Out of State Investing via a turnkey operation

[Joe Gravelle]

Hello BP'ers,

I am looking into investing out of state, specifically in Memphis and maybe Dallas. Has anyone had much success in this market? If so, what price points. 

I am looking into using one or a few of the turnkey operators. I am vetting Memphis Invest ( to enter the Memphis and Dallas areas) and MidSouth Home Buyers for Memphis only. Any feedback on these companies?

I appreciate the info in advance.

[Gary P.]

Hello @Joe Gravelle

There are many turnkey companies in Memphis. I have looked into both Memphis Invest and Midsouth and like the work they both do on the rehab side and would be happy to own properties from either of them. At this point I have 4 properties through Midsouth due primarily to entry price point and an added bonus that they wait patiently for financing to complete (my credit is over 800, my DTI easily covers the cost of all of these mortgages without considering the rents… but still, financing takes more time then I anticipate). I prefer the properties at the higher end of the Midsouth scale and am choosy about the neighborhoods.

Both companies take a process approach to the business and make effort to refine their process.

Memphis Invest farms the work out to contractors that specialize in the field: electricians for electrical, HVAC for HVAC, plumbers for plumbing… etc.

Midsouth maintains licensed staff on the payroll who perform or oversee the work.

As property managers, Midsouth has been responsive. I have had a couple of tenants get behind and one of them get caught almost back up to current. The other one had some life events and was experiencing financial distress. Midsouth demonstrates care and concern for their/our tenants and works with them through rough patches avoiding turnover. The financially distressed tenant was able to move in with family and, if all goes well, pay down the arrears and expenses. The unit was quickly prepared and leased to a new tenant.

Midsouth can be patient because they work with the starting point of the rent and figure backwards to sales price to investors and buy places that will meet those criteria and still make them at least the minimum profit they are looking for. As an investor the ratios remain consistent and predictable. As such the inventory seems to have a high demand. Midsouth uses a mail list, like waiting in line so everyone who is interested (new investors or investors with multiples) has an unrushed opportunity to become an investor.

I do not think of Memphis as an appreciation market, perhaps that is changing with millennials moving in. I will keep my projection strictly on the cash flow until proven otherwise.