Chris Clothier - Memphis Invest

37 Replies

Has anyone ever bought a rental property in Memphis from this person?

He lists MANY properties for sale in the BP "properties" section at what appears to be highly INFLATED prices. Also makes what appears to be unlikely claims of expected cash flow.

I've looked at several of his listings and many are 10k or more over what even Zillow estimates the value to be. And the conventional wisdom seems pretty much to be that the "zestimate" found on Zillow.com is very inflated and to be taken with a grain of salt. Of course, maybe the toilet seats are gold plated, and he puts in marble floors, but....

So, has anyone bought properties from this guy? If so, did you end up overpaying? Did you achieve anything close to the cash flow he claims you can make?

Not trying to be a jerk. But I own propeties in memphis, and this sounds suspicous. My loyalty tend to be with fellow BP investors, not with vendors.

PG

Phillip -

Since you began attacking my listings on here several months ago, I have invited you to contact me to see if I could assist or help with the obvious problems you are having here in Memphis with other vendors.

Please be fair in your posts and let readers know that you have never taken the opportunity to speak with me or anyone from my company about our services or properties. As I state on here many times, we have built an excellent reputation for being transparent and honest. I welcome your thread asking for information on me and my company, but I also respectfully ask that you at least have some working knowledge of a company or individual before you begin to slander them or their listings.

I have no idea who you have done business with here in Memphis or who currently manages your properties, but as always, my door is open if I can assist you.

Best Regards,

Chris

Hey Brian,

Thank you so much for your response. I will tell you though, that Curt Davis is a part of another company named Memphis Investment Properties, LLC. The company founded and operated by my family is MemphisInvest.com. I can tell you that Curt Davis is a good guy and will be helpful. We concentrate on a little higher end property than Curt and do a little more work on the front end, but they are good people who will do their best for you if you choose to invest with them.

If you would like to meet when you are in Memphis to get multiple perspectives, I would be more than happy to meet with you. Best of luck with your investing.

Chris

Chris,

Could you plse point out where I am being "unfair" and slandering you simply by pointing out the inflated prices you are asking for your rental properties?

I have spoken to you about your company. Remember the many emails we exchanged? Sorry if I chose not to phone you and listen to your sales pitch. And you didn't do a very good job of explaining your high sales prices and claims of high cash flow on properties with such low GRM.

You can try all you like to divert attention away from the subject (your prorperty prices, fair or over value. Your cash flow claims, realisitic of hyped), and talk about whatever vendors in Memphis I've dealt with. I waas asking about you.

Still interested in hearing from anyone who has actuallying purchased properties from Chris, 10k or more over zillow estimate, with an average down payment, and still made a chunk of positive CF each month by renting them out.

Maybe we could analyse one of your recent listings here, and see how realistic your claim of $300 positive CF really is. There are experienced investors on the board who are good at such analysis. I am assuming you'd be willing to provide your operating expense assumptions. Maybe we could start out by analysing the property at 5273 White plains?

PG

Chris,

Here is one of your listings at 5273 White plains, 38116. One of my propeties is in Fox Meadows in the zip next door 38115.

You are asking $75k, the zillow "zestimate" is $70k so you are asking around 5k over the zillow estimate, which is typically highly inflated to begin with. Not an "attack" just the concensus. I notice most of your asking prices are above the zillow estimate. Most educated investors would question this right off the bat. Not just me.

You estimate the rent on this property to be $800. So, 75k purchase price on a property renting for $800. Frankly that is more like a GRM you'd see for middle class properties in California, not Memphis. But, anyway, you claim positive CF of 200-300 a month.

Let's see, mgt+tax+ins+vac+main would be around 80+125+50+60+60=$375, plus mort payment of maybe $325 and you more like a cash flow of 100 a month would be more realistic.

So, go ahead and call the above an attack and try to make something personal out of this if you must, but all I am saying, in line with Josh's caveat in the sticky at the begining of this section, BUYER BEWARE.

Still would like to know of anyone who has purchsed from Chris.

PG

I have been recently looking at investing in the Memphis area as well. The New Jersey market is very difficult now. I recently have been in contact with a colleague of Chris's at Memphis Invest LLC, his name is Curt Davis, and so far he has been very helpful, courteous and informative. I plan on taking a trip to memphis and meeting some of the staff and reviewing an investment plan with them, but so far I have no complaints.

Funny you should mention Curt Davis. I mentioned Curt to Chris in one of my emails to him and Chris made a point that Curt DOES NOT WORK for him and is not associated with Memphis invest in any way. Whatever that means.

Brian, been there, done that. Of course they are courteous...etc. They are sales persons. Nothing wrong with that. Just don't be too naive. There is a lot they won't tell you. Biggest thing for me was just how crappy the tenants are in memphis. Of course, they spin it like: "Memphis is an excellence rental market. In fact, over 40% of the population rents...blah, blah, blah." What they don't tell you is that is because an inordinately high number of people there can't handle their finances, and therefore, don't own and have to rent!

PM me if you want more info.

PG

You have to be colleagues to PM someone. "Follow" Phillip and then check "add as a colleague" when prompted.

can't handle their finances, and therefore, don't own and have to rent!

From a landlord's perspective, what's wrong with that? You're selling a product - rental housing. You want lots of customers.

I don't know if that particular deal is a good one or not. I do know you can always do better if you bypass turnkey rentals. The person offering the turnkey deals is going to make money on the deal, or else they wouldn't be doing it. If you have the time, money, and ability, you can get directly on the ground and make more money than buying a turnkey. And, yes, it does appear to me some turnkeys are sold at inflated prices to naive investors who don't bother doing any due diligence. Some appear to be OK deals. Do your own due diligence on prices, rents, and rental demand and decide if giving a turnkey provider a cut of your money is worth it.

Interesting thread. I'm usually not a fan of the 'inquired party' (IP) interrupting a thread about themselves. I often feel that they do it to ward off any would-be posters of negative comments about them (not saying that that's Chris' intent).

Having said that, since the IP did enter this thread, I look forward to his response to your questions Philip.

Jon,

All cities have renters a landlord can "sell" to. But in memphis it's difficult to even find an applicant that doesn't have at least one financial judgement against them. So I have been told by several Memphis pms. That being the case, it gives me little solace to know that there are a larger proportion of the population there that rents. I should have found a market with a smaller but adequate rental base without a "deadbeat" culture.

PG

Jon -

I absolutely agree with your point that not all investors need a company or service like mine and it absolutely comes with a cost. But I wanted to point out that not everyone lives in or has the time to be actively involved in their investing. If they do, there is no reason to use a turn-key vendor. That term in itself is so overused that it would make a great thread to ask what really is the definition of turn-key. Every one of our investors have full time jobs or live in markets where cash flow with low entry price just isn't possible. In that scenario, our investors look to a company like ours to handle the transaction for them and absolutely pay a premium for that service. But it is a big responsibility to treat them fairly and help ensure they are successful.

Chris

Ibrahim -

Believe me, the last thing I want to do is get involved in this query. But it stems from my asking Phillip to not comment on my property listings with negative remarks about how overpriced we are, if he will not speak with me one on one. Since seeing his first post I have offered to try and help with his negative investments here in Memphis, but he has not responded. I have only offered my assistance. Nothing more or less.

But he has a right to his opinion and right to ask about me. One thing you will not see on here is a bunch of brand new registrants posting how great I am. I don't know if we have any investors on BP, but I do know as I stated in an earlier inquiry about my company Memphis Invest, that an interested investor can talk to as many of the 292 investors we serve as they need to get a good feeling about how we do business.

Now, how about the numbers on this property.

Phillip -

Here is how we reached the numbers on this property. the purchase price is actually $72,900 and it was sold today with contract pending at $70,500 even. That being said, it was entered incorrect on our site and our assistant used those number and posted it at $74,900 on BP. That is minor and I ran the numbers at that price to show how we reached our calculations.

Cost - including $16,000 in completed renovation $74,900
25% down payment $18,725
Financed amount $56,175

Assumptions

Financed at 5.25% for 360 months $310
Taxes - City & County $137
Insurance $ 25
Property Management $ 74

Monthly costs for the property are $546.

We estimated the property would rent for $825 and that is the number we used in calculations. The property actually is awaiting the closing of a two-year lease with first year at $825 and the second year at $850 with a $1050 deposit retained by the owner if and when the tenant moves out.

Rent $825
Costs $546

Monthly cash flow is $276.

Very few of our 292 investors actually look for cash flow from properties for expenses - say living expenses. A majority are looking for the positive cash flow as a passive investment. That being said, each has a different calculation for vacancy and maintenance costs but we recommend calculating 10% of the gross rent for a vacancy and maintenance cost. By doing (and documenting) extensive renovations on the front end to the properties, it raises the initial price, but we are seeing a drastic reduction in deferred maintenance and holding costs.

Lastly, this particular property is being purchased by an investor for $47 per square foot after all costs which is an extremely good deal. They are paying $56,900 for the property and $16,000 for the renovation for a total price of $72,900. The property was assessed within the last two years at a value of $91,000 and at $825 the rent multiplier is at 1.13 which is not our best property, but it will perform better as rents improve.

Those are the numbers on this particular property.

Phillip - please accept my invitation to discuss if there is anything we can help you with here. It may be that we cannot, but if we can, the offer is there. You are absolutely entitled to your opinion and I respectfully disagree with some of what you've posted on our properties, but welcome the chance to speak directly with you.

Chris

I have read for a bit this post and a previous one with the same topic with I believe the same person starting the thread so I thought I would throw in my 2 cents.

I have never met Chris, but I have been a broker in Memphis for several years and deal in the same business as his company. I am certain we know many of the same people and I can say that he does have a good reputation around town. That's from a competitor, not an associate.

My thought in reading the OP is that the level of thinking isn't thorough enough to pass judgment on valuation. I am familiar with many of his listings and when performing properly I would reason that they could obtain those results. The consideration has to be made to whether the tenants will pay and whether maintenance and unexpected expenses will be a factor (theft/vandalism/eviction). Those are issues that unfortunately are prevelent in Memphis rental markets, ones that we obviously don't like to shed an emphasis on when selling a property. If you were to run numbers under an optimum scenario of collection of rents vs. normal maintenance the property probably performs as advertised. What has to be considered is the likelihood of that actually happening. While management is a factor in that result, the neighborhood and thus the related tenant base can give a good indication of the likelihood that optimum results can be achieved.

In evaluating the property and its related value, expected performance combined with the probability of those results being achieved lead to the valuation of said property. I do seem to see the mention of zillow and its valuation of the property. While some may use this tool, it is no substitue for knowing the area and the circumstances that actually contribute to the valuation, not just a computer formula. If anything, zillow may have contributed more harm than good with valuation, but thats another discussion.

While I am sure some properties havent performed, and he would probably acknowledge not all do as planned, his company must have a number that do with as many deals that they complete.

A better question may be what they do for the clients when a property doesnt perform as advertsied.

The bottom line is if you want somebody to put something into a nice little box with a bow on it you will pay through the nose for it.

Just like information you can dig yourself or pay someone for the info already packaged.

So it's 300 then 276 and then take away a normal vacancy turn rate for a good area and you are closer to 200 a month if everything is perfect.

It's a marginal deal at best but for investors who want turn key it's what you will get.

I understand investors not investing in their own back yard if it is not a cash flow area and is appreciation driven with high price points.

Every investor has a different threshold that constitutes a deal to them so what is a great return is subjective.So from what I have seen turn key people are selling legit marginal deals or they are over inflating properties.I have not seen turn key sell smoking deals.

Many investors are not flipping anymore because of the long hold times with FHA seasoning.Instead they sell these turn key properties with alternative financing.The churn rate and number of properties that can be sold is much greater to investors than home buyers.

I've never dealt with Chris myself personally but i do have a investor/friend of mines who has dealth with his brother Kent and has said that they are legit,im not a big time earner or anythign but i take what this guy told me to be true as he has always been,this guy is also wholesaling deals there as well adn from a few well known people all say that the Clothiers are honest buisness...just my 2 cents..

Cost - including $16,000 in completed renovation $74,900
25% down payment $18,725
Financed amount $56,175

Assumptions

Financed at 5.25% for 360 months $310
Taxes - City & County $137
Insurance $ 25
Property Management $ 74

Monthly costs for the property are $546.

We estimated the property would rent for $825 and that is the number we used in calculations. The property actually is awaiting the closing of a two-year lease with first year at $825 and the second year at $850 with a $1050 deposit retained by the owner if and when the tenant moves out.

Rent $825
Costs $546

Monthly cash flow is $276.

What about maintenance?

PG

My thought in reading the OP is that the level of thinking isn't thorough enough to pass judgment on valuation.

Brandon,

Be honest. Would you pay 5-10k over the estimate on Zillow under ordinary circumstances?

Would you buy a 50 year old rental property in and average neighborhood in a zip such as 38116 for 75k that only rented for 825 a month? Thinking it would be some kind of cash cow?

I'm not saying you have to be staunch advocate of the 50/2% rule of thumb. But like I said, GRMs like that are what you expect to see in California. Not an average area of Memphis.

TC

I have to ask why do you care what anyone is paying for property that you aren't involved in? It's apparent you have an ax to grind with Chris and Memphis Invest and are using passive aggressive posts to voice your "anti-Chris" message.

What's your goal here? More to the point, who appointed you the babysitter of all real estate transactions in Memphis? What business is out of yours what someone pays for a listing that isn't yours or isn't asking for input on?

These types of posts irk me as there isn't any real benefit to them. The OP often doesn't have a real gripe other than they don't like whom they're posting about and are simply looking to stir the hornets nest by creating negative press.

Phil,

I'm curious as to why or how you're basing your value vs. zillow's highly inaccurate and wildly fluctuating zestimate.

There are many posts and arguments around the web on the problems and tainting this zestimate does to both buyers and sellers thoughts.

In my area, the zestimate fluctuates constantly and way to quickly. I have seen my primary residence change in swings of $50k in the span of a few days.

The zestimate is blind, meaning if 2 similar homes side by side are fairly close, but one has a $25k brand new chef kitchen and the other has a 25yr old throw away kitchen, zillow is none the wiser, hence inaccuracy.

Is this zestimate more accurate in other parts of the country? In the northeast it is considered a joke.

Philip,

Would I buy that property, no. However I am an active investor in the city and I am certain I can find better deals. As another poster mentioned, for someone who wants to put no time nor effort into owning the property and receive a small return, it may work for them. They may not be able to obtain that in their hometown. That's what many investors looking for the turnkey (just mail me a check) property each month may find attractive.

I never claimed that this property was a good deal, but that to determine if it were a good deal you would need to do more research than comparing the sales price to zillow.