All Forum Posts by: Dwayne Jones

@Douglas Skipworth and @Percy N. Thanks for the feedback. I have a few opportunities and I'm trying to position myself strategically for long-term and limit my liability. I'm looking at branching out to other cities in Tennessee and potentially other states. I'm growing and trying to protect my brand and personal assets. 

I've been a member of biggerpockets for a few years but recently decided to become more active and engaging. Too my surprise there are a lot of paper pushers and number crunchers with little or no knowledge of inner-city engagement. I hear horror stories about ghettos and slum communities and most of them probably never visited with the people in the community but will pass judgment based on a computer comp or drive by inspection. Inner-city investing is not for everyone but don't give opinions based on what you've heard and not experienced. Yes, I've seen properties trashed but I've seen suburban homes trashed just as bad. If you don't provide inner-city people with quality and affordable housing where will they go? They will move in together and run a property down or move in for a short period of time and try to pay a too high rent only to have the investor spending funds to clean and repaint before the next renter. It takes the right temperament and business knowledge to operate in the inner-city. Yes, there is money to be made in the inner-city but poor construction and poor management is a disaster waiting to happen. It's not for everyone but hiding behind a keyboard and not being part of the solution is counter productive. Again, inner-city investing is not for everyone and definitely not the faint of heart or most newbies. Terms like rough neighborhood, ghetto, poor areas, and others are used and you probably never met many people in the area you are referring. This many not be everyone but I've seen quite a few post over the past two weeks about so called bad neighborhoods. But who is willing to make them better?

I just wanted to hear how some of you got started in real estate investing. Were you up at night watching infomercials? Did you see a friend investing? For me my parents owned real estate and as a child I saw a lot of what not to do. My mother was always concerned with the interest rate of money instead of the access to money and my dad had a deep bleeding heart for renters sob stories. Although it was a business for them I can remember my mom going over to rental property early in the morning a pleading with people to pay their rent so she could have enough to pay the mortgage on the rental property. She sometimes cried and because my dad did not handle the financing he did not share the same sentiments. My parents had several townhouses, 36 unit apartment building, and six commercial properties. My dad worked for the fire department and mom was a dentist. Over the years they acquired funds and access to capital but lacked the expertise or knowledge to manage and maintain their real estate holdings in the late 70's until the late 90's. So they lost a few properties and filed for bankruptcy but managed to save a few properties and remain ok after a few years of restructuring. For me I knew there was a better way and as I grew up watching TV gurus, studying on my on, and networking I've taken a different approach. 

@Curt Davis Thanks. I'm thinking about converting to a full corporation but I'm not thrilled about all the filings and double taxation. Thoughts? Or I may just sign the guarantee but I'm getting older and trying to protect myself from potential liability while things are pretty good.

I have several years of experience as a general contractor and investor and this year decided to convert to an LLC. I have properties clear and free in my name personally and wanted suggestions on securing a business line of credit without signing as a guarantee. No problem quit claiming or creating a note from myself to the LLC. I would like the ability to operate without having to get bank loans and or construction loans. Currently, Memphis is a open market but conventional financing methods take a long time and most HML are skeptical about Tennessee. Cash rules and a business line would open up additional opportunities plus I would like to limit my personal liability but willing to put skin in the game via real estate equity. Suggestions would be appreciated.

@Alexander Price The neglect is minimized because I have seven locations with 42 total rooms so I have a payroll maintenance person. Initially I allowed the renters to keep the common areas such as kitchen and baths clean but that was not a good model. Rooming houses are similar to an inexpensive extended stay. Because I'm concerned about my investment, I've taken a proactive approach to renting. As stated above food theft was the number one problem but we solved that issue by purchasing minifrigs for each room and microwave. They still use the kitchen stove but no frig in the main kitchen. I've installed inexpensive security cameras at the front door, back door, and both ends of the main hallway (no internet so DVR only). I have smoke detectors and fire extinguishers in the hallway. The maintenance guy cuts the lawns and my construction company handles repairs. I had to put picnic tables outside at three locations because there were too many people hanging out front smoking cigarettes. We use flat bone paint on the walls and repaint after every renter. We don't have much turnover and I actually have a waiting list. As far as the investment side, the return on investment is good but one has to have a resident manager to keep tabs on daily activity and go by (or have a representative) go by at least monthly. If I were to sale the properties I would probably sale as rooming houses but it would not be difficult to convert back single family houses. I typically took living rooms, dining rooms, and sometimes a den and framed a room with a closet. From the outside the houses look like all the other houses on the street and most of the renters walk, ride the bus, or bike with some having cars so parking has not been and issue. Although it may be a little more work rooming houses yield a larger return in the inner-city. I am also selling cottage homes homes 400-900 sq. ft. on vacant lots purchased via the land bank. Tying to fill a need and be a savvy investor as well.

@Maarifa Arnett if you are interested in an assessment inbox me and I can meet you at the house. I am an contractor and investor but I understand the plight of getting started as well as rebuilding the inner-city. Nothing wrong but many people do not have the ability to start out with investment funds or access to money so getting into real estate the best way you can is essential but be smart. Many people  don't understand the Memphis market and others have only making money as an end game. I don't knock them but my end goal is to provide decent and affordable housing while rebuilding communities but you should make money during the process. How much profit margin is up to you. With that being said, I grew up down the street from the house you showed at the corner of Park and Boston. Also, my grandmother actually lived two doors down from your property and my brother currently lives two blocks over on Enterprise.  Needless to say I have six properties in Orange Mound/ Memphis that are preforming as rooming houses and rentals. The closest rental to your property is located on Deadrick near David. I have cousins that did not want their parents home after they died (my aunt and uncle) and abandoned the house for two years and eventually called me because they didn't want to pay the back taxes and the home had been vandalized because it was never boarded up or secured. Long story short, the house was cleaned up and rehabbed for a little over $7k because I'm a contractor and my cost was a little lower than normal. I converted a 3 bedroom 2 bath with living room and den into seven rooms for rent at $340 per month each. I typically have five to six rooms rented but no vacancies currently or seven renters. With an average monthly income of $2,040 per month less utilities (MLGW) $580 on a high month in the winter = $1,460. I use to provide cable but no longer. Each room has a bed, microwave, and minifrig. I'm not sure investors in other areas are making a similar return on investment. I've found the biggest problem in rooming houses is food theft if stored in a common kitchen. Many people rent rooms for varying reasons. Some receive a government check and can't afford and apartment, some have temporary jobs with unstable income, some can't get utilities due to past mistakes or can't pay the deposit, some can't afford to furnish apartments, and some don't want the cost of monthly upkeep of a house ie lawn care. Finding hard money lenders is impossible for Orange Mound, getting a fair market appraisal is not going to happen, and finding investors who are willing to take a risk is difficult, and people in the area need somewhere to live is a reality. If you want to start in real estate I'm willing to give you some tips about the community and process. I once funded a project years ago out of my pocket after months of rejections for investors, traditional banks, and so called hard money lenders. Once you get started you will always find deals but securing capital will always be a challenge in the inner-city. Again, inbox me if you have additional questions. Oh, one of the best ways to keep vandals out is to introduce yourself to the neighbors and keep them informed of what you are doing. During the initial construction phase allow them to come in and show them your vision. They will be your best security and want to protect your property because they are in the know and feel part of the revitalization of the community. Boarding up every day and maybe waving creates curiosity and distance. People want to know what's going on and if you don't show them someone will want to break in and find out. There are some crooks but the neighbors know who they are and will spread the work to keep out. Just some advice from someone who deals with this daily.

@Maarifa Arnett I kept looking at the picture and I know exactly where your house is located. It's on Boston Street in the 800 block. That street will be a good rooming house or rental but right now you will not be able to sale to an investor or individual. 

 https://www.google.com/maps/place/817+boston+memph...

@Maarifa Arnett I'm in Memphis and currently involved in inner-city rehab and rent, rehab for investors, and new cottage home construction. As a general contractor and investor, I would first determine my cost ie. $5K to acquire and how much rehab does the property need. Do you need a new roof, windows, painting, electrical, plumbing, HVAC, flooring, cabinets, or wall repair just to name a few items. I'm working in Orange Mound, Frayser, and Bethel Grove and the market for selling to a new owner is very slim and to an investor depends on the cost. You can rehab the house and rent as a single family property or rent rooms ie boarding house or rooming house. Depending on the amount of capital and experience you have with rehab a wholesale deal to another investor may be your best bet. With $5K in back taxes and the size of the house I'm sure this is a few years delinquent. You may want to check and make sure the total includes city and county taxes and no pending fines for grass or environmental court. The tax sale process has changed effective January 2016 so check to see if the property is up or has been through a tax sale. You don't want to buy or acquire property and its scheduled for demo.

Karen: the land is really cheap. I've purchased most of my lots from private owners and the county land bank from $100 - $2,500. The lots already have utilities because a home was previously on the lots. The lot and infrastructure savings are $16k-$20k.