Desperate for Tenants in Memphis

General Landlording & Rental Properties
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Desperate for Tenants in Memphis

Bill Manassero
Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes

Bought a duplex in Memphis with two 3bd/1ba units, nicely rehabbed, from a turn-key "passive" investment firm. The units are going for $650 each and the market is around $750. I have not had a tenant in either unit since purchase (over 6 months ago). I am in the process of trying to find a third property management firm. I am desperate here and not quite sure what to do. Reduced price to $595 per unit but still no tenants. Any suggestions.

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Derrick Craig
Memphis, TN · Member since 2013 · 969 posts · 524 votes
11y

@Bill Manassero 

Here is an update for you and the BP family on the duplex/townhome that you have here in Memphis. I know you were having such a hard time with the last PM and a lot of naysayers were giving you a hard time and or telling you to cut your losses....

 GREAT NEWS-  :))))))))

I rented  3420 Bruntonwood Cove to a mother of 4, a Section 8 tenant for $797.00 she has moved to Memphis from Connecticut to be closer to her family. One down one to go hopefully I will have the other side rented for you before the end of the month... Keep your head up everything is going to be just fine as @Melodee Lucido would say!! LOL!!

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  • Bill Manassero
    OP
    Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes
    11y

    Unfortunately, I can't screen or interview prospective tenants (in person) because I live in Haiti.  Does anyone know of any good Memphis Property Managers that could get this property rented?

    0Reply
  • Bill Manassero
    OP
    Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes
    11y

    How would I go about connecting with potential real estate agents in Memphis that might help get the property rented?

    0Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    OVG are middle men they market turnkey companies houses.

    Probably came from Charles.

    They are not active here now nothing to do with rents but with their margins being squeezed as yields fell.

    Sadly 38118 is de gentrifying big time but that should be rentable still.

    0Reply
  • Bill Manassero
    OP
    Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes
    11y
    Degentrifying? Can you define please?
    0Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    Going down hill. Your property will be declining in value.  You probably also paid 10K too much for it but that is another issue. Most turnkeys wont touch 38118 now it has a lot fo gang issues these days unfortunately. Like any zip there are plenty of good parts that are still fine. Yours is borderline.

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    11y

    @Bill Manassero

    I am sorry you were taken advantage of.  Lubin Property Management will try to manage anything anywhere.  I dont know if a good mgnt company for this area.  The area where your duplex is has to be one of the worst ares in 38118 and in Memphis.  No one is touching that place. 

    What I cant understand and this should go for anyone looking to buy in any city, stop dealing with middle-men and seek out the actual providers on whichever city you plan to invest in.  You should have gotten a second opinion before you purchased.  

    I hate to say it but you will never sell that duplex unless you plan to take a massive hit. 

    Sharon Anderson is/was the registered agent and she is in prison right now for real estate closing fraud. 

    Your only hope is that some thug in the neighborhood breaks into your duplex and sets it on fire!!!

    Good luck

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    3Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    Sadly that is true Curt.  Insurance payout is the best solution. I also am aghast someone in the USA would buy from someone in Singapore but hey we all do dumb sh*t sometimes.

    0Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    YEs I found when we were offered that home in January this year. My acquisitions manager s report said:
    "Checked out that duplex. Not an "atrocious" street just "very horrible".  

    You have definitely been let down big time by Rebecca @Bill Manassero .  I hope it isn;t too expensive an education.

    0Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y

    I recall a recent post where Memphis had one of the highest vacancy rates in the nation. No excuses but that might be the back drop there. The Gov housing folks is a good idea. If you can find someone to help on the ground there would still be a lot you can do to help rent it from afar. You can get the ball rolling with some ads and email inquiries to speed this up a bit. Set up viewings for a future possible date. I would be careful about revealing exact address to prospects until you have ground help in place. Just like that sign out front not going in. I had a post awhile back where I calculated how many AC units get jacked in Memphis and it was around 10 a day. Perhaps consider getting one unit rented for a low price to get this property semi secured too.

    Update-

    I guess the Memphis pros are saying sell it. I would not go against that advice at this point. Salvage what you can and move on. 

    0Reply
  • Brandon Kamm
    Commercial Real Estate Broker · Memphis, TN · Member since 2010 · 151 posts · 82 votes
    11y

    Just to back up what some of the Memphis professionals have indicated, your best bet is to just dump it if you can for what you can get.  In the long run most likely you will end up pumping much more into the property than what you are able to collect.  As they have also indicated that is a rough area that is becoming rougher.  We are trying to stay away from that are on the management side as there are more problems with rent collections, vacancy, and tenant neglect of property than the time its worth putting into it.

    I hate that you had this experience, but it should really be a lesson for all that when buying out of town and/or turnkey you should have a good relationship with the provider and really if at all possible visit the property and perform serious research on the city and area before investing.  It may cost some time and money but forgoing that can often lead to a poor investment in the long run.

    0Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    There is no high vacancy in Memphis. Our rental market is great. Multi family in particular the stats are amazing. It's because we have a much higher than US average percentage of renters that sometimes strange stats appear.  But like any city, war zones are a problem

    0Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y
    Originally posted by @Dean Letfus:

    There is no high vacancy in Memphis. Our rental market is great. Multi family in particular the stats are amazing. It's because we have a much higher than US average percentage of renters that sometimes strange stats appear.  But like any city, war zones 

     Cool Dean. Stats like that need to be fully unpacked to understand significance. I stand corrected.

    0Reply
  • Bob E.
    Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
    11y

    RentoMeter.com show some nearby rentals at $600 but estamtes average rent at $760.  

    Best places.net show the crime rating for this zipcode as 96/85 for violent / property crime (on a scale of 1 -100) so the neighborhood is on the tougher side.

    Update your pictures and get a PN that know the area.   I would look at padamapper.com and see what rentals are in the area and then call to see if they professionally managed and if the PM is a good fit for you.

    1Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    I didn't mean it like that Matt I just know our market is pretty solid but our stats can get skewed. Like the other stat that Memphis is such a dangerous city.  If you go to one of the 3 or 4 small areas where everybody tries to kill each other then yes it's dangerous, but the vast majority of the city is fine.  Unfortunately Bill has not only bought a dog, but he bought one with fleas, mange and bad breath :-)

    1Reply
  • Julia Blythe
    Real Estate Investor · Memphis, TN · Member since 2014 · 156 posts · 101 votes
    11y
    Originally posted by @Dean Letfus:

    Location?

    Dean asked the most important question, when investing here in Memphis.  Investing in Memphis is all about LOCATION, LOCATION, LOCATION.  Contrary to what others may say, this area IS a WAR ZONE.  We used to own a business in a industrial area that was located in 38118 near I-40 and Perkins and trust me when I say --- It was/is a war zone.  Gun shots and dead bodies.  Not every night -- but when you have to try and figure out if a noise you hear outside is fireworks or gun shots, I call that a war zone.  Lucky for us, we had a large security company’s headquarters located across the street that had guys coming and going all hours of the day and night.

    If you are going to be in that location, you have to accept Section 8.  No question.  That is probably why you have had no success in renting out the units.  Forget about having good or bad pictures.  If you don’t accept Section 8 in 38118, you are not going to rent out your units.

    I really wish those of you whom are considering investing in Memphis would actually come here and get to know the neighborhoods you are investing in.  Do your homework.  Know your crime areas.  If I may be of assistance, please let me know.  (Not for my gain but to just to help  some of you out from making huge costly mistakes.  We only deal in high end flips and A or B commercial properties -- so we are not your competition).  

    Good luck!!!  

    5Reply
  • George P.
    Property Manager · Livonia, MI · Member since 2011 · 4k+ posts · 1k+ votes
    11y

    sorry you are having such hard time. i feel for you!

    great advice by the BP community though!

    0Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    11y

    Wow - I've learned a lot from this thread.  I went to google-maps and did the street-view thing.  And it didn't look so bad from that perspective.  What I learned is that you really do need solid local knowledge and information.

    I'll put in a plug for a couple of the local Memphis guys.  @Derrick Craig and I have done a deal together, and he was great to work with.  Also, @Chris Clothier has a free e-book on how to buy out-of-area properties (but I couldn't get the "@" thing to work for his name for some reason).

    1Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    11y

    @Bill Manassero - I made a similar mistake about 6 years ago with my first MF investment.  It wasn't in a war zone, but they were very low-end properties.  I bought them from a guy who had recently rehabbed them and put renters in them and almost immediately put them up for sale.  They weren't really "turn-key", but had many of the same attributes.  The big problem for me is that I trusted and believed everything that he told me.  Now, I got to know this guy, and I don't believe that he lied to me, but the properties just didn't have enough history to be able to definitely know the real income and expenses.  Anyway, they ate my lunch for 6 years until I finally sold them at a loss this year.  My advice to you would be to sell these as fast as possible - even if you have to sell at a loss.

    1Reply
  • Bill Manassero
    OP
    Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes
    11y

    Bryan, Thanks for the great info.  I really value your experienced advice.  Thanks for taking the time to share your expertise. I paid cash and own the property outright and can't afford the loss right now.  If i can just get them rented (probably through section 8)  I will be happy with the $1K plus monthly cash flow.  I've got to give that my best shot (marketing, etc.) and see what happens. If I can really see the downward trend I will think about other options but markets fluctuate and so do crime areas.  If I could trade it for something comparable in value and cash flow I would definitely consider that but to take that big a hit would not work for me right now.  I will see if I can get good comps or an appraisal just to see how bad the hit would be but I think I have to give it a shot for right now.  Call me an idiot and I may regret it but it's all part of the learning curve, i guess.

    1Reply
  • Julia Blythe
    Real Estate Investor · Memphis, TN · Member since 2014 · 156 posts · 101 votes
    11y

    As a wise person once said, "Everyone's got to live somewhere."  Start to get the approval for Section 8 today and you may get them rented.

    1Reply
  • Bill Manassero
    OP
    Rental Property Investor · Mission Viejo, CA · Member since 2014 · 230 posts · 113 votes
    11y

    Julia,  Thanks for the encouragement.  I was getting kinda depressed with some of the responses.

    Have you gone through the Section 8 application process?  Do you know how long it takes and can it be done online?

    Thanks again.

    0Reply
  • Matt R.
    Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
    11y
    3Reply
  • Patrick L.
    Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
    11y

    Everybody keeps saying just put a Section 8 tenant in there and I don't know how the market for Section 8 is in Memphis but here landlords compete pretty hard to get the Section 8 tenants because they know they'll get the rent.  The tenants get a voucher for the size house they're eligible for and can select any property they want as long as the owner will accept the voucher.  Most section 8 tenants here expect upgraded kitchens and baths and many landlords here that are competing for these tenants make those upgrades and offer move in incentives for section 8 tenants (such as a no security deposit plus a $500 gift card).   If someone has a voucher they can usually get a better house in a better area and they don't have to be in the cheapest house in the hood.  A quick search on the tnhousingsearch.org website (where people list section 8 properties) and I see 306 3 bedroom properties available in Memphis.

    If you want to rent it quickly make it slightly nicer and slightly cheaper than the comparable properties.  Don't over improve but you can make inexpensive upgrades that make the place stand out.

    A quick look on Zillow and I see some 3 bedroom single family homes priced under $600/month in the same area so anybody that told you that you'd be able to get $750 was probably just lying to you.  

    4Reply
  • Brandon Kamm
    Commercial Real Estate Broker · Memphis, TN · Member since 2010 · 151 posts · 82 votes
    11y
    Originally posted by @Bill Manassero:

    Bryan, Thanks for the great info.  I really value your experienced advice.  Thanks for taking the time to share your expertise. I paid cash and own the property outright and can't afford the loss right now.  If i can just get them rented (probably through section 8)  I will be happy with the $1K plus monthly cash flow.  I've got to give that my best shot (marketing, etc.) and see what happens. If I can really see the downward trend I will think about other options but markets fluctuate and so do crime areas.  If I could trade it for something comparable in value and cash flow I would definitely consider that but to take that big a hit would not work for me right now.  I will see if I can get good comps or an appraisal just to see how bad the hit would be but I think I have to give it a shot for right now.  Call me an idiot and I may regret it but it's all part of the learning curve, i guess.

     Bill, I wanted to follow up on a couple of the points you made in your post and your tough situation.  

    I paid cash and own the property outright and can't afford the loss right now

    Wouldn't selling the property and receiving some of your cash back be better than having the property free and clear but having to put money in it year after year and still taking a loss down the road.  I'm sure you are trying to be optimistic here, but based on where it is and who will live there, its going to be a struggle to keep this cash flow positive based on your situation.  Even when rented and having the income you will have expenses that will be incurred.  Management fees, leasing fees, and maintenance.  Believe me in this area you will have maintenance expenses no matter the shape of the property now.  With taxes and insurance coming as well its going to be tough for it to generate any cash based on the situation you have described.  What will ultimately follow will be the eviction, legal, set out and future make ready expenses that will occur with whomever you do move in the property.  You could find a tenant that does pay rent and take care of the place, but in these areas it often is reliant on an owner/manager who is very much on top of their property and  spend a lot of time keeping the tenants in line.

    If I can really see the downward trend I will think about other options but markets fluctuate and so do crime areas.

    I do believe you are overestimating the area and potential here.  Im sure most of the Memphis managers/operators/landlords on here would agree that this hasnt been nor will be an area of growth in the foreseeable future.  It hasnt been since the 1980's and based on trends in the city wont be anytime soon.  Sure markets change over time, but i would really think about a general statement such as that vs. an educated opinion from those who know the area.  If anyone from or in Memphis would argue that Parkway Village has any positive outlook i would be surprised.

    Its always hard to stomach a loss, but sometimes the direct hit is easier than the slow bleed followed ultimately by the same direct hit down the road

    1Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    11y

    @Brandon Kamm is right. This area was OK but the gangs have moved in now. It will not re-gentrify any decade soon.  The longer you wait the more you will lose. If it isn't currently trashed you will get less of a haircut.  You could try to get Lubin to get it rented then sell it as a performing property but don't wait too long!

    1Reply
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