Memphis Invest - 2018 Performance Review

[Chris Clothier]

I am a bit out of practice on posting company updates.  Like most things, I intend to post more often and then the important things (like running a company) get in the way.  This post is very similar to a letter we sent to our clients in the last couple of weeks.  I have made a habit of posting a yearly update at a minimum on the company.  There are a lot of discussions here where this kind of data is helpful.  It is helpful for investors to know what to ask about when talking to a management or Turnkey company; to know what metrics are being tracked by Memphis Invest especially for comparison and expectations and to use as a measuring guide when determining a best fit for you as an investor.  

Mostly, posts like this simply keep us accountable.  We are far from perfect, but have very high expectations and certainly know we have the ability to work toward perfection if nothing else! Thanks for reading and feel free to ask questions.

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On behalf of the Clothier family and the entire team at Memphis Invest, GP, as we close 2018 and welcome 2019, we wanted to share with our valued clients a few of the milestones we accomplished together this year.

Our company continued on its’ pattern of growth recording our fifteenth straight year of growing in number of team members, number of properties purchased, number of properties managed, value of clients’ portfolios, dollars spent in renovation and two newer metrics that we kept a close eye on this year.

Diversifying Across More Markets

First, we added 32 new team members this year. We opened a new market in St. Louis and Tulsa and grew our teams in Oklahoma City, Little Rock, Houston, Dallas and Memphis. With seven excellent investment markets and one streamlined training and operating process, we are starting to see some real acceleration in the new markets. We are excited to see how those markets grow, and our team with them, in 2019.

Heading Toward $1 Billion in Assets Under Management and 10,000 Properties for Passive Investors

Our goal was to purchase 1,000 properties in 2018 and we fell just shy of that goal. For the year, Memphis Invest purchased 953 properties for our clients' portfolios.  We end the year managing right at 5,135 properties with a combined value of approximately $642 million. That is a serious value to have under management and we do not take that responsibility lightly.  We anticipate that at our current growth rate, the value of the portfolios under management will exceed $750 million for our clients by the end of 2019.

As many of you know and some may be hearing the details for the first time, we committed to reducing the level of deferred maintenance on our properties some years back. We know that investors have choices in their investments and are constantly being marketed to by other companies. We understand one of the biggest values we bring as a company is to renovate each property to its’ highest level that makes sense for the investment. We perform a level of renovation that far exceeds other companies in the Turnkey investment industry and that helps us to keep our properties occupied and performing consistently. In 2019, we spent over $45 Million with renovation companies, contractors, trades specialists and permitting authorities.

Alignment of Interests

This is a big buzzword in the Turnkey community and really the property management world.  How do you align interests when the very process of creating revenue takes revenue away from a client.  Well, here is one way we absolutely work to align our interests with our clients interest.  

In early 2018, we hired several new team members and upgraded our lease renewals team. We also began discussing the need to step-up our move-out prevention efforts. We focused heavily on front-end customer service for the residents and the experience they would have. Then we focused on improving communication and follow-up so residents would value the home they are in and experience they receive from the management company. Lastly, we focused on our team and the training they receive to make their task of renewing leases and preventing move-outs easier.

In 2018, we prevented 1,551 move-outs from occurring. A little over 60% of those properties renewed their lease for two additional years. Our clients received approximately $3,536,000 million in rent payments that would have otherwise been missed had our team not prevented move-outs on expiring leases.

Providing A Better, More Consistent Investment Experience

Less than 19% of our properties under management experienced a move-out in 2018. That is the lowest level we have achieved as a company since tracking this metric.  Two out of every three clients did not experience a move-out in their portfolio in 2018 and the Memphis team deserves a big shout out. They actually reduced the total number of move-outs in 2018 from 2017 and had the fewest number of actual move-outs since 2015. They achieved that milestone while managing nearly 750 more properties.  We know that the average length of occupancy is just over 5 years on average.

Our clients are the real winners in 2018. A total of $44 million in net rental payments were delivered to our 1,985 clients. That is net of management fees, maintenance costs and move-out costs (cap-ex included).  With the reduction in move-outs and the increase in net rent payments, 2018 was a fantastic year for clients of Memphis Invest.

As always, we are striving in 2019 to continue to improve. We understand that while most clients did not have a single move-out, some clients had more than one. We understand that while most clients saw their net rental receipts grow, others did not. We are committed to continuing to get better. This is a long-term investment for each of our clients and the Clothier family is taking a long-term strategy for growth and improvement.