenburger

Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes

8y

@Derek Okahashi Could you/ would you want to just provide capital and earn a return on your money from your cousin?

OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

Originally posted by @Grant Rothenburger:

@Derek Okahashi Could you/ would you want to just provide capital and earn a return on your money from your cousin?

He is consolidating right now and doesn't really need funding for new projects.

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

8y

Originally posted by @Derek Okahashi:

Originally posted by @Grant Rothenburger:

@Derek Okahashi Could you/ would you want to just provide capital and earn a return on your money from your cousin?

He is consolidating right now and doesn't really need funding for new projects.

you may want to consider quality performing first trust deeds.. let those that run rentals for a living deal with the day to day you just become the bank.. COC notes will generally out perform owning the asset .. and its true mailbox money .. no tenants toilets or trash or crime LOL

I lived in palo alto for years so I know what you mean about 2 blocks you just cross 101 to EPA and back in the day it was VERY dangerous..

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OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

Originally posted by @Jay Hinrichs:

Originally posted by @Derek Okahashi:

Originally posted by @Grant Rothenburger:

@Derek Okahashi Could you/ would you want to just provide capital and earn a return on your money from your cousin?

He is consolidating right now and doesn't really need funding for new projects.

you may want to consider quality performing first trust deeds.. let those that run rentals for a living deal with the day to day you just become the bank.. COC notes will generally out perform owning the asset .. and its true mailbox money .. no tenants toilets or trash or crime LOL

I lived in palo alto for years so I know what you mean about 2 blocks you just cross 101 to EPA and back in the day it was VERY dangerous..

Jay,

First, I enjoyed your episode. Also, I was thinking about that exact transition from Palo Alto to EPA on University!! I work at Stanford so I go by there all the time. It has gotten a little better but I don't think it's great. For trust deeds to I need to be an accredited investor? I am not there yet...

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

8y

Originally posted by @Derek Okahashi:

Originally posted by @Jay Hinrichs:

Originally posted by @Derek Okahashi:

Originally posted by @Grant Rothenburger:

@Derek Okahashi Could you/ would you want to just provide capital and earn a return on your money from your cousin?

He is consolidating right now and doesn't really need funding for new projects.

you may want to consider quality performing first trust deeds.. let those that run rentals for a living deal with the day to day you just become the bank.. COC notes will generally out perform owning the asset .. and its true mailbox money .. no tenants toilets or trash or crime LOL

I lived in palo alto for years so I know what you mean about 2 blocks you just cross 101 to EPA and back in the day it was VERY dangerous..

Jay,

First, I enjoyed your episode. Also, I was thinking about that exact transition from Palo Alto to EPA on University!! I work at Stanford so I go by there all the time. It has gotten a little better but I don't think it's great. For trust deeds to I need to be an accredited investor? I am not there yet...

nope you do NOT need to be accredited... its a nice alternative let those that specialize in the asset live there work there do all the heavy lifting and you play the banker.. once you get hooked on notes watch out.

I don't think most west coast folks understand mid west towns and how the demographics change so radically from street to street and or how if a street turns bad the values as you state can go down to next to zero to actually exit.

For all those that will listen to what I have to say I am a big proponent in those areas if your going to invest there and that is fine just make sure as an out of state investor that you buy as close to median price for the msa as possible.

this in itself will put you in areas were you have homeowners as well as renters and you have a legit chance to exit if you needed to.. if you invest were only investors invest then your exit is quite limited its only going to sell to another cash flow investor.. this is why for those areas I like being the bank .. where your borrower owns 50 to 200 of these homes and does it for a living.

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OP

Realtor · Mililani, HI · Member since 2017 · 107 posts · 47 votes

8y

@Jay Hinrichs I am currently browsing your site http://turnkey-reviews.com Do you recommend any resources on getting started with notes?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

8y

For accredited investors there are quite a few on BP that have NPN funds.. this is a different animal and you want the experts leading the charge here.

as for individual notes that's more of a niche and I will send U a pm on that one.

also the crowd funders that allow non acreds are an option as well. Although for myself personal I am big on one note one investor..

simply because of the better control aspect..

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Eric James

Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes

8y

Originally posted by @Jay Hinrichs:

Originally posted by @Derek Okahashi:

Originally posted by @Grant Rothenburger:

@Derek Okahashi Could you/ would you want to just provide capital and earn a return on your money from your cousin?

He is consolidating right now and doesn't really need funding for new projects.

you may want to consider quality performing first trust deeds.. let those that run rentals for a living deal with the day to day you just become the bank.. COC notes will generally out perform owning the asset .. and its true mailbox money .. no tenants toilets or trash or crime LOL

I lived in palo alto for years so I know what you mean about 2 blocks you just cross 101 to EPA and back in the day it was VERY dangerous..

What metric do you use to determine if your notes outperform owning the asset? If I recall correctly, you fund people using the brrr strategy. I haven't been able to figure out how to compare returns from this kind of investment in which you end up with $0 in the property.