Memphis Vacant Property Registry

34 Replies | Memphis, Tennessee

Hello Memphis investors - 

This is a quick bit of info to let you know about the Memphis Vacant Property Registry.  It is a city ordinance enacted in 2013 to help fight blight in the city of Memphis.  Basically, if you have a property that is vacant for 30 or more days with no intentions of getting it occupied, you are supposed to register that property with the city for a fee of $200 / year.  This registration helps the police monitor vacant properties and, I believe, helps pay for the city to cut the grass so it doesn't show up on the tax bill (don't quote me on that).  Information is available here: http://safeguardproperties.com/Resources/Vacant_Pr...

This is a serious issue to me as I believe blight is holding Memphis properties down. I personally seek out delinquent owners who don't manage their properties and contact them directly.  For out of state or country owners, this is usually a problem with the management company, I know, but the owners still have to put the pressure on their management companies to keep the properties up.  

I recently bought my first rental property in North Memphis, in an area that is currently scrappy but has potential for growth.  There are a few junky properties nearby, including one owned by an investor in New Zealand.  I tracked down a phone number and we had a chat.  When I informed him of the registry, he simply balked, then cursed me out.  I emailed the property address and his contact information to code enforcement right after the call.

So, if you're reading this and you have a boarded vacant property in Memphis that you aren't planning on fixing up, please just register it with the city.  Yes, it hurts your precious cash flow but it also helps keep the city that much safer.  The boards on the windows do very little to deter the criminals in this city who would use these homes for nefarious purposes.  Registering the property pays for additional police coverage which protects your investment and the neighborhood.  

I'll probably catch a lot of flack for this, but it had to be said.  

It sounds great in theory but when the city decides it wants to make every investor pay $200 then it becomes an issue. Blight is mostly an issue in low income areas and even if you make the owner do something about it that still wont change the awful dynamics of that area or neighborhood. The actual people in those neighborhoods are what is keeping them from ever moving forward, not a boarded up house. Some things can never be fixed. I can respect your worthy cause.

It ain't my worthy cause, Curt, it's city ordinance.  No less than that, it is expecting investor owners to do the same thing that owner occupants are expected to do, keep up their property.  What's so pie in the sky about that?  Not every investor has to pay the $200, just the ones who don't want to maintain their property.  

Your fatalistic attitude is predictable because by saying that nothing will change if investors step up to the plate, you then attempt to relieve those investors, and possibly yourself, of the moral charge of stepping up to the plate.  I don't pretend to know what it's like to have been born in one of "those neighborhoods," but I do intend to make whatever dents I can by providing housing that is safe, clean, and affordable (ie not boarded up and neglected waiting for another buyer).

Like I said in the original post, I knew flack was going to come.  I just didn't think it would come from someone who actually lives in Memphis.  

This is going to be mostly in high crime, low income and rent areas. I think the problem is not that they do not want to fix it up, but they were sold a bag of goods from local real estate hucksters about high ROI on these cheap worthless properties. I would imagine they have lost so much money that they would rather just sit there instead of fix it up. Really it is a catch 22, because even if they did fix it up before it was done the property would be vandalized again. When you talk to these people you should just encourage them to sell it for whatever they can get and cut their losses rather than to just sit there in blight.

@Aaron Fowles

You must live in fantasy land if you think you are going to make a change in low income, high crime and vandalism type neighborhoods.  You expect the foreign investor who probably purchased a home in a terrible area but was told it was great to fix the home up, spend $10,000 when they have already been taken not only by the person who sold them the home but also by the criminals in some of these neighborhoods, just so it can happen all over again?  They should probably try and sell it and cut their losses but maybe cant, so lets then fine them for it.   

if you have a bleeding heart for low income, bad neighborhood type of renters then more power to you.  I know how that ends up and only a local stands a chance to make it happen ( or not hurt so much ).  Good luck

@Account Closed   Bed side manner aside from Curt or Alex posts .. unfortunately its reality.. and real world... its not the house its the people that live there... You may find a few pearls but those are far and few between and its great to think your going to fix these social ills one house at a time.. But the reality is your not... And for every one that fails there is marketing companies in AU or NZ or GB or CA that will sell these homes as cash flow gold.. and there are people who just don't get it that price points in these larger cities .  (Just look at the threads on BP about buying under 30K houses and people in CA are still bound and determined to do it not having a clue as to what its really like they just see cheap point of entry). DIRECTLY correlate to Risk.. and that under a certain dollar value the risk is HUGE and the only one's who can make them work are those that live there and manage them themselves you can't afford PM in these areas.. Plus MOST if not all really top notch PM's wont even work in those areas.. they don't want the risk and they don't want to have to be the one's calling their owners telling them that their house got trashed for the 3rd time in 18 months and the tenant got kicked off of hud and won't move etc etc.

I don't have an answer.. but maybe some non profit city sponsored program should just by them all if they want to help these folks. otherwise let free market prevail.. locals who can make them work paying 5 to 10k for a house and providing basic housing and can deal with all the lying cheating stealing and crime .. well more power to them.

Out of area investors should NEVER buy in those areas end of discussion.. But when you have outside marketing agencies selling to folks that have no clue and they get big dollar signs and make huge mark ups and never even set foot there .. well you get what you get a poor NZ investor who probably has lost ALL his money probably paid 2 to 3X what the property was really worth to a local and is pissed..and I don't blame them. The foreign investors that contact me that bought in these areas and in Detroit and Rochester etc. I just tell them to walk and let them go for tax's  nothing is going to happen to them they can't be touched financially or legally..

Originally posted by @Erin Riegel :

How do you seek out delinquent owners? I'm trying to do that here in AZ?

 I can Google like a professional. And in Memphis I know how to work the tax websites automatically.

@Account Closed  I hope the vacants get registered in Memphis.  It's a tax on being idle.  Investors should make it rent ready or sell it.  Letting it run down without concern for the neighbors causes damages to the others nearby.  

You need to educate the neighborhood not this group.  Everyone here is responsible and pushing the business ahead.  

Originally posted by @Rick Baggenstoss :

@Aaron Fowles  I hope the vacants get registered in Memphis.  It's a tax on being idle.  Investors should make it rent ready or sell it.  Letting it run down without concern for the neighbors causes damages to the others nearby.  

You need to educate the neighborhood not this group.  Everyone here is responsible and pushing the business ahead.  

 I like that, a tax on being idle.  

As a resident of Memphis, in a zip code many investors wouldn't touch, this issue is meaningful to me. I work hard to find any owner, investor or occupant, who doesn't maintain their property. 

The city is currently doing a parcel survey to put eyes on every piece of property in the city (may extend to the rest of the county).  This should generate a list of the most negligent owners and things can go from there.  

Originally posted by @Account Closed :

Hello Memphis investors - 

This is a quick bit of info to let you know about the Memphis Vacant Property Registry.  It is a city ordinance enacted in 2013 to help fight blight in the city of Memphis.  Basically, if you have a property that is vacant for 30 or more days with no intentions of getting it occupied, you are supposed to register that property with the city for a fee of $200 / year.  This registration helps the police monitor vacant properties and, I believe, helps pay for the city to cut the grass so it doesn't show up on the tax bill (don't quote me on that).  Information is available here: http://safeguardproperties.com/Resources/Vacant_Pr...

This is a serious issue to me as I believe blight is holding Memphis properties down. I personally seek out delinquent owners who don't manage their properties and contact them directly.  For out of state or country owners, this is usually a problem with the management company, I know, but the owners still have to put the pressure on their management companies to keep the properties up.  

I recently bought my first rental property in North Memphis, in an area that is currently scrappy but has potential for growth.  There are a few junky properties nearby, including one owned by an investor in New Zealand.  I tracked down a phone number and we had a chat.  When I informed him of the registry, he simply balked, then cursed me out.  I emailed the property address and his contact information to code enforcement right after the call.

So, if you're reading this and you have a boarded vacant property in Memphis that you aren't planning on fixing up, please just register it with the city.  Yes, it hurts your precious cash flow but it also helps keep the city that much safer.  The boards on the windows do very little to deter the criminals in this city who would use these homes for nefarious purposes.  Registering the property pays for additional police coverage which protects your investment and the neighborhood.  

I'll probably catch a lot of flack for this, but it had to be said.  

 Hey Aaron,

It is certainly not an unworthy topic, although I'm not sure the ordinance you are speaking of does or was ever intended to do what it is you are asking.  I remember when this ordinance was first introduced and there was a lot of uproar on both sides.  I don't think the city council was ever serious about this ordinance and as it stands, it is still not in force meaning it is an ordinance that the city has not implemented into their policy.  Why?  Because it was only intended as political cover, in my opinion.  It was poorly written and was a convenient talking point about all the evil investors buying up property and turning the city into slums.

The reality is that the worst effected areas, as the study you just citied is going to show, are concentrated and have been in decline for decades.  

As for why the ordinance was never serious - it is written to basically effect no one.  A property must meet three criteria.  1.  It must be vacant  2.  It must be abandoned.  3.  It must be delinquent in taxes.

If a property meets all three criteria, the owner has long given up and has no intention of ever registering or paying anything.  There is a high probability that they can't pay it.  In what you are asking - owners with boarded up houses and no intention of fixing them up and putting them back on the rolls to just please register - the very action of boarding them up often means they are not abandoned and if they are paying taxes in a timely manner, then they are not abandoned.  So those owners, who sometimes make business decisions to board up a house rather than continue to lose money trying to keep it operating.  At some point, the write off no longer out-weighs the opportunity to sell and they unload the property.  

Lastly, saying an owner would be worried about their precious cash flow on a boarded up property is also a bit confusing.  A boarded up property is producing exactly zero in cash flow so I doubt an owner in that situation is worried about losing cash flow by registering a property.

I like the passion and the zeal.  I would suggest you meet with the gentleman who runs the Frayser Development Corp. and with the leaders of Community Lift.  There is an attorney her in Memphis who is also fighting hard against blight, but mostly with larger properties - I cant think of his name.  Either way, there are a lot of people here in the city who are as passionate as you about fixing the blight.  This ordinance is not really intended, in my opinion, to help because it is so poorly written that it will only effect those owners who have already given up anyway.

As for the fees you mentioned on cutting grass, that is handled by the Code enforcement division of the city as well as a lot of other issues you mentioned as well as tearing down dilapidated properties.  Once those services are done, they are added to the taxes of the owner as a lien.  

Good luck with your first property and hopefully you are successful in buying more in the city.  I think you can have success with your passion if you network with some other really good people here in the city fighting the same cause.  Good luck

@Account Closed about passion and partners.  Your passion is very admirable and inspiring!

If you don't know, Steve Lockwood runs the Frayser CDC ([email protected]) and Steve Barlow is the Memphis attorney fighting blight. Greg Spillyards at Community Advisers ([email protected]) is doing great things in several underresourced areas as are lots of other private sector and non-profit guys and gals.  I know all of them would love to work along side you.

Send me a private message and I'd be happy to introduce you to any of them that you don't already know.

Please keep up the good fight.  Memphis needs you!

In the worst part of Atlanta (30314), an investor was found to be THE blight leader.  He's now famous for code violations and will likely find himself in jail.  It became a personal mission of the Atlanta Mayor.  

Seems to have sparked a lot of improvements here.

@Rick Baggenstoss one take away is for all of you who think you get liability protection from an LLC think again LOL.

This guy was speculating he should have boarded the houses up... in many of these areas its financial suicide to rehab and rent... Or better yet he should have razed them and just mowed the vacant lots... since he is obvioulsly trying to do a land assemblage that will have greater value.

@Chris Clothier  , thanks for your thoughtful reply.  You gave me some insight into the issue.  

There are, however, plenty of properties that are investor-owned, vacant, abandoned, and tax delinquent, with or without boards.  Whether or not those owners are likely to be browsing the forums at BiggerPockets, I know not, but I still found it worth mentioning.

@Douglas Skipworth thank you for your reply.  I once had an issue with a Crestcore managed property in my neighborhood that a few calls to the owner in California cleared right up.  That house now has tenants and no more boards!

You need to buy A LOT of property to turn around a blighted area so the out of staters with a few properties can't really do much. If criminals live there, there will be crime. The only way I see real change happening to an area like that is if one investor or group of investors came in with a plan and bought up entire neighborhoods.

@Account Closed   Devils night is coming up maybe this area of Memphis should just follow suit with Detroit and burn these places down... Then turn the lots into community gardens were the neighbors could grow veggies and fruits and do it all on the honor system..

We see that here in Oregon there will be a little stand in front with freshly harvested fruits or veggies with a donation can ( Coffee can) and you just pull over and grab some tomato's or such and then leave your money in the donation can.. and every few days the volunteers that are tending the garden come by and empty the can.. and use that to buy things to better the garden... Nothing like fresh veggies from a garden.. I have seen pictures of these in Detroit even, so if they can do it there I am certain they can do it in Memphis as well.

Originally posted by @James Wise :

You need to buy A LOT of property to turn around a blighted area so the out of staters with a few properties can't really do much. If criminals live there, there will be crime. The only way I see real change happening to an area like that is if one investor or group of investors came in with a plan and bought up entire neighborhoods.

Have you seen this type of concentrated effort come together and work out somewhere in the past?

@Darin M.   I have seen this in many cities usually though in Urban core not out in the burbs were I am thinking these homes are.

I had an OREO property on a street next to a collage and the collage bought up 4 entire blocks .. they then demo'd and built student housing. I got probably 4 or 5 times what I would have gotten since it was like the neighborhood being described in this thread.. were houses are worth 5 to 10k I think I got 40k for it and well was a happy camper.

I think the collage income averages.. they have to pay more for the hold outs some probably donated some took next to nothing then you have us lenders trying to eek out every cent we could get.

Also were I am building currently in Charleston SC is a rare area were your taking dilapidated old homes that use to be super high crime and such.. and rehabbing them or building new.. Many you can't tear down ( historic district) and they just wither away.. But the new product is selling for 400 to 600k were 10 years ago this was hood rat city and houses were probably 10 to 20k max... We are now paying over 100k just for lots and 150k or more for rehabbers.

I bought one last year for 200k  it was leaning fiercely put 100k into it and listed at 450k.. Same demographic basically as Frayser Memphis .. You May find the article below interesting

http://www.postandcourier.com/article/20141018/PC1...

@Jay Hinrichs   Interesting Article.  I think you could easily replace the location with the East side of Austin and it is the same there.   East Austin still has a way to go but I still regret not buying over there back in 2004 when I moved here.  Lessons learned.  

Originally posted by @Darin M. :

@Jay Hinrichs   Interesting Article.  I think you could easily replace the location with the East side of Austin and it is the same there.   East Austin still has a way to go but I still regret not buying over there back in 2004 when I moved here.  Lessons learned.  

 Great point by you and it does add some levity to it.  Just about every poster who takes shots at one city or another or one type of investing, is from locations that deal with the same issues.  Every major city does.  There will be blight, abandonment and failure and it takes a tremendous concerted effort and even then, the effected area is usually smaller than most would like and the blight still exists in other parts of the city.  

For Memphis, it is absolutely worst in the urban core and in zip codes both south and north of the downtown area nearest the river.  It will take decades and millions of dollars both private and municipal to turn those areas around.  It would also be a huge boost to have a major job supplier move in and offer jobs and infrastructure to an area.  Much like Nike did in Raleigh.  But before anyone starts thinking Raleigh itself is a great area, it is still fractured and even with Nike, the renewal has been super concentrated,  In other words, there is still blight in Raleigh after Nike built a huge distribution center.

Lastly, I tried the route of being the leader on a renewal project on a cove here in Memphis with 14 houses.  The area was blighted for sure and in need of major overhaul.  I was able to secure 12 of the 14 duplexes on the cove.  We spent hundreds of thousands of dollars on this cove but made some major mistakes.  We did not involve any business near us and we did not involve two churches that were nearby.  Without support of those directly around the neighborhood, the houses experienced tremendous turnover vandalism and destruction.  I have made a choice to stay away from these areas as an investor because they are so difficult to make work.  Anyone who thinks the answer is just to buy up everything in one area - think again.  Without a partner with a vested interest, it could be a long, painful investment.