Move to new PM? Sell? Looking for advice on Memphis SFH rental

Move to new PM? Sell? Looking for advice on Memphis SFH rental

Patrick GiblinPro Member
Rental Property Investor · Burlington, VT · Member since 2020 · 48 posts · 26 votes

I am an out of state investor I have a SFH rental I purchased 5 years ago from a large, turn key operator, who has continued to PM the property, located in Memphis within the 38118 area code. It was renting for $1495, up until tenant move out in July, purchased for $160k in 2021, 4 beds, 2.5 baths

I've worked hard to keep tabs on the property, keeping it up and communicating with PMs. However, my first turnover is happening and the PM has quoted me over $10 of work (including 15% fee).  While I know I am probably getting marked up, the house has significant wear and tear, despite the team doing an inspection in February (with some issues never really addressed). I've never taken a dollar out of the property, but now all that savings is going right back into the property, and I am weighing my options as it seems if that will happen with most turns, this process is not worth my time


1) Complete the work, move on the a new PM. I've reached out and I am asking specific questions of each

2) List and sell. Zillow says $166 estimate. An investor in the area has told me I'd get much less. To break even, meaning get back my down payment and closing costs and pay of mortgage, I'd need to sell with a formal listing for $170k (assuming 10% closing costs) or $152 cash


This has been my first SFH as an out of state investor, and other than building my own team, I've been pretty on top of things compared to most, so I feel like this is a real gut punch. I work in health care and cannot sneak away during work hours to do emails, communicate with PMs, or other forms of management, which makes it a bit harder

Would appreciate any insights

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Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
1mo

Have to agree with @Stuart Udis; you have a broken business model. I would love to tell you something more pleasant, but no value in that. So here it goes: 

1.) Your rents are quite low and you have to pay a PM, so not much cash flow to fund repairs and maintenance.

2.) Lack of appreciation over the last 5 years is a really bad sign. US real estate has gone up 38.1% on average since 2021 (Case Shiller)

3.) Low price point = rough tenants. You chose the property, the property chooses the tenants, nothing a PM can do.

4.) Remote and managed by PM. Extra cost burden and lower level of oversight. Nobody will manage your money like you do.

Most new investors on BP have rose colored expectations of PMs (and contractors). Choosing a PM with a lower rate amplifies the problem. What did you expect for $72 per month? That pays for maybe 30 minutes of whatever, most of it is facilitating your 15 min phone call and responding to 2 emails.

I have been investing in SF for 17 years and have tried all sorts of price points. If you want to make money you need to be at least at the median price for your city. Better above median. Better homes, better tenants, better income, better appreciation. The business model works. When you are scraping the bottom of the barrel it gets tough. Some people are scrappy enough that they make it work below that, but: they manage personally, they do most of the handyman work personally, they spend a lot of time and care screening tenants and checking on them.

You can't make money in REI without appreciation. Either cash flow pays for capex or appreciation does. So if you want to call one of them "profit", you need both.

How long before you need a new roof, driveway, HVAC, kitchen, bathroom, flooring, windows, siding,..? They all have a countdown timer attached to them.

You can spend 10k very quickly on a turnover: 

- new paint 3k
- new carpet 4k
- carpentry: a couple doors, some trim, a bathroom cabinet: 1k
- trim overgrown landscaping: 1k
- HVAC service and misc repairs: 1k
- a little bit of plumbing or electrical: 1k
- new appliance.. 
- new water heater..

My recommendation: your next 5 years will be similar to your last 5 years: treat it like a flip and sell it. Buy something that rents for 3k in your home market and manage yourself. There is not a one decent single family home for rent in Burlington at the moment! 5 listings, mostly tiny 650 sqft misfits. As a renter, you have no choice, but rent an apartment. Or frankly, invest in something else, there is always the stock market..

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  • David SeharPro Member
    Member since 2026 · 2 posts · 2 votes
    1mo

    I'll keep it short since there's already a lot of good info here from several people.

    I've managed properties in Memphis for 14 years and now run my own small boutique firm. Unfortunately, I see this quite a bit. Two months ago a prospective (now current) client reached out to me with a similar issue. $10k make-ready on a house built in 2020. He wanted to exit, asked for my opinion, I went and took a look, and we ended up turning the unit for $4k and leasing it the following week.

    Most management companies gear their business around profiting off maintenance, unfortunately. That's part of why I started my own company.

    Without seeing the rental it's impossible to say for sure, but I'd strongly recommend getting a second opinion from another PM, and it doesn't have to be me. I'd tell you the same thing even if I lived in another state. Anything over $1k per year of tenancy deserves a second look before you sign off on it. 

    Get a second pair of eyes on it and make sure the one looking at it, managing it, and the one you are speaking to about it are all the same person, not someone in an office who is looking at a bid from a third party vendor, who made it from a list a separate field inspector made (yes this is how most local of the large companies operate here).

  • Property Manager · Member since 2026 · 10 posts · 0 votes
    3w

    15% fee is too much.

  • Investor · Charleston, SC · Member since 2018 · 193 posts · 81 votes
    3w

    The bigger red flag to me is not the 15 percent fee, it is that your February inspection caught issues and they were never actually addressed. That means their inspection process is not tied to any follow up, so this turnover list could be real wear and tear or just deferred maintenance stacking up. Before signing off I would ask for photos on the higher dollar line items and get one outside bid on just the flooring and paint, that alone tells you whether this quote is legitimate or padded.

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