Deliriously Ecstatic in Memphis

15 Replies

This is an update to my post "Desperate in Memphis" from December 28th!

Great news! We booked our second tenant (in my duplex) at $650 on a one-year lease to a young couple with solid income, excellent credit background check and a good renting history. Now, my duplex is completely booked up at a higher income than I would have ever projected. Wow, what an education I've had!

For those of you have been following this saga, it has been a wild ride but a great lesson for newbies (like me) and vets alike. As you scan over the responses (in "Desperate in Memphis") you will see they ranged from ”dump the property at a loss” to a lot of helpful suggestions and tips.  Well, here's the story...

In summary, I purchased a “tenanted” duplex (3/1 on each side), nicely rehabbed, from a turn-key company based in Singapore. Shortly after escrow, my two “in-place” tenants “conveniently disappeared." The turn-key fortunately had a 6-month rent guarantee so I didn't feel the full hit -- at least not at first. Now, I know what you’re thinking – TWO RED FLAGS: turn-key out of Singapore and 6-month rent guarantee! OK, have some grace. I’m a newbie!

Anyway, the “in-place” property management firm also quit shortly after escrow. The turn-key’s “on the ground” people highly recommended another PM who ended up being “less than pro-active,” never visited the property and whose idea of marketing consisted of lowering the rent until “someone bites.” After 4 months, I was very concerned and started shopping for a new PM. Most didn't even want to touch the property because it was in “the wrong part of town.” Rent was lowered from $750 per unit to $500 and there were still no prospects. It was at this point that, out of total frustration, and after much prayer, I logged onto BP’s forum and wrote “Desperate in Memphis.”

Immediately, I started receiving a flood of comments and advice from a high level of experienced investors. Most of the comments, however, were leaning toward “dump the property now at a loss.” I was discouraged but listening and willing to do whatever was necessary. However, I’m more of a “half-full” type guy so, although the “half-empty” crowd had some great points, I knew that there was more than one way to view this problem. I strongly felt that although this may not be the best area of Memphis, people still need a decent place to live and if there was any way to keep this property I had to find out.

There were also a few BPers who were encouraging; one in particular from a veteran in Memphis named @Derrick Craig. His comments consisted of practical advice to help get the property booked. He didn't see the property as a “total loss.” He was a “half-full” guy like me AND he lived in and knew the Memphis market well. He understood property management (he owns a property management firm), turn-keys (he also owns a turn-key company) and he especially knew the area where my property was located (he grew up in a similar area).

I started checking around and spoke with other BPers who knew Derrick and asked what they thought of him. Each person had only the highest regard for his character and professionalism. And usually their comments followed with, “if you could get Derrick to handle your property your problems would be solved.” I found out they were right. I also found out he was a big Patriots fan.

I contacted him offline and, after a number of conversations, he agreed to work with me. My current PM wasn't too thrilled but I had no other choice. My PM reluctantly released the property “without penalty” and Derrick jumped right in. Before I even officially hired him, on his own initiative, Derrick went to the property, took notes and pointed out a number of issues of concern, including the fact that a squatter had moved into one of the units. I knew at this point he was a mover.

I hired Derrick January 5. By January 13, I had a section 8 tenant in one unit with a potential rent of $797. By February 11th, I had my second tenant in at $650. Gross rent of $1,447! I moved from “Desperate in Memphis” to “Deliriously Ecstatic in Memphis” in less than 60 days! Praise the Lord! Thank you BP. Thank you to all who took the time to offer their advice and suggestions on my post. And a big thanks to @Derrick Craig – Rock Star from Memphis! (Don’t move to Graceland!)

In summary, here are a few of my lessons learned:

  • BiggerPockets is an invaluable resource that EVERY investor should be utilizing extensively!
  • Property management is NUMBER ONE for the Buy and Hold crowd! Never settle without carefully vetting your property management prospects before hiring.
  • Best turn-key companies are those with offices in the areas where you are buying.
  • “Half-full,” rose-colored-glasses investors can still survive and thrive in real estate.
  • Build up a great team of advisers, mentors and colleagues. I made some great contacts and friends through my post!
  • Never give up! No matter how discouraged you get. Miracles still happen!

God bless. Bill

@Joshua Dorkin  You need to read this. This says exactly what I believe so many people feel about BP.

@Bill Manassero I'm glad you got the help you needed and your real estate experience didn't turn sour. I have friends who will never invest in real estate again because of their first horrible experience. In their case, the heroin dealer was their best tenant... Oh the stories they could tell.

great story from the trenches to the stars! Glad to hear you reconsidered your business plan and made appropriate actionable steps to change the status of your rental.  Way to be dynamic!

this is a great outcome for you.  Congrats.

great to hear, thanks for updating us. 

@Bill Manassero  - I am glad to hear this worked out.  You are completely right that PM can make or break you.  Good for you for walking away from a bad PM and seeking out a good one.  I think a lot of people who buy turnkey forget that the can hire PM outside the company if it is not working.

I bought a duplex in December from a CA investor (and I am buying another one of theirs this month).  They were losing money because the upper unit was vacant for 8 months and they wanted out.  It was a clean unit in a good area.  We bought it on a Monday, had a lease on Wednesday and tenants moved in within a week, and for $100 more a month then their PM was advertising it.  The only difference was my PM cares about my business and works hard to make me (and him) money

That is great that you have turned the property around.

Just do not get overly excited at this point. You have brand new tenants with no seasoning history at the property.

If it's still the same with little to no issue in 6 months to 1 year then you REALLY got something good going on after a track record is established. Rougher areas tenants turn over a lot so length of time being stable will be an accomplishment for sure.

@Bill Manassero  

What an amazing story!  Boy, were you brave to jump in with limited due diligence.  Luckily, the tide has turned. ... Loved your lessons learned.  Best wishes. 

@Bill Manassero  

  yes I remember this well... I hope you sent Craig a nice Valentine gift.. that was a miracle job on his part... AS Joel says you still have the same property.. and hopefully you can get some consistency with it.. Its clear buying it from Sales orginizations that are not anywhere near the asset is fraught with risk.

Good on Craig to take you on and fix this .. happy to hear it. 

What a great story!

We're new to this ourselves and thinking about similar properties in Memphis.

Thanks very much for sharing this @Bill Manassero.

Andrew and Parvin in Toronto

Andrew, thanks for your comments. As a turn-key investor who always buys in markets far from home, I learned the hard way that your Property Manager is everything for your REI success. You cannot do enough due diligence to check out your property and your future "partner" wherever you buy.

Awesome!  I read your previous post and am glad things have turned around for you.

Originally posted by @Bill Manassero :

Andrew, thanks for your comments. As a turn-key investor who always buys in markets far from home, I learned the hard way that your Property Manager is everything for your REI success. You cannot do enough due diligence to check out your property and your future "partner" wherever you buy.

 Bill, congrats on your turn around on this turnkey.  A great lesson.  As a out of state TK investor myself, I share your view that PM can make or break your investment no matter where the property is.

awesome. Simply awesome. Stories like this is what keeps me trying. It so easy to het caught up in the, real estate is dead or theres nothing left crowd. I'll use this story and the others like this to drown out the neigh sayers. Thanks.

@Chris Clothier

 Thanks for the kind comments...

Thank you all who have took the time to read this forum post along with

 Desperate for Tenants in Memphis the original forum post that got us here!! I wanted to show you a colleague request that I received this morning and coincidental he mentioned @Bill Manassero in the post... See below

Colleague Request

To: Thomas B.

Thomas B. wants to be your colleague!

This request has been accepted

No_avatar_small

Hello Derrick,

I am a fellow Memphis investor and would like to "connect" with you on bigger pockets. I would also like to say I was very impressed with your initiative in helping Bill Manassero. The Video blew me away!

Best regards,
Thomas Beasley

No_avatar_small Thomas B. sent about 4 hours ago

Small_1415206255-avatar-craigderrickPro

Hi Thomas,

Thank you for the kind remarks and thanks for the colleague its always great to find like minded investors here in the city of Memphis TN. Bill seemed like he was having a rough time and no one would help him everyone was telling him negative/discouraging things without reaching out a hand to help him. So I decided to take it upon my self to be the bigger man and help some one in desperate need because I would want some one to do that for me as well.

Let me know if you need anything that I may be able to help you with.

Thanks

Derrick Craig

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