Memphis Investment Properties

Rental Property Investor · Lee County, FL · Member since 2017 · 26 posts · 17 votes

Has anyone here worked with Memphis Investment Properties before? If so, can you tell me about your experience with them? How are the property managers? Any issues?

Thanks in advance!

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Zach LemasterBusiness Member

Rental Property Investor · Denver, CO · Member since 2015 · 1k+ posts · 3k+ votes

@Edward Tudino Thanks for the mention.

@John Roesler I would like to add some clarity to this situation as you are not accurately describing our business model. We work across 15 different states in multiple asset classes (SFR, small & large MF, commercial office & retail, along with new build & development). Some of these investments we have complete control & ownership of, and some of them we have partnerships involved in like the one you invested in. So it would not be accurate to describe our overall business model in the simplified version mentioned above. It is accurate that the one home we are discussing in KC you purchased a couple of years ago was through another team we put you in touch with since we did not have the inventory at the time to support what you were looking for. My point is that we work in many different capacities in RE, and sometimes it's hard to understand the full picture based on one experience. One of our most exciting projects right now is the development of new builds in rapidly growing markets like FL & NC! We are set to build over 300 homes this year between both those states in areas where you can enter into a home with immediate cash flow, appreciation & equity! Most of these homes are appraising $20k to $30k above the sales price allowing immediate equity on a new built home in an excellent location. Not to get sidetracked, but I just wanted to add clarity on what we are focusing on currently, which is more of the BTR approach that many of our investors have had a ton of success with.

It is unfortunate that you say you would not work with us again as that shows you see no value in what we assist with. Just to be clear, you purchased a property with our assistance almost two years ago in KC. Yes, it is accurate that the team you originally worked with had poor communication & follow up on the management side. When we had a discussion about your frustrations with the current PM, we did everything we could to assist you with getting set up with a new mngt team. So we introduced you to John who I have personally worked with on multiple levels for over 10 years, and is now doing a much better job managing your property. Looking at the posts you left on this thread they tend to all seem positive, and talking about how the property is performing now that you have better management in place. So I would like to just point out the assistance that we were able to provide when things did not work out perfect. In addition to helping to resolve that situation, we assisted you in setting up an llc & quit claiming the deed to have the asset protection that you had informed us was part of your overall investment plan. Hopefully there is some value we offered here? Real Estate investing has risks like anything, and at some point everyone will experience a bad tenant. I think the best evaluation of a business, management team, partner, etc. is how do they respond to a situation when things don't work out perfectly. So hopefully you feel that we still did our best to set you up for success when things did not work out 100% as expected, and that the main take away from your experience over the past couple of years has been a ton of education which will ultimately allow you to become a more successful investor long term! You took action to get started, and stay the course! That is the most challenging obstacle for most that never do anything! I'm happy to answer any questions you have at any point in time.

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Elizabeth Wilson
Real Estate Investor · Memphis, TN · Member since 2016 · 940 posts · 695 votes
9y
@Ryan Budil - I am a local Memphis investor so have not worked with them as a buyer (at least not yet!). But I can completely vouch for @James Wachob's knowledge of Memphis and REI. They are one of the largest PM companies in the area (at least it feels that way). I'm sure others in BP who have TK investments with them will share their experiences with you as well.
Best of luck!!
3 Reply
James WachobBusiness Member
Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 887 votes
9y
@Elizabeth Wilson thanks for the good words! @Ryan Budil The key is to find a great team! Ideally you would find a company that has everything under one roof. Acquisitions team, renovation crews (fully licensed and insured), Property Management, and a Real Estate Investment Brokerage in case you ever decide to sell.
By teaming up with a solid firm you can mitigate your risk and have some "boots on the ground" that have your best interest in mind.
2 Reply
Glenn Kendall
Mc Kinney, TX · Member since 2014 · 3 posts · 7 votes
9y
So I had a good conversation with an advisor at MemphisInvest and had her send over a number of sample deals.
On the phone, when I asked about cash-on-cash returns, she told me on financed properties I could expect 11%-15%.
On their actual spreadsheets, these were actually numbers for ROI.
However, in digging into their spreadsheets, I noticed a number of glaring omissions from the calculations:
- closing costs excluded
- vacancy factor excluded
- maintenance reserve excluded
When all of these things are included, the actual cash-on-cash was less than 25% of their stated returns, and although I did not bother to calculate the ROI, I would guess the true ROI is about half of their stated ROI.
The response I received to my questions about this were
- since closing cash is a one-time thing we do not include it
- only fixed costs are included so vacancy and maintenance are not included in their calculations
Honestly, I was quite surprised that these basic things were not included in their calculations. I have yet to run across any standardly accepted calculations that would omit significant and likely costs of ownership. They have a large base of investors, and I am puzzled why so many would be satisfied with such a seemingly inaccurate calculation.
Am I off base in my thinking?
What thoughts do you have?
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
9y
@Glenn Kendall vacancy and maintenance will happen. If you do not include that in your calculations, you will lose money. 10% for both is high, but that is a good starting place. If you are losing money calculating 10% for both, then you are taking on higher risk then normal. There is no way to make 11 to 15% without including maintenance and vacancy. You may make it at some point in time, but over the long haul, no way. I own 21 properties in Memphis, Little Rock and Knoxville and you have to include vacancy and maintenance.
901-848-9028
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Amit Kumar
San Diego, CA · Member since 2017 · 33 posts · 7 votes
9y
I've had conversations with them but haven't purchased a TK at this point. overall they seem to have their act together and do 2 year leases but I think take first months rent for finding tenant. they reportedly work primarily in b and c+ neighborhoods (if memory serves me). I didn't like the fact that if the house appraisal comes back below the selling price they won't renegotiate (although they claim that 70% of properties appraised at value) feel free to pm me any questions I may not have answered. again all the information is from a couple of conversations, I do not have property with them at this time
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Glenn Kendall
Mc Kinney, TX · Member since 2014 · 3 posts · 7 votes
9y
@Alex Craig I couldn't agree more. The fact they omitted such major components blew my mind. In a follow-up conversation a few days later I was told that only fixed costs were included in their calculation, not costs which were unknown and that is just the way they calculated returns. I guess anyone can make up their own definitions but that doesn't make them valid.
@Amit Kumar The fact that only 70% of their properties appraised at value was probably the major reason I chose not to invest with them. The properties that don't appraise at their selling price appraise for 10-20% less. Their price is non-negotiable. So I am starting off significantly in the hole.
I was told their's wasn't for people who wanted to get rich quick: I'm not trying to get rich quick; I just don't want to get poor fast, and purchasing a property that is over-valued violates my #1 rule of capital preservation.
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
9y
@Account Closed I can't speak for their model; they have a lot of happy clients, so something obviously is going right. I am just stating that if you do not include vacancy and maintenance into your purchase decision, you are not evaluating correctly. I used to not V&M in my #'s and would tell our clients to plug in their #'s, but 10% for both is a good worst case scenario for evaluation and if you like those #'s, then you will be ok.
901-848-9028
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Greg GaudetPro Member
Investor · Pukalani, HI · Member since 2017 · 413 posts · 291 votes
9y
Originally posted by @Alex Craig:

@Glenn Kendall vacancy and maintenance will happen. If you do not include that in your calculations, you will lose money. 10% for both is high, but that is a good starting place. If you are losing money calculating 10% for both, then you are taking on higher risk then normal. There is no way to make 11 to 15% without including maintenance and vacancy. You may make it at some point in time, but over the long haul, no way. I own 21 properties in Memphis, Little Rock and Knoxville and you have to include vacancy and maintenance.
Thank you for your input Alex. I've been looking into the Memphis market, only because the market I live in is way too expensive. Would you mind sharing which of the 3 markets you mentioned (Memphis, Little Rock, and Knoxville) would be best, in your opinion, for a beginning investor looking to start off with a SFH REI in the $30-50,000 range?
Podcast Guest on Show #385
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Brian LeinbachPro Member
Venice, CA · Member since 2017 · 2 posts · 1 vote
9y
I did see a list of all of their upcoming properties and applied the 50/50 rule to do a quick evaluation and realized their wasn't a deal on that list that stood out as a good deal. I am still trying to wrap my head around it. I don't mind if they make some money flipping the property, I also don't mind paying higher management fee if its good quality. But I can't make any money on these margins.
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
9y
@Greg Gaudet I think the 30k house in most markets is a risky venture. I only recommend those for local investors who truly understand the market, the risk and can give it the 100% attention it may need. 50k is possible in LR and Memphis. My entry into Knoxville is simply buying homes around our restaurant. We are typically all in around 65k in these areas, but keep in mind, we do more rehab than most of the investors so that we can have more cash flow and less maintenance and vacancy. Better rehabs create a more passive investment.
901-848-9028
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Greg GaudetPro Member
Investor · Pukalani, HI · Member since 2017 · 413 posts · 291 votes
9y
Originally posted by @Alex Craig:

@Greg Gaudet I think the 30k house in most markets is a risky venture. I only recommend those for local investors who truly understand the market, the risk and can give it the 100% attention it may need. 50k is possible in LR and Memphis. My entry into Knoxville is simply buying homes around our restaurant. We are typically all in around 65k in these areas, but keep in mind, we do more rehab than most of the investors so that we can have more cash flow and less maintenance and vacancy. Better rehabs create a more passive investment.
Mahalo Alex. After doing more research the past few days, and getting more feedback from folks like you, I have decided to aim more towards the 50-100k range probably in Memphis. Like you said, I'm thinking of doing something in the 65k range with top to bottom rehab so that I don't have to worry about capex and maintenance costs as much. I'm thinking that if I have a top to bottom renovation with everything down to new roof, plumbing, and electrical, I can safely assume %5 for capex, maintenance, and vacancy each instead of 10% each.
Thank you for your input!
Podcast Guest on Show #385
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
9y
@Greg Gaudet You bet. Little Rock has been good to us for that sub 70k property. Taxes are cheap. Section 8 program is well run and one of the areas we like is really a nice area, not sure why housing is so cheap in that particular area.
901-848-9028
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Glenn Kendall
Mc Kinney, TX · Member since 2014 · 3 posts · 7 votes
8y
@Brian Leinbach. You could make money on their properties if you use their assumptions. Unfortunately, their assumptions are very flawed.
0 Reply
Peter Schuyler
Fort Myers Beach, FL · Member since 2016 · 225 posts · 124 votes
8y
They just hosted a great tour of Memphis, Marco Santarelli from Norada was there, Aaron Chapman and many others, it was a great two days and they educated and feed us well. 33 Memphis properties were for sale, and investors including myself were scooping them up along the tour. They offer some rehabs and new build, you really should check them out, great folks.
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Mark S.Pro Member
Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
7y
I am under contract with them on a property right now. I've been following them for a while now and James seems extremely knowledgeable about the Memphis market. His videos, especially the one where he goes over the different areas of Memphis on a map, are awesome. Another investor beat me to my first choice property, but James sent a personal customized video response to me via email with a few other, similar recommendations. I thought that was an excellent way to handle the situation and I am under contract on one of those homes right now. The photos look great, for the most part (the front lawn is a little rough and some other minor things) - we'll see how the inspection goes.
It's probably too soon to tell, but I'm already having to wait several business days to get answers to some very basic questions from the property management company they put me in touch with. After reading some sub-par reviews on the PM company online, I am a little concerned to be honest. I hope I'm wrong, but my gut feeling on the PM is not great right now. Fingers crossed. Will report back in the future on all this.
1 Reply
Shane Swanberg
Sacramento, CA · Member since 2018 · 9 posts · 14 votes
7y
Mark, have you closed on that property yet? I've bought a few through them and I'm out in CA.
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John Roesler
Rental Property Investor · Saint Paul, MN · Member since 2019 · 44 posts · 37 votes
7y
Are we talking about https://www.memphisinvestmentproperties.net or https://www.memphisinvest.com ? I didn't realize they were different companies when I was first looking.
I haven't bought a property yet, but I have had a few conversations with the folks at the Reedy owned Memphis Investment Properties and am getting closer to moving on a property.
@Shane Swanberg did you buy through Memphis Investment Properties? What was your experience?
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Shane Swanberg
Sacramento, CA · Member since 2018 · 9 posts · 14 votes
7y
Yes, I have. Experience has been good. Solid cash flow, steady tenants so far and management is responsive.
2 Reply
John Roesler
Rental Property Investor · Saint Paul, MN · Member since 2019 · 44 posts · 37 votes
7y
@Shane Swanberg I am just going through the process to purchase my first property with MIP. There is already a tenant in this house and so I am looking forward to the immediate cash flow. Great to hear that management and tenant experience has been good so .far. I hope to have the same experience.
1 Reply
Brandon Rivera
Member since 2017 · 14 posts · 2 votes
7y
Congratulations and good luck @John Roesler. Looking forward to reading updates.
0 Reply
Nicole Schrock
Brush Prairie, WA · Member since 2019 · 11 posts · 1 vote
7y
@John Roesler Thank you for pointing out that MIP and memphisinvest are 2 different companies. The company ther person spoke about in the post earlier said that said they left out a bunch of fees but they also said it was with Memphis Invest. I am on the ledge of buying my first property with them and I have already been pre approved, I am just a little nervous.
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Ned J.Pro Member
Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
7y
In my research on several TK properties, its not uncommon to leave out the vacancy and maintenance factors out of their numbers....which I find alarming....makes their numbers CoC and ROI look better than they will really be. You can still make some $$ but not nearly what they make you think. Run your owner numbers...
Biggest factor I see many TK investors leave out....equity and appreciation. You tend to pay top dollar, so you have zero added equity on purchase......and many of these units are in areas that don't appreciate much...so when it comes time to sell.....and everyone thinks they will keep it forever, but few do....... you need to factor in another 8-10% for getting ready to sell, agent costs and closing costs. So some of that "awesome cash flow" is going back out of your account when that time comes rolling around....
2 Reply
John Roesler
Rental Property Investor · Saint Paul, MN · Member since 2019 · 44 posts · 37 votes
7y
Completely agreed on the left out fees / assumptions. The most common one I've seen left out is the tenant placement and renewal fees, often sizeable ( placement commonly 1 month rent).
I made my own spreadsheet based on the BP calculator, and I plug every turn key I look at into it. I am findind that when they say about 13% COC, its closer to 6-7% COC.
I've since cooled on MIP and decided not to buy the house I was looking at - just wasn't as good a deal as I was originally thinking. Now I'm in the process of closing (have a purchase ageement and due diligence is happening this next week) on a house in Kansas City MO through Rent to Retirement.
I found this gentleman's story to be helpful for things to think about when investing long distance - https://www.jumpinrealestate.com/
3 Reply
John Roesler
Rental Property Investor · Saint Paul, MN · Member since 2019 · 44 posts · 37 votes
7y
An update for anyone following along - closing on the KC MO property this Friday 6/28. I'll be happy to share updates in the future as I see how the property performs vs. my calculations / estimates.
2 Reply
Account Closed
Member since 2019 · 13 posts · 4 votes
7y
@Shane Swanberg Hey, I am also from CA and looking to buy a property with MIP, did their cash flow projections work for you so far? Were the houses appraised for the purchase price?
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