All Forum Posts by: Chris Clothier

Data from our property management company (managing 2,395 single-family houses):  

Property theft is actually down 1st quarter 2015 compared to same quarter 2014 by a little over 10%.  Minor theft and vandalism continue to be the majority of the occurrences including copper, line-sets, security door, broken windows.  We had 15 of those minor occurrences in the first quarter out of those 2,300 plus properties.  

I do believe the reasoning for these numbers is detailed renovation and management.  Little things like spotlights, cutting back shrubs and trees from in front of windows and doors, fences, locking gates, alarm signs, using cameras in some instances, caging AC units and placing the AC unit in the back yard behind fencing, using security doors in front and back and lastly keeping properties occupied.  All of that keeps theft and vandalism down.  However, I am not sure how well these details would work when applied to $30,000 houses.

As for the things you always hear about - AC units, furnaces, coils and water heaters.  We had 5 of each stolen from individual houses in the first quarter.  I would hardly consider that an epidemic of theft.

As for areas of town, we only operate in certain parts of the city - roughly 50% of the city today.  So, my zip codes are going to be slightly skewed.  

38128 - which is Raleigh - 20 total occurrences which was by far and away the most and a large increase year over year.  That being said, 11 of the occurrences were minor theft and vandalism.  But Raleigh did have issues with coils and AC units in the first quarter as well having 4 coils and 2 AC units stolen in the first quarter.  As much as it looks like theft is going crazy in Raleigh compared to the other zip codes, it is really a collection of minor items that has driven that number up.

38118 - Parkway Village  - Had 6 occurrences in the first quarter with a couple of AC units, a couple of coils, a furnace with 1 minor vandalism.

38116 - Whitehaven - Had 5 occurrences and those were 2 ac units, a furnace and 2 minor vandalism incidences.

No other zip code that we manage had more than one incident in the first quarter.

As for $30,000 houses, I think you can find some in each of these three zip codes, but again, I'm not sure these numbers would apply to those areas.

 Investing is all about give and take and unfortunately your criteria is a bit of take and take.  Wanting to invest in the low price points, which obviously require fewer dollars out of pocket (risking fewer dollars) and wanting them in locations with low crime and high rent ratios may not be realistic.  It all depends on what you consider to be low crime and how high you want the rent ratios.  At the same time, depending on your crime criteria, you may be comfortable with an area, but the area and the properties themselves are going to be more challenging for you due to shorter occupancy timeframes and riskier move-out periods (i.e. its not the crime that raises your risk, but the more frequent and possible longer vacant periods when properties get vandalized).

Memphis is just like any other major city in America and there will be cheap houses available and there will be crime.  As an investor, especially one that @Derrick Craig points out is right down the road, you need to drive the neighborhoods in the city with properties priced below $30,000 and see what you think about investing in those neighborhoods.

 I absolutely understand John and appreciate your response as well.  The old links you posted were a very serious matter for our company because they contain some very serious subjects and a number of false and defamatory comments.  As I stated, they were so serious that we felt we needed to file a defamation lawsuit to address them.

I hope you understand  my response.  I trust that you were simply looking for answers and in your due diligence I have no issue answering your questions.  I would be happy to answer any specific questions that you may have.

You have found a fantastic resource for real estate investors and I wish you the best of luck as you get started.

Chris

I find it interesting @John Lee that you have no information on your profile. It is even more interesting you have only posted two comments.  Both of them today and both about Memphis Invest and both linking to negative information.  As you see when you read through those articles, we filed a defamation lawsuit in July of 2013.

I have no problem with you posting those links.  I am not bothered by what one person falsely stated about our company and the integrity of our actions has certainly outweighed the b.s. we had to put up with when dealing with the individual that we sued.  I would however, like to see you add some more information to your profile and show that you are a legitimate investor and not a fake profile here to disparage my families' company.  

I will withhold any further comments for now. 

@John Lee

So with social media, as an owner, you have to be careful with what you do and how you respond.  If you look, there are two or three sites that have negative comments on our property management.  I think without looking, there are probably 25 total complaints across different sites about our management company.  It is not so much a case of you cannot make everyone happy, but more a case of, we want to respond to legitimate concerns and simply understand that the rest are white noise.  Almost all are denied applicants, but there are a couple of tenants who went to social media to complain.

It is important that we listen to negative feedback because that is where you find the ways to improve, but most if not all are just white noise on the management side.  So we rarely get involved in social media discussions since anyone is free to say whatever they feel they need to say.    

IN the case of the woman on Facebook that you reference, we did not engage her on FB, but did reach out to her in person with our Dallas Management.  In person, she was no where near as nasty as her comments were and as amazing as it may sound after reading her comments, she continues to rent her property today and is currently in good status.  She pays on time and we have had no issues with her since her initial complaints.  

Lastly, we are managing 2,968 properties as of today.  Our average length of stay is over 4 years - our annual expense to rent ratio in 2014 was 3.87% and trending a little lower after 4 months in  2015.  Our vacancy rate as of today is 3.98% so... Are we perfect? - not even close.  But we are pretty damn good!

I am not a fan of any guarantees because they are often only used as a marketing gimmick.  What good is a guarantee?  There is nothing in place that makes it enforceable.  TK companies earn their reputations by guaranteeing their clients that they know how to operate fairly and with integrity.  They earn their reputations by doing exactly what they say they will do - by providing excellent customer service - and by putting their clients needs first.  A guarantee is only as good as the operator as @Jay Hinrichs stated.  TK companies that use guarantees - and this is my opinion and not meant to disparage anyone cause I still mentor companies that use guarantees - but it is my opinion that when you market with guarantees you have not learned your companies' true value.  Those companies have not yet established their core competency and core value to the marketplace.

We have bought back clients investment properties in the past.  Life sometimes gets in the way and people need help.  You have to help out investors when you can and just like @Curt Davis noted, when you have clients waiting for homes and the properties are performing, it is easy to facilitate a sale.  So you do not have to have a formal guarantee to perform like you do.  You just have to have a little integrity and do the right thing by your clients, your company and your family.  If you can help an investor out who needs your help and buy a property back, then you do it.  If you can't, then you do everything you can for them short of buying that home back and hold your head high.  

There are a lot of good companies out there.  There are a lot of bad companies out there.  There is really no way to rank the companies themselves since that would be a matter of opinion unless you used useless metrics like size and volume.  I can assure you one thing - just because Memphis Invest does huge volume in three cities, those numbers of homes and cities are not the reason we have our reputation.  Being more expensive or being bigger or having a bigger team, those are not the reasons we have a great reputation.  So those numbers mean nothing for ranking because I am a big fan of several companies in other cities and especially of two other Memphis companies that are active right here on BP.  None of them are as big as us, but they all have great people that operate with a high level of integrity.  That is what mattes most.  

And yes, my family is absolutely grateful for the kind words from other turnkey companies, clients and even investors who are just fans of our family and business.  We have worked hard and tried to do things the right way and are still very active in helping other entrepreneurs get off the ground.  We have helped many turnkey companies and view good competition as very healthy for all of us.  We all want to rid our niche of the fringe operators who prey on investors and the best way to do that is to lift the good companies up.  So there are plenty of other good companies - how anyone goes about listing them out  is up to each individual investor based on what they need.

@DL Martin - it happens all the time.  Many turnkey purchasers are buying a passive investment and are really investing in the company.  They are much more concerned by the ability of the company to perform and once they are comfortable they purchase properties without seeing the actual property itself.

Hey @Brian Christensen - Welcome to Biggerpockets!  Congratulations on finding the site - I think you will find some excellent information and contacts here.  I have been in the TK niche for a while so I think I am probably qualified to give you a few of the best arguments against that route to help you get clear with your decision!  

First, the word itself means nothing.  Turnkey does not mean anything.  It is a marketing term that is way over-used today.  Right here on BP, you can find posts daily for properties that say Turnkey and there may be 10 different definitions for what each seller considers turnkey.  So first and foremost, just know that even in Memphis (or any other city you may consider) the word Turnkey when used to describe a property or a company may not always mean the same thing across the boards.  As a buyer it is really important that you break away from the word Turnkey and really pay attention to the details of who you are doing business with.  The wrong team can absolutely set you back.

Reading @Jon Holdman 's comments, I would only add that he points out the worst of the worst.  I do not know any companies that operate the way he describes, but I know that with any passive investment, especially one that hinges on a shiny, marketing keyword like Turnkey, everything he mentions comes down to the quality of the team you are working with.  So I think based on his comments and the fact that Turnkey does not necessarily mean anything, the biggest risk with buying a turnkey property is the integrity of the team.

Next up is value.  I would be less concerned as a passive investor with equity as I am with the true net I am making on a property each month and the value that is being provided to me by the company or team I am working with.  That value comes at a cost and as a buyer, my real decision comes down to 'am I getting the value I expect for the price I am paying'.   For me as a consumer, all of my buying decisions come down to the value I am getting.  You place a high value on your time (family and job) and are looking for a solution that allows for income with sacrificing what you value.  

So it comes down to finding a team that will give you the best chance to get a consistent and reliable return while providing enough value for the equity and income that you are giving up.  As @Curt Davis  noted earlier, unless you are a full time investor or have the time and experience to put into the process, it is doubtful that you will save money doing it yourself.  

I think from your posts, you already understand the importance of due diligence.  If you would like a list of some good questions to ask and some dos and donts for buying out of area, let me know and I would be happy to send them to you.

Buying passive investments is not for everyone and while I do not know companies by name that operate the way Jon Holdman explains, it would be terribly naive for anyone to say that does not happen.  It probably happens every day and even here on BP.  So your research and your willingness to be patient as you decide who or where and even if you invest, are going to be your best tools to make a good decision.

@Billy Maloney propertyware is a piece of software that property management companies use to manage portfolios.  Its' primary function is to give the management company tools to manage their businesses.  In the platform, their are multiple portals that can be used for many purposes like advertising available units, communicating with tenants and vendors as well as communicating with property owners.

So, owners get a property owner log-in when they purchase property and it is managed by premier.  An owner can set up their preferences for email alerts when tenants pay bills or when property management attaches a bill for maintenance services to one of their properties.  The owner can access their portfolio on the system at any time and see real-time info. on their properties.

It has its pluses and minuses for us as operators and for property owners, but it is generally considered one of the best and most robust systems for companies our size.  

To everyone on this particular thread, I apologize for jumping in.  I know this is intended to get some input and I felt there was already some really good input on here, but wanted to clear up a couple of things real quick.  Sorry if it gets a tad long-winded.

@Billy Maloney just to be clear, you are not required to use Premier Property management when purchasing from Memphis Invest and we want you to be completely comfortable before moving forward.  If you have any additional questions, please ask them before closing as our #1 priority is the experience you have with our company and your complete satisfaction.  If you have any final questions - you can always reach out to me directly.

@Chad W. I am happy to hear that things are going better for you.  There is one major misconception that I want to clear up.  Premier DOES NOT offer management services to the general public but only to our clients.  It is a value add service and part of our over-all customer service program.  That customer service and all communication is administered by Memphis Invest and not by Premier Management.  

When we worked with Craig to set up management services for their clients, it was a real leap of faith on the part of both companies since technically we were competitors.  Craig and Curt are both highly experienced and very good people who work very hard to keep their clients happy.  So both companies really believed we could work together.  However, we had to agree on communication.

ALL communication on their properties is supposed to go through them.  ALL customer service support goes through them.  That was crucial so there is no question as to whether our company is trying to win their clients from them.  If they sell a property to a client, we will use you as a for instance, it was agreed that they would provide communication and customer service on their properties under management.  

Premier property management itself does not reach out to any clients under management.  That communication is handled by Memphis Invest for our clients and by Craig and Curt for their clients.  I do sincerely hope that we continue to provide excellent management and that Craig and Curt continue to provide the communication and service that you need.  And hopefully you understand that Premier was never intended to fill that role so both companies could operate freely without fear of stepping on each others toes.

The relationship that we have with their company is excellent and because we only provide management to our company and to their properties, we are able to be more focused.  As for PropertyWare, that is another story and we are constantly working with PropertyWare to improve that particular piece of software.  

Please continue to let Craig and Curt know if there is anything that Premier can do to improve your experience and they will absolutely work on your behalf to get the answers and service you need. 

Lastly, @Curt Davis was spot on with some of his metrics.  Premier operates at a 4% vacancy on average.  Currently we manage 2,953 properties in three cities.  There are 2,396 Memphis properties under management and less than 90 vacant as of today including properties recently purchased and renovated that have not been rented yet.  In 2014, the expense ratio to collected rent was 3.84% across the entire portfolio.  That number includes the nominal mark-up we charge and that mark-up provides revenue to have full time staff that not only answer tenant calls, but also dispatch vendors and call every tenant back to survey their satisfaction with the work.  As for average length of occupancy, we exceeded 4 years in 2015, turning over less than 19% of the portfolio.  That is accomplished precisely because we do quality renovations on the front end and react quickly to tenants needs AND follow-up to make sure they are satisfied.  Lastly, the length of stay is increased by hitting these two metrics:   75% of all leases fulfill to completion and 73% of those leases sign an extension.

We are super dialed in on our metrics and the ways we measure our ability to hit our stated goal and that is complete satisfaction of both our clients - the investor buyer and the tenant.  That is an impossible goal, but absolutely the best one to work toward

Call Bill Brewer with Shelter Insurance.