All Forum Posts by: David Hutson

congrats.  glad to help out.

as the newer guy on the block in Memphis, but not new to the game, I agree with Alex.  In Memphis I feel you would have a lot of issues focusing on section 8.  of my properties there only one is section 8 and I'm about to evict them over the inspection process since I can't get in to complete repairs.

on the VA side, it can be an issue also, speaking as a active duty vet with a disability. I alwaysent try to help vets but it's almost as bad as section 8.

Alex and Douglas are very knowledgeable of the areas.  I follow there advice when they give it.

Evening all,

I'm in the Sacramento area and have been investing for several years.  I have not tried get a license see until now.  I'm about to get my license as I am starting to sell off my properties and want to save on the commissions.  once you have your license you can, will, be held to a higher standard.  I figure once I sell all of my properties here I will be retiring and move out of CA.  

It will cost about $1,500 a year to maintain all of the dues and associations so ensure it will be worth the cost to get it, hours of studying and classes, maintaining it.

Good luck.

@Pamela Starnes,

For me, I haven't seen any quality properties that provide a good return and do not need so much rehab that it is financially worth purchasing, especially when compared to SFR. There are several smaller properties available but they are in the not so good parts of town and while I see all the talk about how great the cashflow is I'm sure the turnover and repairs is taking up most of it.

I'd say take a look and see what you find.  What you are looking for may be different that what I do.  There are some good properties but they usually still need repairs and the return is too low for me.  Be careful on the west side of town

@Michael Penwarden,

Memphis isn't a great place for small multi family, in my opinion. I have purchased 12 homes there in the past 2.5 years and haven't been able to find quality smaller MFR. I'm in the military now and don't have time to research larger $1M + properties there, at least until I retire in a few years. I have seen several smaller 6-12 unit properties and they are not something I would want to own. SFR's in Memphis are pretty simple, especially with the turnkey companies I am working with. The wholesale/rehab homes I buy are really simple also as every management company out there either has a team in place inside the company or works with one to fix up the homes, usually in a few weeks. I have found that the turnkey is a little more pricewise but I don't have the vacancy or unexpected rehab costs up front. A rehab home will take a few weeks plus the time to market it and get a good tenant. My turnkey homes pay me from day one. I also only buy rehab homes now when I go out there. I won't buy one sight unseen.

I ALWAYS recommend buyers go out and look at homes, whether it's turnkey or rehab.  I go out every year and it's under $2k for the wife and me for 5 days.  You may be able to write it off against the properties you purchase/own. (I'm not a CPA, but I do write my trips off).

Over the past few years I have built great relationships with a few the bigger/prominent turnkey companies, a management company and a few agents. I stay in touch with all of the pretty actively and I visit them all when I fly out as I plan on purchasing four houses per year out there for the foreseeable future. BTW, if you plan on going out, schedule it around their local REIA group, Memphis Investor's Group. I did that my last trip a few months ago. Many of the locals who are actually working the deals show up. I even found my last wholesale house there that night. For $20 and a few hours of your evening it's a very worthwhile event.

Sorry it's long but there is a lot to it and I figured you or someone else would ask about this if you didn't.

David

@Michael Penwarden,

My opinion is that the turnkeys are better with funds from a 1031 exchange.  I am going through this now, just sold a fourplex here in Sacramento and buying five homes in Memphis. 
The reason I found turnkey to be better is that if you do the BRRRR you must have the repairs completed and paid for within the 1031 window to qualify. There are more requirements/complications if you want to get the home rehabbed with money from the exchange. If you do not meet the timeline then any repairs not completed will become disqualified.

With my exchange I only bought one that needed rehab work and I am paying for the repairs out of my own pocket so the house will be part of the 1031 but the repairs will not be.

If you have any other questions send me a message and I can tell you what I know from the experience.

David

I always use Hudson Zinfandel.  they are great.  I have never had an issue with their services.  highly recommended them.

NO. At least nothing I would own or touch, probably not even a SFR. If you find one it will need significant repairs or be in the worst part of town, have bad tenants and the police won't even go out to it.

You may be able to find a condo, but that would be right at the limit.

You should hold onto your money and save up for a good home.  If you do find something for $100k you will either need to complete repairs, complete evictions or there is some other issue.  Don't rush into a bad deal!

@Andrew R.,

You will have to pay those anywhere you buy.  Like Rocky stated, it's part of the cost of doing business.  Take the numbers provided, verify them and then make a decision based on the overall numbers and locations that you find beneficial to invest in.  Everyone has reasons for specific areas and the numbers have to work for that location.  Find a location that you are comfortable with and has returns that meet your goals/needs and move forward. 

From a investors perspective I think Crestcore has very good management.  They currently have five of my homes under management.  They are very responsive and use the features of their online systems to keep you up to date on all issues.  I don't have to call them for anything as it's all online.  When I do call about a specific issue I get a quick response. 

Like Douglas stated, Alex Craig does a good job also.  I like their business model. 

I have property with Meridian also.  No issues with them but they focus on higher end properties.

My two important things to remember is 1, choose a PM that manages properties in the asset class your home is in.  Don't go with a company that manages $150k homes if yours is worth $60k.  It doesn't work well.  2, Ensure the company has a good reputation and has been around awhile.  Use BP, BBB and other sources to weed out the bad companies and then interview a few more to determine which company you feel the most comfortable with.  All of the companies will probably have a few negative or not so great reviews since tenants aren't happy when they get evicted or have issues and have to move but the majority of them should be positive.

Call the condo association also.  See if they have any PM companies that stand out or handle most of the rentals in the building already.  Using a company that is familiar with the property already can be beneficial.