All Forum Posts by: David Hutson

@Alex Craig and others,

In regards to buying turnkey versus from a wholesaler, I find that the rehab/repairs on a wholesale home are almost as much as a turnkey since I can't manage the rehab myself. For the wholesale home I purchased a few months ago (all in rough numbers) $53k for home from wholesaler at the Memphis Investors Group (REIA) meeting I attended during a visit there to purchase homes. The person I purchased from mentioned it in a pitch in the meeting while I was there. I texted him during the meeting, he met me in the hallway, gave me the keys and I bought it the next day. Also the next day I walked the home with a Crestcore leader and we put a budget together and a few weeks later it was done. I spent about $8k and a few weeks getting it ready. Crestcore had it rented within a few weeks of when the rehab was complete. So I had a few weeks or so of vacancy and the rent up fee also to get the tenant in.

Compare that to turnkey where I may have been able to purchase the home from $65k-70k as a guess and it saved me some money/gained me some equity but not a lot.  If I wasn't in Memphis would have just bought turnkey.  Overall I netted about 10% in equity, not bad but not worth an extra trip out there or hoping that no major hidden repairs pop up once rehab starts.

That's why, for me, I think it's often better to buy turnkey.  Unless you are there or know how to get the good deals, have a crew or someone you really trust to supervise the rehab the costs are significantly higher than what the people with boots on the ground pay.  If I could have stayed in town another few weeks I would have managed the rehab myself.  It would have cost me another $2-$3k to stay in town in a hotel though and being in the Army I can't take that much time off at once without issues at work.

As I have stated in the past I am still new to Memphis, only about 2 1/2 years investing out there and I am slowly building my teams, making connections and helping out everyone I can and I still think that unless you are there and know the town by each of the pockets in each zip code it can be risky, even if it's turnkey.  

*** I'm not trying to pitch any houses or companies but want to reiterate I do get sales referral fees from some companies in Memphis.  Just putting it out there again since I have received about 8 messages from this last post.  I'll try and help everyone who has questions, even if it's not for a recommendation for who to buy from or to provide recommendations to other companies since my goal isn't to sell homes on here.  When I talk to people here I will tell you who I get referral fees from and recommend whoever is the best for your goals, not just those who will give me a fee, dependent on your situation. 

Since Alex Craig from Memphis Turnkey brought this up I will also mention he has a great company in Memphis.  I have also heard from Chris Clothier from Memphis Invest.  They both have excellent reputations in the turnkey business.  I do not get fees from either of them and have no concerns saying you should check them out.

@Sam Reddy,

There are several good companies out there but they all focus on different levels of homes/tenants.  Crestcore manages several of my homes that I have taken from other PM's that didn't work out for me. 

David

I have purchased a dozen homes in Memphis in the past few years, primarily turnkey but I have some others also.  I consider myself somewhat successful so far out there.  In my opinion you can buy only turnkey and be successful.  I enjoy the hands on aspect also so I don't want all turnkey although I am finding I spend almost as much money on the non-turnkey homes.  Send me a message if you have specific questions. 

I'll be flying into John Wayne airport next week, Wednesday or Thursday, if you want to meet.

Here's some advice, if you are going to buy in Midtown do it now.  All of the investors and people I know who live there are being priced out since the arena is almost done.  The prices and rents are being increased dramatically.  People who I work with have rents being raised 50% within three months. 

I can't verify whether it's like that throughout all of the downtown area but all that I have talked to aren't happy with it, unless you are the owner of the property.  I don't see how all of the rents can keep going up.  I think there will be a large group of people moving out, to include businesses, and then the rents will go down some until they get back down to a point where people are willing to pay to be in that area.

I have a handful in the area.  I'm sure there are a few pockets where they will sell for 50k but not too many.  Maybe you should look at what has sold as an estimate of what yours are worth.  That's what the appraisals should be based off of.

@Ryan Tucker,

I can't say how effective it is since I'm not selling but I do look at all of them as they come through so it is effective for me.  People who aren't pro can't respond as to whether they are interested or not so I don't really think we can tell how effective it is.  If you give it a try I'd guess you would get at least one sale which would more than cover the cost of the pro membership.

David

Get a pro account on BP and list great deals on the site.  

If you list junk though be prepared for someone to state that.  I'm a buyer from CA looking for something now so put it up and you will know it's a good deal as several people will respond.

I only physically went to one company as I was running out of time and felt the companies I talked to had the same type of investments, returns and practices. 

@Oliver Hoeller, I'll send you a PM.

@Kim Stofan,

No, I don't always check the properties I have purchased.  I have been in less than a third of them and driven by about half.  I'm not going to live in them so I don't worry about that as much.  I do property inspections to ensure there are no physical issues I need to worry about and the inspector takes pictures of anything that may be of a concern to me.  I almost always use the same inspector so he knows what I'm looking for.

I use property management for all of my out of state homes.  You need someone qualified to ensure the houses are maintained and that the tenant is paying on time.  It would be hard for me to post a 3 day notice if a tenant doesn't pay.

Drawbacks?  Not having an unlimited supply of money to keep buying more is a good one.  Really, the only drawback I have found is that I can't visit the properties to verify tenant issues.  If I were there I would most likely do some of the repairs that come up myself.  I am able to complete most maintenance myself so paying a small premium to a PM bothers me but it keeps the tenants happy.

Being able to physically drive by the properties and follow up on issues is my biggest problem.  I'm more of a hands on type of landlord but overall it's working out well in Memphis.  I just found more funding, above 10 conventional loans, from a private bank so I'll be purchasing out there again in the next few weeks.

Daniel,

Congrats on you choice to come onto the site and saying hello.  Turnkey Reviews has been a great site with lots of info, like on here.  I was there 2nd interviewee if I remember correctly. 

I have many properties in Memphis and just got home from looking at turnkey homes in Kansas City.  I've talked with Engelo Rumero in Ohio and considered purchasing there.  (I think it's too cold and too much snow for my preferences so far but not ruling it out. )

There are hundreds of people on here who will be willing to help out.  Ask questions here and let everyone know what it is you are looking for and what your goals are.  You will get many responses.

I live in Sacramento, so not far from you, and it is very easy to invest out of state but make sure you do inspections and verify everything, twice, that you are told about the properties you are looking to purchase.