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

    NOOOOOICE!  Merry Christmas! @David Hutson

    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    6y

    @Richie Thomas No need to worry about snow here, rarely happens and if it does, it is a slight dusting.  Today on Christmas, I ran the AC in my house.

    901-848-9028
    1Reply
  • Andrew Coulter
    Member since 2019 · 18 posts · 7 votes
    5y

    @David Hutson curious what the exit strategy would be with these homes? Do you think these will need to go to other investors or would home owners be interested if you ever decide to sell? I haven't visited to check out these neighborhoods yet but it sounds like the area where MSHB properties are found are mainly rental properties. Does MSHB assist with the sell of these homes if investors are needing out for whatever reason? Is there a location to find MSHB homes being sold by current owners? Thanks!

    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    5y

    @Andrew Coulter,

    It will depend on where the market cycle is but selling to another investor wouldn't be much of a problem today.  I have 30-80% gains on these homes as of now and rents have gone up $75 on the properties that turned last year.  If I had to sell, which I never will, I can reach out to the investors I work with or have referred and sell directly to them.  Homes here are selling just under the 1% rule currently.  I could sell at 1% and come out very well now as the prices have gone up and there is a shortage of homes.  Turnkey homes, bought newly rehabbed, are usually purchased at retail pricing and that is fine as long as you know you need to hold the home for many years.  There are people who have purchased their homes in the past few years and seen some appreciation and decided to sell and break even or make a small gain.

    Mid South Home Buyer homes are often in high rental neighborhoods but about 50% of homes in Memphis are rentals.  Their higher priced homes, like the homes I have in 38118 or 38115, could possibly be sold to a homeowner but their are numerous investors looking for homes over $100k with rents over $1k.  I would sell to those investors first since I wouldn't have to have the tenant move out.  I could get a contract on those homes in days here with the current market conditions.

    MSHB does not assist with the sale of their homes. They refer it out and I'll send you info on that. I have found many of mine on the MLS. In 2017 I found one owner who wanted to leave the U.S. for a job overseas and was selling a package of three. I put in an offer and ended up with the package at $107k. The appraisal came in at $175k, which is great, but what matters to me is that the total rents were just over $2k. With a rent increase over the past few years I am currently receiving $2,160 a month for the three. This is where holding rental homes becomes profitable. Time is your friend. Turnkey or not, the longer you hold the homes the better the position you will end up in, as long as you aren't forced to sell in a bad market.

    Feel free to send me a message if you have other questions.

    3Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 540 votes
    5y

    @David Hutson, I’m surprised MSHB isn’t also still doing their short-lived “investor exchange” program, where they facilitated the sale of their homes between investors.  It seems like this program lasted somewhere between a few weeks and a few months.  I bought my second rental through that program back in early 2018 for $74,480.  It rented for $850 at the time.  It now rents for $875/month, but the tenant in there has been there ever since.  I might be able to bump rents a bit, but she pays early/on time; she’ll have been there 3 years coming up in the spring and I’d like to keep her.  Plus, and maybe I’m wrong here, but wouldn’t want to do that to an existing tenant during COVID.  

    My third rental with them I bought for $84,000 in late 2018 and it rented for $885 at the time.  We bumped it to $905 a year later.  Then tenant recently moved out after about two years and they had it released in 5 days for $995.  This one is in 38118.  Rental market there is definitely strong. 

    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    5y

    @Mark S.,

    The investor exchange program took them away from their primary business and wasn't worth the hassle.  The give the leads to an agent now and he works with the sellers who want to sell.  There are usually eight to 10 homes that owners want to sell.  It's the only way I would be able to buy as many as I have and I plan to buy two more this year if the numbers work and the properties are where I want to buy them.

    0Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 540 votes
    5y

    @David Hutson, are you talking about Jeremy?

    0Reply
  • David Hutson
    OP
    Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
    5y

    Yes. He gets most of the listings.  It's not required to go through him but I think most do since I don't see many other listings, at least not very often.

    0Reply
  • Dmitriy Fomichenko
    Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
    5y

    @David Hutson

    congratulations and wishing you much success!

    0Reply
  • Steve Fuller
    Real Estate Investor · Houston, TX · Member since 2016 · 1 post · 0 votes
    5y

    @David Hutson -- Thanks for all the information above. Would you mind sharing what figures you use for vacancy and repairs with MSHB homes? I know that every home is different, but I would love to hear what numbers your experience might suggest.

    0Reply
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