All Forum Posts by: Dean H.

@Vikas Raoot @Douglas Skipworth

For what it's worth after a few years of investing in these areas all of the misc repairs, turn over costs, vacancies, evictions, FED's, cap ex, taxes, property management and all the other misc crap will be 50% of gross rent. I keep accurate records and over 4 1/2 years in these areas of Memphis it is within 5%  of half of the gross year after year. For quick evaluation I just figure if I can't get my investment back quick enough / or pay a mortgage and have cash flow  with 1/2 the rent I pass on the deal. 

I have a SF rental 3/4 of a mile east of Stax, low income area but it works for my program. Personally if your new to investing in Memphis I would probably shy away till you have a team that wants to deal with the issues that just come with this type of investing. It takes the right relationship with the right manager to deal with things in the C-D areas

Went to lunch with a relative to pick his brain about investing and ended up buying a duplex from him, the funds helped him buy another flip. That was the first of many single and multi family investments my wife and I have made out of state. I just kept his property manager. The rest of my team has just kinda joined the fold as things roll along. I buy a couple a year now and try my best to pay cash for all of them. I know on BP leverage is everything but I just don't want the BS at my age. I look for opportunities that fit my strategy and buy about 1/2 of 1 percent of what catches my eye. One of these days I'll quit working 60 hour weeks and enjoy the cash flow but for now its just to much fun to grow the portfolio.

@Juan McLemore

I'm sorry Juan but I just don't understand the fascination with multi family in B-C areas of Memphis.

Memphis is a city with an excess inventory of single family housing in the B-C neighborhoods so your pool of available qualified tenants for multi family will be marginal at best.

Also the property tax rate on multi family is considerably higher than single family.

It all adds up.

I do have both single and multi family properties in Memphis/Shelby county which might or might not add credibility to my opinion

Dean, remember me I'm the restoration contractor, the demolition contractor is my cousin Jerry and his number is ##########

@Leanne Kreps

I have a nice portfolio of Multi family and single family in Memphis and I don't see myself buying anymore multi there. Tax rates are higher and tenants just have so many single family houses available quality tenants are tough to get. Besides I like the choices I have with single family, sell one if you need beer money and it won't destroy your whole investment goal. I just don't fit the BP model very well I guess but it works for the wife and I

Devon,

If I was your age I would hook up with a good general contractor and learn as much as you can about the "trades" There are just no young people entering the "hands on" part of the business. Stay at it and try everything with everyone so you have a good handle on doing all skills involved. As you learn you will come across people that will sell investments to you just out of frustration, the trick is to always be in a position to act when they ask. Learn, earn, and save it will come.

@Ericka G.

Ericka,

I always look at it this way, you have a fairly good idea what those future cap ex items are and can budget for them sensibly. If you exchange them for other properties you might just be assuming someone else's identical thought process. I used to always say I was going to trade up as my unit numbers got where I thought they should be but as a property manager of mine once said " Dean, why sell something you know hoping for a better situation, Just put the cash flow towards another one and you will soon have another one you know just as well"  I haven't sold one yet, I guess if the grand kids want to sell the choice is up to them. Once the ball is rolling,,,,,,,,,,,,,

How does the old song go " welcome to my world,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,"

Depending on the condition that you bought it in 8 months in and covering your payments and expenses isn't that bad. I buy rough properties generally so I guess I'm just used to having things pop up for repairs. Seems to stabilize about 18 months in for me and then,, just about the time it starts cash flowing I buy another one or two and reinvest it all in them anyway. Do this a couple of times a year and the next thing you know you have a nice portfolio. Still no ready cash but I could stop expanding anytime and collect cash I just enjoy the game too much. Remember its a slow and steady game.