150 Units Distressed

[Account Closed]

Hey All,

I have a property in Memphis Tennessee that I am looking to purchase. It is 168 units. I negotiated with the seller and he agreed to do the sale for 450 thousand dollars cash. My goal is to have the apartment complex fully rent subsidized. Between the VA and section 8 I feel as if I can get the property up to 80% occupancy. The property needs about 2.5 million dollars in rehab costs.

It would be great if someone can share with me memphis contacts who would be able to help me secure tenants with vouchers for subsidized rent. 

I would also love to hear about other peoples experiences in the memphis market. 

Thanks Yehuda

[Jay Hinrichs]

@Account Closed   Yehuda  not to poor on the negative side of this thread but I would head Alex's advice as gospel.

I had a friend here in ORegon go down the exact same path on a a boarded up multi in Memphis. I basically told him the exact same thing that Alex told you above... darn near word for word LOL.

this is a very experienced foreclosure buyer and we both bought in Atlanta in 2012 and killed it with B class SFRs  so he was thinking as they market tightened he would do some multi

he gets this 60 unit in constract from 5k a door.... I tell him your going to lose your money dude.

he tells me I am nuts the last owners were slumlords and did not treat the tenants right.. he is going to put in BBQ pits BBALL hoops  new jungle him really treat these folks nice. etc etc.. he dumps 600k into is so now he is in it 900k plus interest and taxs . his plan get it to 80 to 90% and dump it.. Well he soon learns that pro's in the area are not going to pay anywhere near what he was thinking

results were as follows.

1.  BBQ's were stolen and destroyed first month

2. BBAll hoops made it 7 to 10 days.

3. One murder numerous violent felony type activites.

4. Property manager stealing him blind ( this led him to have to fly from Portland to Memphis once a month to collect rents)

5. he got just up to 80% then it started cratering with evictions and  trashed units

in summary he got an offer for 500k and took and came back to Oregon with his tail between his legs lost 500k or about half of what I made him in ATL  LOL... He now listens to me a little closer

But what he did not know is he had no CLUE as to the demographics and how tough that type of tenant base is... In Portland we have NO hood we have NO Ghetto  every one pays there rent and what is section 8  hardly anyone uses it.  mainly old folks... no one will rent to section willingly. So he had no point of reference born and raised here and just had NO clue really.. and he had his I can make this work if I just do good by these people they will love me!!!

So he got schooled pretty good.

Caveat Emptar to the 10th power...