My first deal with Memphis Invest/REI Nation
I've been lurking on Bigger Pockets for a while, but I have not posted until today. I figured I would start by posting a breakdown of my first real estate deal through a turnkey provider, REI Nation.
I purchased this property in the Memphis area in March 2019. The property is a 4BR/2.5Ba located in a suburb of Memphis. It is in a solid class B neighborhood, and was fully rehabbed by REI Nation at the time of my purchase. My purchase price was $169,900. The property had just been rented on a two-year lease for $1295 in year 1 and $1345 in year 2 ($1325 average). Here are the numbers:
Purchase price: $169,900
Down Payment 25%: $42,475
Closing costs: $4875
Gross Rent: $1325 monthly
Expenses (monthly):
Vacancy (4%): $53
Property taxes: $160
Insurance: $51
HOA: $21
Maint/Repairs (4%): $53
CapEx (5%): $66
Property Management (10%) $133
Lease-up fee (1 month rent with turnover estimated every 24 months): $55
Total Expenses: $592
NOI: $1325-592= $733
P/I: $127,425 x 5.125% = $694
Cap Rate: ($733 x 12)/($42,475+$4875)= 5.2%
Cash Flow: $733-$694 = $39
CoC return: $468/$47,350 = 1%
My numbers are more conservative than the ones REI nation provided. Obviously, the overall numbers are not stellar. However, my goal was just to get started. I also wanted a passive low-risk investment. After reading a lot about REI Nation (Memphis Invest at the time of my purchase), they had a great reputation but were on the pricier side of turnkey investments. That was okay with me at the time.
My experience with REI nation as a company has been great. My investment (I actually own 2 properties with them now) has been very passive. I get a phone call follow-up from their customer service representative every month. I have not had any vacancy so far, and I have not had any missed payments. Only a couple of maintenance issues have come up which were handled without my involvement.
My only real "complaint" about this process is that because it was so truly hands-off, I didn't really learn much about real estate in my first deal. That is clearly by design as REI Nation is geared to be a passive investment. However, I am looking to be more hands-on on future investments as I have been educating myself with books, podcasts and the BP forums. My goal is to move forward with a BRRRR investment in the Memphis area over the next 6 months or so.