does anyone have feed back meridian pacific properties

Question

I stumbled across this Meridian Pacific properties and was wondering if anyone has done business with them and if they promise what they offer?  It seems to good to be true.  They guarantee a 1 year lease on your investment property and claim to have found hots spots that will show appreciation of 18% per year, all you have to do is purchase the property from them.   From what I read they act as the property management company as well.   I am interested to to here what the BP community thinks of Meridian Pacific Properties.

Jerry W. · Answer

No offense intended but if you only a few posts no one really takes your posts about how good a company is very seriously. it is very easy to open an account and rave about your own company. if you have hundreds of good posts you are taken much ,more seriously.

It is good to interact but your first few posts giving testimonials just lack the reliability of long term posters.

David Hutson · Answer

I have purchased a new home from them in the last year and it was a full price home. The return isn't as good as my other Memphis homes but I am ok with it as it a new home and performing well.

As for the management.   So far I have no complaints.   There was a small glitch initially but it was quickly corrected.   It's 10% for their mgmt fee.  I pay 8% for my other homes there but it's worth it to me for the good service since I am on the west coast.

Account Closed · Answer

I have one property through MPP purchased 1 year ago.. They do a pretty good job.  I did have some difficulty with closing dates being rushed then postponed and a few errors on closing docs that eventually were corrected.  Once up and running things have been generally smooth with one small dollar dispute on repairs.  After 11 months my run rate for cash on cash is close to 10%. 7.5% after renters insurance and property taxes and minor repairs this year ( I was a cash buyer)  Do beware of any market forecast "Model" suggesting annual property appreciation be included on your return considerations. This is a type of relationship where you are looking for turnkey rental cash flow, not major market appreciation for a flip.  You would need to go elsewhere for that.

Justin B. · Answer

Sure.  10% down is only $7k.  $250/month is 42.8% COC Return.  37.5% if you take into consideration closing costs (~$1k).  The IRR isn't simple math I can state here but the numbers I spit out were using 2% appreciation (so very conservative).

Michael Finn · Answer

@David Hutson  - We truly value your business and please let us know if there are any items in which we can serve you better with during your investment.

Michael Finn · Answer

@Scott Somerled -

Thank you for the questions, and of course, we would gladly spend the appropriate time to answer any others you have have over email or phone, if you would like.

Currently we manage approx. 330 doors in the Memphis market as well as a 128 unit high rise apartment. With our SFR homes, our average rent is approx $1150/month, average length of lease is approx 18 month and our average vacancy is just under 6%. Another important PM measurement is we average approx 96% collections per month.

Our PM rate is 8-10% depending of how many homes you have under management with Meridian.

Lastly, we have two offices. One in San Diego, CA which where we run Sales, Marketing and Operations, as this is where the largest portion of our investors come from, and one in Memphis, TN which is where we have have our Acquisitions, Renovations and Property Management teams. So we do in fact have "boots on the ground" in Memphis and have had so for many years. Memphis is also where one of our Founders and Principals, @Jeffrey King, lives almost full time, year around.

Speaking in broad terms, the largest difference in product for us is we focus on the A-B+ Class Memphis neighborhoods, which would be the $90K - $180K price points and $900-$1595 rents per month. We have found through our experience that these price points help provide a higher quality home (age, location, school district, curb appeal, crime rate, median household income, lower maintenance profile, appreciation potential, etc.) and a higher quality tenant (fiscally more responsible, less transient, strong job security, etc).

I hope this helps give some clarity to our business and please let me know if i can be of assistance.

Sincerely,

Michael Finn

Scott Somerled · Answer

@Michael Finn  Thanks that is greatly appreciated.  A few questions for you.....

How many properties do you have under management?

What is your occupancy rate?

What do you charge monthly and initially to place a tenant?

Do you own the property management co. in Memphis that you use?  As your team is in San Marcos, CA.

What makes you different than any other team that is in Memphis and has all aspects of the operation grounded there?

@Justin B. How does $250/month cash flow on a 70k property give you those numbers?  Can you break that down for me/us?

Thanks

Michael Finn · Answer

Thanks to everyone for the comments and thoughts so far. Being forward, this is my first post on Biggerpockets, and yes, I do work for Meridian, as our Key Accounts Manager.

Biggerpockets has become a fantastic forum for investors, vendors and turnkey operators, so I thought I could use this stream to help clarify some of the concerns mentioned about programs like ours.

For some context, I actually came to Meridian as an internet lead turned investor over 4 years ago and liked their business model so much, I came to work for them.

The program we offer is actually a Rental Warranty, not a guarantee, which is a big difference. Guarantees can act more like a seller subsidizing rental incomes rather than true market rents, and, as many have mentioned, be a costly expense that would likely be wrapped into company margins. Meridian sells all of our investments only after they are tenanted and performing. The warranty is simply us standing behind our placement of this first tenant and, as us, as a Management team. If there is a break in the lease with the tenant we placed within the first year, the Meridian warranty helps cover that vacancy until we can stabilize the property again. This happens quite infrequently, which is honestly why we are able to offer it.

Another small clarification, we do not proforma our investments to show 18% appreciation rates. The return ratio we use is an IRR (internal rate of return) calculation, which assumes a leveraged purchase with a 20% down payment. The IRR is an annual return which is comprised of the annual cash flows (9-10% per year)  plus two equity components, debt pay-down and appreciation. That is how we derive the 18% annual returns. Of course, that would require a sale of the investment.

We actually underwrite our properties at a 3.5% appreciation rate, which given the the zip codes (Meridian invests in 9 zip codes in Memphis), price points ($100K-$180K, which is at and above the median home price) and market historic averages, this is a very conservative measure.

With that said, appreciation is really considered more or "icing on the cake". We believe in appreciation, however cash flow in high quality investment is main purpose of these investments for us and for our clients. We have found that while the cash flow proformas may be lower in these areas, we have a higher quality of tenant (lower vacancy), higher quality property (lower maintenance) and stronger neighborhood fundamentals (more liquidity and appreciation potential).

All in all, this product appeals to the investor base that is looking for a more stable and quality investment than simply the highest rate of return.

I hope this helps a little and look forward to the continuing the dialogue with this group.

Best regards,

Michael Finn

http://www.meridianpacificproperties.com/

Dean Letfus · Answer

Anybody offering rent and maintenance guarantees has built a huge margin into their sale price.  Never a good deal for the investor long term. Especially in a market like Memphis with patchy appreciation

Jay Hinrichs · Answer

Most of my turn key guys that tried rental Guarantees and maintenance ended up not liking it.  And or as Mr. Davis pointed out needed to mark them up to cover this expense. Neighborhoods not withstanding.

Although the little bit I know about Memphis I do Know Germantown would be a place that could appreciate as opposed to areas that are over flowing with rentals.

does anyone have feed back meridian pacific properties

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