Memphis Property Manager Jailed for Bad Rental Properties

Curt DavisBusiness Member

Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes

http://wreg.com/2015/11/15/property-management-ceo-jailed-for-bad-rental-properties/

I sure hope no one has been doing business with this guy. This is why if your an out of state investor and your trying to go with the cheapest guy, it may not end up being the best decision. You might pay just a little more going with a legit professional company. Same goes for turnkey.

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Douglas SkipworthBusiness Member

Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes

10y

It's amazing that simply being honest and competent is a competitive advantage in the property management business.

I encourage every property owner to vet their managers thoroughly through BiggerPockets. In this day and age, investors should be able to avoid dishonest agents and managers just by doing a little online research.

Thanks for sharing, @Curt Davis.

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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
10y
It seems so easy for out of state investors to avoid individuals like this. This is unfortunate, by why it is so important to do business with people who have an excellent reputation, BBB rating of A or better, online reviews, etc. Visit your team, make sure they have an office, staff, past client referrals, ask about their business plan, etc. Even ask about what they did before real estate; most individuals I know in our space came from successful corporate backgrounds which is helpful on understanding how to run a successful business. So many people seek out the cheapest PM's and the property sellers who offer the best "guarantees" and best ROI on paper with are the cheapest houses. Typically the people working in this space are the bottom feeders in the industry; even buying these direct would be hard b/c the contractors working on these properties are also bottom feeders.
These type of stories are such a black eye to our city and industry. Reminds me of John Ferguson who screwed over several Australians. I just can't understand why people go with the John Ferguson's and McNutt's of the world.
901-848-9028
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Douglas SkipworthBusiness Member
Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
10y
It's amazing that simply being honest and competent is a competitive advantage in the property management business.
I encourage every property owner to vet their managers thoroughly through BiggerPockets. In this day and age, investors should be able to avoid dishonest agents and managers just by doing a little online research.
Thanks for sharing, @Curt Davis.
Investor's Guide to Memphis Real Estate
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John Arendsen
Homeowner · VISTA, CA · Member since 2015 · 726 posts · 340 votes
10y
This is one of the of the main reasons I don't invest outside of my farm and do all my own property maintenance and management. When you're not working your own deal you're leaving your fate in the hands of others.
I've been tempted and searching for the past several years for viable investments in other geographic regions but have always decided against it because I've never felt comfortable investing capital in something I have no direct control over.
Just my 3 cents worth adjusted for inflation. LOL!
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Account Closed
Investor · Memphis, TN · Member since 2015 · 105 posts · 68 votes
10y
I'd seen his warrant listed for a few weeks in one of the Cyberwatch reports I watch. Supersketchy.
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James WachobBusiness Member
Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 887 votes
10y
Originally posted by @Account Closed:

I'd seen his warrant listed for a few weeks in one of the Cyberwatch reports I watch. Supersketchy.
from the Urban Dictionary:
Super Sketch
A person or persons that is very skecthy. A super sketch would be abnormally sketchy - beyond repair. See sketch or sketchy and then multiple that awesome personality trait by 100%. A super sketch could also be someone that talks a lot of stuff about people.
*I had to look that one up. You were right on Account Closed
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Alex Craig not sure how he got a D + rating.. I would have given him a flat D.
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
10y
@Jay Hinrichs If he is a D +, imagine how bad a PM with a F rating is. Actually, below is a F rating. Most Memphis PM's have heard horror stories about this guy. The online reviews are real.
http://www.bbb.org/memphis/business-reviews/real-e...
901-848-9028
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Alex Craig do you not have to be a licensed RE broker in TN to manage properties legally. and if so if these complaints can be substantiated this is a clear trust account violation and they will get their license's revoked pronto.
if they are still in business would lead me to guess that the complaints may not be valid. Of course I have never heard of this company and have no way of knowing other than what I know being a RE broker in 3 states and understanding the differenced between trust account money and commingling.
One Thing Brie and I are contemplating with Turn Key reviews is to add a PM module for each market as well. so people can get a read on good pm in a market and one's that have issues.. goes hand in hand with picking the best turn key operators out there. Look for this to be coming after the first of the year.
There is a post on facebook one of my facebook connections in LA posted about this guy ripping her rents as well. so I suspect this goes pretty deep for McKnutt..
There is a lot of temptation in that industry I mean you get up to 200 to 500 houses and whats your gross cash flow... 140 to 350k a month into your account.. you can see were someone would just think well I will just take a few grand here and put it back when my next deal closes.. the ole rob peter to pay paul routine that lends most white color folks in Jail.
like you hear from you if your required to be a RE broker in TN to be a PM... And again if so this should be open and closed issues especially with Mid south if the complaints are real. NO defense for taking deposit money.
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Vincent Crane
Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes
10y
There's so many people looking for quick ways to make money in real estate with little effort, I wouldn't be surprised if there's more out of state investors dealing with property management companies like this that haven't been caught yet
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Vincent Crane Having been around turn key since 2001.. I can flat tell you this happens far more than you may know... and it happens in virtually every market in the US from SF to NY to Miami to Seattle and all the fly over areas as well.
Were the abuse is HUGE though is in low end assets were you have tenants that get abused and you have landlords who live 5 states away who have no clue as to what is happening... believe me I had to foreclose on over 200 of these in the mid west from INdy to Atlanta Memphis Jackson B ham etc.. I went through this in each town..
One PM I knew one day just took two months of collected rents and all deposits to the tune of well over 300k and took off.. he was ultimately caught and jailed but did no good for all the folks that lost money.
This is why in my mind its critical that RE departments in each state are the over see r's they are used to trust account violations. and they are best suited to handle these bad companies.
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Douglas SkipworthBusiness Member
Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
10y
@Jay Hinrichs,
1. Yes, you have to be a licensed real estate agent in TN to manage property for others. However, as you know, there are lots of people working without a license, which is what gives all the good guys a bad name.
2. I think your idea about a property management review site is great. Getting the word out to the consumers to check the site is going to be harder, but I know you are up for the challenge!
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Douglas Skipworth I thought so most states you have to be licensed.
So how can a company like mid south if those complaints on BB are true still be in business if indeed they still are.
I know in CA and MS and OR were I have brokers license's these violations would be dealt with swiftly and licenses would be revoked in almost all cases unless it was a small violation that got correct.. but having witnessed first hand what goes on in the mid west and deep south in the rental game I would pro offer that this behavior if true is prevalent in the organization in question.
AS for getting the word out on a PM review site that will be easy... Its such a hot topic
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Douglas SkipworthBusiness Member
Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
10y
@Jay Hinrichs,
I'm not exactly sure why guys like the one @Alex Craig mentioned are able to continue practicing real estate. All I can imagine is that no one turns them in.
I have heard horror stories from some of our clients about their previous managers, but I don't believe any of them have actually followed through with filing a complaint against the manager.
Right or wrong, I have found that most people who get scammed are either embarrassed by their own lack of due diligence on the front end or they just want to move on to the next chapter in their life and put the past behind them.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Douglas Skipworth that my friend is a terrible way to deal with scammers.. filing a complaint with any DRE in any state is usually done very quickly down load complaint form fill it in and sign and mail it in.. The agency then will contact the broker and want to hear their side of the story.. along with coming in an Auditing their trust accounts. and business accounts.. at that point if these folks are wrong then they are done. end of story and they cannot do it to others.
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Douglas SkipworthBusiness Member
Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
10y
@Jay Hinrichs,
I think you are right. Thanks for the strong reminder.
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y
Great example of why it is so important to thoroughly vet your PM's. @Jay Hinrichs is right. This isn't uncommon and goes on in every market.
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Ndy Onyido
Toronto, Ontario · Member since 2014 · 615 posts · 172 votes
10y
Thanks for sharing. An eye opener for those of us who are remote investors..
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