I have a couple theories:
* Solid leadership, but of course lots of other companies have that.
* Premium segment, but there are other competitors
I was thinking of starting my own firm but I have other talents where it could be used more profitable.
I feel they're basically the JPMorgan of turnkey investing.
Anyone have any ideas?
I figured you wouldn't mind if I chime in here on your thread to give my thoughts on your post. I don't think there is anyone better to detail the big and even the sometimes very small, subtle differences between Memphis Invest and just about any other company out there. And remember, different and even a better value, don't necessarily mean negatives for other companies. There are plenty of good companies out there, but few if any compete with Memphis Invest in these few very important areas.
Leaders lead by example and are not afraid to share
I know this because we open our doors to other turnkey operators and entrepreneurs, even simple property management companies all the time. We have no secrets. We have spent millions of dollars and a lot of time developing systems, processes, technology uses and an incredible team and there is no reason not to openly share that with others. Here is why...
You said in your post that Memphis Invest has solid leadership, but also that lots of companies have that. I humbly say that it is precisely the leadership that sets us apart. I give my dad Kent Clothier, Sr. and my brother Brett Clothier each a ton of credit. But, I also give credit to our senior leadership team. The Clothiers' willingness to take big risks, tireless work ethic and straight bullheaded drive have led us to outmaneuver, outwork and outgrow everyone by a huge factor.
The most common reaction we get when other companies come visit us and spend some time learning how we operate is that they are shocked by how hard we work. I think many entrepreneurs are looking to work hard for a short period and then enjoy the fruits leaving the work to others. For us, the work is the fruit. The hundreds of thousands of miles flown to meet with clients where they live, the 1:00am live webinars and phone calls to investors in Hawaii so they can talk after they get off work, the millions of dollars spent to make sure our integrity is intact and we stand behind our commitments. The most common reaction has been "I just don't want to work this hard and take this much risk".
So this is a long post, but you are welcome to read it and even visit if you are truly looking to get into the passive investment management niche of real estate.
On that note, the word Turnkey is completely abused today. It is a marketing term and has no meaning. We are a Turnkey company when you define it as an investor can step into an investment hassle free and begin earning their return. But I hate to be lumped in as a Turnkey company. We are a passive real estate investment management company. We are almost to the point of saying that you can buy Turnkey or you can buy Memphis Invest. They are two very different things today.
Memphis Invest started out as a very small company. At one point, there were a few of us driving around in a truck each day as our office looking at houses, reviewing renovations, calling in violations to our management company to handle when we saw them on the street. We were a small company simply operating on a deal by deal basis. When we flipped the switch and decided to grow, we changed from the mentality of "stay small and keep it all" to "risk it all and reap the reward".
I think that is a big differentiator between us and many companies. We never wanted to be a small company. We wanted to see if we could build something completely different and disrupt how passive investors actually buy property.
Today, we have 94 full time team members. We will purchase, renovate and close with an investor on over 1,000 investment properties this year. We will close on our 5,000th property under management within the next 2-3 weeks. When we do, our next milestone will be reaching the $1 Billion worth of investment property value under management. We should eclipse that value mark within the next 24 months. We send out close to $4 million dollars in net rental income to our investors each month and will go over that amount before the end of the year. We have now successfully entered our sixth market since first expanding into Dallas,TX. almost seven years ago. We now have a systematic way to evaluate, hire team members, build vendor relationships and enter a market successfully.
We have been in business now for 15 years. It wasn't until 2007/2008 that the decision was made that we were going to try and grow a truly nationwide company. There were maybe a dozen team members at the time and very little if any technology or efficiency. In fact, Kent Clothier, Sr. often tells investors that we were horrible at property management at the time and our renovations were not much better. We were basically doing the same as anyone else at the time. Just enough to get it rented and maybe a little bit more. On the management side, if they wanted to rent the place and had the money, they could rent it. Essentially, low barriers of entry and not very high standards. Same went for investors. If you could close and had money, we would sell to you. We had no customer service plan and were using crappy software in all phases of the business. Lastly, the only value we provided was inexpensive real estate managed for you. If you wanted us to drop our prices, we would drop it to get a deal done.
Again, like everyone else in the industry, we were all in a race to the bottom. A race to zero. Whoever could discount the most, would get the sale. For us, that was not a good long-term strategy for growth.
That would change very quickly in 2008/2009 and by 2011, we had completely flipped our model 180 degrees. We had begun to invest in both our people and technology. We started training our team on how to provide exceptional customer service and started renovating every house to an almost retail and above level. We tried to eliminate deferred maintenance. We also started investing in technology to make us more efficient and better equipped to provide a value beyond a simple monthly calculated return.
So length of time in business and the willingness to change everything and reinvent your company are two big differentiators for us.
We left the real estate investment business and entered the customer service business. Today, we are $150 million sales company that is in the customer service business and real estate is the product.
Property management is a thankless business. However, it is the absolute key to our success. So many companies, including some in Memphis wonder how in the world we are able to get two year leases with rental rates sometimes as much as 20% above what they would say is market rent. At the same time, over 77% of our leases complete their 2 year lease and 73% renew for a new lease term. The reality is we are trading in a different level of home and service. Weekly we are able to drive through the streets of Memphis, Dallas, Houston, Little Rock and Oklahoma City and a Premier Property Management property absolutely stands out. Not only does the property stand out, but so does the service.
We show a majority of our homes to an interested resident. We answer the calls from interested residents. We create an atmosphere right off the bat where the resident can see that we genuinely care about them. We hold our rental agents to a high standard and require them to be on time; have the home prepared to be shown as if you are selling it and be prepared to discuss their other options. It is not uncommon to stand on the front porch and point out houses that may be for rent with other companies and some of them are Turnkey companies. We point out the overgrown yard, the trees with limbs hanging on the house, the broken blinds in the window, the often neglected look of the home form dirty siding to rotten facia. We can point to cheap, dirty rental signs and ask a simple question of the interested resident - "Do you think you are going to get great service from that management company"?
Our goal is to answer every maintenance call and if service is needed, we call the resident back after the service is completed to see if they are satisfied. A vast majority of management companies would say you never call back and ask if they are satisfied because the tenant may complain about something else. They are absolutely right! And why would that be a bad thing? We are managing someone else's property and they are trusting us to keep it in the best condition possible.
One last note. I know the owners of Jacksonville Wealth Builders well. We are two similar, but still different companies, but they taught me a very simple and important lesson. They are the company that taught me the value of referring to our residents as residents and not tenants. Tenant has a very negative connotation and resident has a very strong, positive connotation.
It is that willingness to treat our residents like clients who absolutely deserve a high level of customer service that leads us to an average length of occupancy of over 5 years. We routinely have an occupancy between 96% & above 98% which is vastly better than the average occupancy in any of our cities. My point is that it is very, very difficult to get performance as high as we have it and it takes an incredible team and a commitment to both technology, service and training.
Put simply, this is a big separator for us. We have nine full time team members who call every client of ours every month. They are dedicated to building a genuine bond with our clients and keeping them abreast of everything happening with their portfolios, both good and bad. They are also building relationships as they learn how to best help each investor to accomplish their original goals for investing in the first place. This is a tremendous expense for our company and one that very few if any are willing to make at this level. Yet, the benefit and reward of having these team members communicating consistently cannot be overstated. They are the biggest reason for our growth and success as a company. We set a pretty high bar for ourselves and this team helps us reach it.
At this point we have spent millions building our own custom software to tie our companies and departments together. We are close to testing several new pieces of technology that will help us untie from any outside programs for billing, communication and even property management. Within 12 months we will have our own customer property management system that provides life-cycle integration for every property. From the day we look at the property, to the last day an investor owns it, that property and every detail, every picture, every communication will be in one location.
Client facing portals including for our residents will be well beyond anything that is provided today by 3rd party vendors. This will be a tremendous leap forward for our company both in savings and manageable experience for our clients. There is nothing worse than knowing that your clients and your residents both have subpar experiences with their technology interfacing. When we bring this system online, it will be another game changer.
Lastly, we train constantly as a company. Each team has areas of proficiency that they are constantly training. We commit time and dollars every week to keeping our team trained not only on the basics (the basics of any business are the foundation that hold the company up), but also on specifics to each department. Customer service training, field training for our renovation teams, constant role play for all of our teams. We train, train, train and then train some more on how to always be better at the details than anyone else.
We also hold ourselves accountable.
We have secret shopper calls weekly where we are calling our rental teams and our property management teams to grade them on how we are treating potential residents and current residents in need. Are we answering the phones? Are we respectful and giving good, helpful information? Are we responsive and giving callers clear direction? All of these questions are super important. When we fail - and we do fail - we have great opportunities to teach.
We also survey our investment clients on every purchase closing and our residents on every rental closing. We expect perfection on each survey. We ask questions not only about our team, but also about our lenders, closing attorneys, insurance companies, notaries, etc. If we fail to receive a perfect score in any category, we are on the phone with the client or resident addressing how we can do better. We then follow up with whichever person, department or company failed to get a perfect score on how we can improve.
When we fail to get a perfect score from a resident, we have been known to have our team drop everything and send our team over to the property to personally meet with the resident, bring flowers or cookies and address their concerns. Some would say that is a waste of valuable time when you could handle that over the phone. WE LOVE THAT ATTITUDE! It means we are separating even more.
Those are the best teaching moments available to our team. Someone has taken the time to tell you their expectations have not been met and they are the lifeblood of your investment clients' success. How could it be a waste of time to drop everything and address their concerns? And better yet, to have your team do it so they are able to learn and prevent those issues going forward? Always asking if they are satisfied and have we earned the right to ask you to renew your lease in the future or share our company with any other family, friends or colleagues that may be looking for a high quality property management company to work with.
It is that commitment to excellence that helps us provide a very stable, consistent and reliable return to our investment clients. It is that very commitment to excellence that you will simply be hard pressed to find elsewhere.
We are not perfect. We are far from perfect. We have had clients whom we have simply been unable to meet their expectations. But, it is a pursuit of perfection and drive to be perfect, that has helped us achieve fantastic investment results for a large majority of our clients. And it is those results that lead to 65+% of our annual property sales to go to existing clients building their existing portfolios. Our growth is organic for a reason!
I want to re-iterate that there are some really good people in this industry. Not Turnkey, because again, that is a marketing word. But people and companies that are providing passive investments. I have a lot of respect for many of them. Some...maybe not so much. But, that is ok. I'm not knocking nor am I lifting anyone up. I am simply answering your question about what it is that really, really separates Memphis Invest. There are several companies who publicly say they want to be the next Memphis Invest or they hope to replace us at some point. I like that attitude. It is going to take that kind of attitude to achieve those goals. Of course, we are pretty competitive too, so knowing that there are companies that declare they want to be great is enough motivation to continue pushing. We have plenty of runway left to grow and improve and our rear view mirror still looks clear for now!
Hope that ridiculously long post helped! Best to you