Closed on another Mid South Home Buyers home

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Closed on another Mid South Home Buyers home

David Hutson
Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes

Morning all,

I closed on my 8th home with them a few days ago and it's in 38128 which is my favorite zip code to invest in.  The home is on Edgewood and should be another steady performer.

I have been receiving many requests regarding Mid South Home Buyers lately and whether their program really works.  The management is great and I am receiving consistent returns from them.  This is primarily due to their attention to detail and ensuring they get good tenants in the home.  
They don't charge application fees to prospective tenants so they tend to get a lot of people submitting apps but then they only choose the best tenants to move in.  Since their homes are renovated to almost new standard and they keep their rents at/slightly below market the tenants tend to stay longer.  I have only had a few vacancies but the turnover time has been under a month so that is great also.  

So if you have questions about them or turnkey investing in general feel free to message me.  I enjoy helping others become successful since I have been lucky enough to do well myself.  If anyone has had issues with them I'd also like to hear about it.  Maybe I'm missing something.

David

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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
6y

@Richie Thomas 

I agree wth David and I think David Hutson can update you on his portoflio experience with them so far.  Your assumptions are a bit too high and I'm not sure a 19% loss rate on miscellaneous costs is even necessary.  You have assumed extra already with your ratios so I think a miscellaneous costs is too much.  

I will also say that they do a really good job at the price point and in the areas that they manage.  We operate in slightly different areas of town and with different homes. It is difficult to be sucessful as a passive investor in the lower price points, but I think they may be one of the best around at hitting investors expectations.  There are a couple of companies operating here in Memphis that I would suggest to investors and they are definitely one of them.  When we speak with an investor who wants or needs to be in lower priced properties, we suggest they connect with the team at Mid-South Homebuyers.  

Good luck as you move forward!

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  • Daphne Barber
    Rental Property Investor · Investor from New York, NY · Member since 2017 · 95 posts · 35 votes
    9y
    That's great David congrats! May I ask what you're average profit is every month after expenses? I've been looking at a company on the East Coast where the net is like $300 a month which doesn't seem like much. Thanks.
    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    9y

    @Daphne Barber, 

    I get a few hundred, but I take out money for taxes, insurance, vacancy, repairs and PM, plus the mortgage and I have to put 25% down since I have so many loans.  To me that's a very good number since I have very few issues, a home in great condition and tenants that don't move out every year.  Most are longer term. 

    The only downside so far with them is the wait time to get a house.  You have to wait about 4 months to get to the top of their list.  Everything else has been great.

    0Reply
  • Daphne Barber
    Rental Property Investor · Investor from New York, NY · Member since 2017 · 95 posts · 35 votes
    9y

    Great to hear, thanks. They certainly have a nice website.

    0Reply
  • Philip J. Russell
    Accountant · Sacramento, CA · Member since 2017 · 7 posts · 2 votes
    9y

    David-How did you end picking Mid South over other turnkey companies?

    Thanks,

    Philip

    0Reply
  • David B.
    Investor · Worcester County, MA · Member since 2016 · 122 posts · 72 votes
    9y

    @David Huston,

    My one observation is that Midsouth's properties mostly are in "C" neighborhoods, IMHO. 

     There is nothing wrong with this and I think they have really good property management that works well.  

    David, what is your opinion regarding this?  Is this okay and one of the factors that helps with the good returns?

    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    9y

    Yes, I would say they have homes in B and C areas, more towards the C.  I own 15 homes in Memphis now, 8 with them, so I'm pretty familiar with the areas they focus to sell, down to the neighborhoods.  I'm good with these homes because they manage the tenants exceptionally well.  That's the biggest issue with rental properties in Memphis.  They have homes in several different zip codes/parts of town so you can get one from another part of town if you don't want one in a specific area.

    I will say that their current wait list for a home is four months so they are doing something right.  They don't have the normal process to purchase where you pick a home that is available and put in an offer.  You would be added to a wait list and then be prepared to choose from a select group of properties when your name comes up.

    If you have more questions feel free to let me know. 

    1Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    9y

    @Philip J. Russell,

    I chose them due to the quality of the homes.  They do a full rehab.  If you look at the completed photos on their website.  I'm in the military and like things standardized.  They use the same carpet, tile, cabinets, paint, etc for their homes so it's always going to be easy to maintain and replace/rehab when a tenant does move out.  Over three years I have only had two tenants move.  Their rents are just below market and the houses look great.  Tenants don't move often.

    I have bought from other turnkey providers as well as MLS and wholesalers. Turnkey is just easier.

    You are local to me.  You should keep your eyes open for the local meet ups or message me if you ever want to talk properties.  I meet with at least one person here every week or so.

    1Reply
  • Nic S.Pro Member
    Danville. CA · Member since 2017 · 313 posts · 221 votes
    7y

    I spoke to them for over an hour today - super impressed with their systematic approach. I've joined the waitlist - its freakin 8 months! 

    0Reply
  • James Tabb
    Member since 2018 · 11 posts · 4 votes
    6y
    Originally posted by @David Hutson:

    Morning all,

    I closed on my 8th home with them a few days ago and it's in 38128 which is my favorite zip code to invest in.  The home is on Edgewood and should be another steady performer.

    I have been receiving many requests regarding Mid South Home Buyers lately and whether their program really works.  The management is great and I am receiving consistent returns from them.  This is primarily due to their attention to detail and ensuring they get good tenants in the home.  
    They don't charge application fees to prospective tenants so they tend to get a lot of people submitting apps but then they only choose the best tenants to move in.  Since their homes are renovated to almost new standard and they keep their rents at/slightly below market the tenants tend to stay longer.  I have only had a few vacancies but the turnover time has been under a month so that is great also.  

    So if you have questions about them or turnkey investing in general feel free to message me.  I enjoy helping others become successful since I have been lucky enough to do well myself.  If anyone has had issues with them I'd also like to hear about it.  Maybe I'm missing something.

    David

    0Reply
  • James Tabb
    Member since 2018 · 11 posts · 4 votes
    6y

    Hello David, thanks for your comments on your experience with Mid South. I have just done some research and I feel really good about there model and the fact that they're a true turn key company. From what I can tell there are no properties available and you have to go on the waiting list. Did you have to go through this? If so how long is average wait? 

    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    6y

    @James Tabb, not sure if you intended to add something to the post or if I don't see it for some reason.  In any case, I'm up to 13 homes with Mid South Homebuyers.  I bought four this year and will continue to buy their homes due to the quality of the homes and their property management.

    If you have a question or need assistance message me or post here.  I'll be happy to answer.

    David

    1Reply
  • James Tabb
    Member since 2018 · 11 posts · 4 votes
    6y

    Hello David, as I continued to read the other post, I got my answer. I was inquiring about the wait time time once added to the list. It seems to currently be at about 8 months. Also do you have to have the financing or be pre approved already before being added to the list. 

    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    6y

    @james Tabb, I work with them a lot.  The current wait time is more like nine months, even with the expansion into Little Rock.  I recommend you get prequalified, at a minimum, but know that it will probably be expired by the time you get to the top of the list and you will need to resubmit.

    Set up a call with them and they will walk you through it, to include whether they want you prequalified or preapproved.

    0Reply
  • Anna Ferntheil
    Member since 2018 · 19 posts · 10 votes
    6y
    Originally posted by @James Tabb:

    Hello David, as I continued to read the other post, I got my answer. I was inquiring about the wait time time once added to the list. It seems to currently be at about 8 months. Also do you have to have the financing or be pre approved already before being added to the list. 

     I just closed on my first home with Mid South. I have visited a handful of turnkey companies across the US and they have the best system I have seen-and overall are easy to talk to and communicate well. 

    I called about a year ago and got on their list. About a month from moving "to the top of the list" they sent me an email with what was going to happen once I got to the top of the list and started seeing properties. They also let me know I should get my pre-approval letter at that time. 

    The closing process was the most painless I have been through. It was almost too easy and communication was great from them the whole way. They even have their own insurance company they partner with that offers extremely competitive rates. I did some of my own research with a few options before going with them. 


    Hope that helps a little 

    2Reply
  • Richie Thomas
    Rental Property Investor · Sedona, AZ · Member since 2018 · 260 posts · 141 votes
    6y

    @David Hutson I'm glad I found your post.  I'm an aspiring investor who is looking out-of-state, and while I hadn't considered a turnkey operator until now, it sounds like a lot of folks have had good experiences with Mid South.

    I took the liberty of checking out their website and analyzing one of their recently-closed properties.  I couldn't make the numbers work but I thought I'd post the calculator results here anyway, in case anyone has more accurate information or can correct my assumptions (which are always hard to gauge accurately from far away).  If you have the time and bandwidth, I'd be curious to hear your opinions on the accuracy of the numbers, given your recent move from NorCal (where I currently am) to the Memphis market:

    Realtor.com Link To Property

    Calculator results

    Mid South Property Description

    This isn't to imply anything good or bad about a typical Mid South deal.  I'm mostly asking in order to get a sense of the local market and up my investing game.  If there are better examples of profitable Mid South deals, I'm happy to run the numbers on those as well.  Thanks y'all!

    0Reply
  • David B.
    Investor · Worcester County, MA · Member since 2016 · 122 posts · 72 votes
    6y

    @Richie Thomas

    i just took a quick look at your calculator results...your taxes are about $75 too high and your insurance about $25 too high. I also think you can back your maintenance/Capex and vacancy down just a little. to Maybe 8% vacancy, 8% maintenace and 8% CAPEX....the reason is that they do a really thorough rehab and have really good property management

    2Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    6y

    @Richie Thomas 

    I agree wth David and I think David Hutson can update you on his portoflio experience with them so far.  Your assumptions are a bit too high and I'm not sure a 19% loss rate on miscellaneous costs is even necessary.  You have assumed extra already with your ratios so I think a miscellaneous costs is too much.  

    I will also say that they do a really good job at the price point and in the areas that they manage.  We operate in slightly different areas of town and with different homes. It is difficult to be sucessful as a passive investor in the lower price points, but I think they may be one of the best around at hitting investors expectations.  There are a couple of companies operating here in Memphis that I would suggest to investors and they are definitely one of them.  When we speak with an investor who wants or needs to be in lower priced properties, we suggest they connect with the team at Mid-South Homebuyers.  

    Good luck as you move forward!

    Podcast Guest on Show #224
    REI Nation4.578 Reviews
    WebsiteView Page
    4Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    6y

    @Richie Thomas, 

    So I have a few things to add to your calculator numbers.  First Mid South didn't sell that house for $76k.  They sold it to an investor in Dec 16 for $71k.  Another investor I know bought it a few months ago and Mid South still manages it.  Not sure if it was luck or what but I am familiar with the house.  The house looks nothing like the Realtor.com photo currently.  It was painted in their burnt red color and they cleaned up the property, added plants, etc.

    As for the numbers, I believe the seller took care of all of the repairs noted on the home inspection before it was sold.  I'm guessing there was some wear and tear left but no significant repairs were needed to be done.  Vacancy is very high.  Use whatever number but I wouldn't go over 8%, like @David B. mentioned.  One of the reasons I like Mid South is they rent their homes for a little less than market rent and their homes are better renovated.  A tenant can't go down the street to find a cheaper home for rent and get the same quality.  I have only had four turnovers since I started investing with them about six years ago.  (That's where I'm making the money and their vacancy rate is under 4%.)  Insurance is high.  I pay around $500 a year for similar properties.  Taxes are also high.  The Misc is for what?  If you add that to all of your assumptions you won't make money on any property.  If you take out reasonable taxes, insurance, PM, repairs and vacancy with a turnkey out here you may make $150 on the proforma for a quality $75k property.

    Also, when I started investing with them about six years ago I lived in Sacramento.  I moved here about six months ago and it does make it easier to invest here but it can be done from anywhere.  I never had issues being out of state but I do recommend you fly out and take a look around and meet with people here first.  Find the areas/parts of town you like.  Walking the neighborhoods and seeing the quality of work with any company you work with is a plus.

     @Chris Clothier also has properties that are similar in quality in different parts of town and price range. The Clothier family a great company and is well known. MemphisInvest.com, soon to be REI Nation, if you want to look at options.

    1Reply
  • Richie Thomas
    Rental Property Investor · Sedona, AZ · Member since 2018 · 260 posts · 141 votes
    6y

    Thanks @David Hutson.  I got the $76,000 figure from the "Last Sold" price on Realtor.com.  The $150 per month was partially a safety cushion, but also for things like snow removal, yard maintenance, etc. Living in California, I really have no idea how much it costs to have snow shoveled. :-)  I do like the idea of charging a bit less in rent if it means a much lower vacancy rate.  I saw the updated photos on Mid South's website, and I agree it looks much improved from the listing photos, while not being over-rehabbed for its area.

    On an unrelated note, I'd be lying if I said that the prospect of BBQ ribs in Memphis played no part in my interest in this deal.  Lesson learned- never make real estate decisions on an empty stomach. :-)

    0Reply
  • Richie Thomas
    Rental Property Investor · Sedona, AZ · Member since 2018 · 260 posts · 141 votes
    6y

    Thanks @Chris Clothier.  It says a lot about Mid South when even similar businesses in the same market have only good things to say about them. As I mentioned to David, the $150 in miscellaneous expenses was for snow removal, yard maintenance, and an extra safety cushion. The fact that it ended up being 19% of expenses was partially down to my ignorance on how much those things cost, coupled with the relatively low monthly rent.

    That said, I'm trying to learn how to walk that line between being overly optimistic and overly conservative, and so far I've tried to err on the side of caution. It's important to me that I avoid the burnout that a huge mistake on my first deal might cause me, but I know there are dangers to being overly cautious as well. Thanks for lending your opinion.

    0Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 540 votes
    6y
    Originally posted by @David Hutson:

    @James Tabb, not sure if you intended to add something to the post or if I don't see it for some reason.  In any case, I'm up to 13 homes with Mid South Homebuyers.  I bought four this year and will continue to buy their homes due to the quality of the homes and their property management.

    If you have a question or need assistance message me or post here.  I'll be happy to answer.

    David

     David, I am also investing with them. I’m set to close on my 4th MSHB home in the next 30 days or so (5th rental in Memphis and the one I picked up elsewhere was not rehabbed to the same MSHB quality).  Part of the reason I bought one elsewhere earlier this year is the waitlist.  How were you able to buy 4 MSHB homes this year?  Seems nearly impossible.  Are you paying cash?

    1Reply
  • Nic S.Pro Member
    Danville. CA · Member since 2017 · 313 posts · 221 votes
    6y

    @Mark S. I think the cash buyers list is a bit shorter but I’m also curious how he got 4 in a year ;). I guess when you have 15 with them - you get VIP status which I’m not mad at. I’d like to get there one day soon. I’m on wait list - should be at the top in May/June.

    0Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 540 votes
    6y

    @Nic S., it is what it is, but I assumed no favors for anyone and fair is fair.  This one will put me at 4 with them.  How many you got?

    0Reply
  • Nic S.Pro Member
    Danville. CA · Member since 2017 · 313 posts · 221 votes
    6y

    Zero. This will be my first @Mark S.

    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    6y

    @Mark S., @Nic S.,

    I didn't buy them all directly from Mid South.  I am on the same waitlist as everyone else.  I was tired of waiting to be next on the list and now I search for their homes when the current owners decide to sell.  For the past few years sellers overseas have wanted to sell since prices are high or they want to do something different with the money, a few times sellers had a life changing event.

    Some of the homes are a year or two since they bought them and sometimes it is after a tenant turn so the home was just updated.  There are homes that were rehabbed years ago and still have good tenants.  I plan to get at least 25 of their homes so waiting nine months in between purchases would take forever.  Figure out what you want and then find a way to get there.  

    1Reply
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