All Forum Posts by: David C.

@Steve Babiak

the problem with guarantees in this business is how hard it is to measure it, and how to assess blame. Can the owner reject tenants. If he does, does he still have his guarantee? It works with cars because they are commodities and its easy to document when they are broken.

If an investment fails to perform who's fault is it: owner? property manager? Obama? sudden crime spike? etc... I just think it would end up being very costly insurance that would erode much of the return.

However, maybe we can convince AIG that Real Estate only goes up and tenants always pay on time and they will sell us cheap real estate investment performance. Remember, they fell for the 'houses only go up' argument and sold all that insurance on mortgage derivatives :)

From what I've read by the others on the other thread, there seems to be agreement that Class D properties have too much hassle to be considered: turn-key or a passive investment. For that reason, I don't think they should be offered as 'turn key'.

Now - if a turn-key-operator sees to much potential profit and has too many aggressive investors, then it might be very hard to turn away the business, in that case - I just think the marketing, promises and guarantees needs to match reality for these class D properties. They should not describe them as 'turn key' or 'passive'.

@Chris Clothier

Good clarification Chris, I've only seen and heard good things about you guys and I appreciate that you take your time on this site to share.

Given the heavy use of the term in the business, not using it in your marketing would be a mistake.

If I ever decide that turn-key is the thing for me, you are on the short list.

@Chris Clothier

sorry Chris you also said this:

"will tell you that defining Turnkey and what it should and should not be is futile. I have been trying to do it for years and it now has such negative connotations that we do not refer to our companies as Turnkey any more. We are identified with the term, but we try not to use it anymore because it has so many meanings. "

you exactly refer to your company as 'turn key' 3 times on your companies main internet page.

It really annoys me that you'd reply to my post and make me look like i misread yours when you EXACTLY SAID you don't use it anymore. And you EXACTLY use it on your own main page. Being 'identified with the term' sounds like other people on their pages or articles call you that. That's not the same as: we use the term in our marketing materials but never say it out loud.

@Chris Clothier

you should check your homepage:

AMERICA'S PREMIER TURN-KEY REAL ESTATE COMPANY

and later:

Memphis Invest truly pioneered the turn-key investing process in Memphis, Tennessee and continues to provide top quality real estate investment opportunities as well as the best customer serv

and again:

what to expect from property management, how to raise bank capital, why Memphis Invest is the top turn-key investment company and why Memphis is

@Sharon Tzib I'd consider myself a potential turnkey investor.

I'd say if Class D has so many headaches that it can't be managed, then its not appropriate for a turnkey operator to sell them as 'turn key'.

If they want to offer them - they should have some other name. Want higher returns that our turkey properties offer? Try one of our Class D properties in our 'Earn Your Return' program - we'll be calling you all the time, and you'll be fighting with AON for your rent insurance but if we all work really hard, you can get better returns than our B/C properies offer on a turnkey basis.

That might be an honest pitch for Class D?

I'm looking forward to those pics too, that place looked really interesting.

@Aaron Yates

Sounds like you have the right attitude about criticism. I find your story inspiring. I also find strong opinions voiced aggressively without full information very annoying.

I think this site is awesome, some of the same people who are the most helpful also sometimes have a bad day, or get annoyed, don't abandon it for that reason.

I'd start walking away from the debates that get annoying. Your original post survives, expressing your opinion, you don't need to reply to everyone who disagrees, just because they spoke last, does not make them right. I'm very careful to consider each response on its own when I read these boards, I know some people go a while without posting, so they may have not seen follow up questions or criticisms of their ideas.

If you don't answer, don't assume people will see that as 'defeat' or 'surrender' - I most often see a non-response by a respected contributor as 'that criticism was not worthy of response'. I'd consider you a 'respected contributor'.

I find that the criticisms that bite the hardest are the ones I later realize were true. If you surround yourself with Yes Men, you will never grow.

Be thankful this mystery critical-BP'er cares enough to take time to try to help you.

With that said, you don't have to do what others say, but if its making you uncomfortable or angry, step back and give it some serious thought.

I am a high earner but I have a saver mentality: I like to say that a penny saved is more than a penny earned due to income taxes.

If you 'don't buy a starbucks' - that's $4 in your pocket.

To earn enough to get $4 in your pocket - you probably have to earn $5 or more. So each penny saved is about 1.25 earned.

While $4 or $5 is not much, its the sum of many small decisions that add up to something. My 150,000 example was already a very high earner. Anyone making 70,000 who can live like someone making 45,000 has the opportunity to save a large amount each year, which does add up over time, but it requires years of sacrifice, and I don't want to live like someone earning 45,000. You know its possible, because there are many people who make 45,000 and live OK lives. Many, many people survive on that and find ways to have fun, complete fulfilling lives.

The other advantage of saving and living a frugal lifestyle, is that it reduces the total amount of savings needed to retire AND MAINTAIN YOUR LIFESTYLE.

If you have a 45,000 lifestyle, in theory with a 4% withdrawl rate, a portfolio of only 1,125,000 is sufficient to sustain that lifestyle.

If you are living large with an 80,000 lifestyle - you need 2,000,000 to sustain it.

at 120,000 - you need 3,000,000

So, if you make 65, and live like 45, you can quickly get to 'financial independence'.

If you make 140 and live like 120 (same 20k difference) it will take you much longer to be financially independent.

The 4% safe withdrawl rate is pretty well accepted and has been studied a lot. You assume that you start with 4% of the portfolio, have a diversified stock/bond portfolio and increase your withdrawls based on inflation and the starting 4% number, you don't redo the 4% each year, but you do get inflation bumps.