Memphis Investors and Investors in general

Dwayne Jones · 2016-08-14T11:52:11-07:00

I've been a member of biggerpockets for a few years but recently decided to become more active and engaging. Too my surprise there are a lot of paper pushers and number crunchers with little or no knowledge of inner-city engagement. I hear horror stories about ghettos and slum communities and most of them probably never visited with the people in the community but will pass judgment based on a computer comp or drive by inspection. Inner-city investing is not for everyone but don't give opinions based on what you've heard and not experienced. Yes, I've seen properties trashed but I've seen suburban homes trashed just as bad. If you don't provide inner-city people with quality and affordable housing where will they go? They will move in together and run a property down or move in for a short period of time and try to pay a too high rent only to have the investor spending funds to clean and repaint before the next renter. It takes the right temperament and business knowledge to operate in the inner-city. Yes, there is money to be made in the inner-city but poor construction and poor management is a disaster waiting to happen. It's not for everyone but hiding behind a keyboard and not being part of the solution is counter productive. Again, inner-city investing is not for everyone and definitely not the faint of heart or most newbies. Terms like rough neighborhood, ghetto, poor areas, and others are used and you probably never met many people in the area you are referring. This many not be everyone but I've seen quite a few post over the past two weeks about so called bad neighborhoods. But who is willing to make them better?

Curt DavisBusiness Member

Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes

10y

I do agree it takes the right person to make this work. Best person is someone locally. These homes and areas are not recommended for out of state investors as not even the best management company will be able to successfully manage homes in areas like this. It's also no secret that statistically homes that rent for example under $600 per month are mostly lower income areas with usually a higher crime rate. I can appreciate the heart and desire to make areas like this work. If this is what your going for I wish you the best.

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Douglas SkipworthBusiness Member

Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes

10y

@Dwayne Jones,

What you're doing in your neighborhood is amazing!

If we could find a way to duplicate what you're doing, this city would be a 100 times better than it already is.

Please keep doing your great work and encouraging others to do the same. You are making a huge difference!

Investor's Guide to Memphis Real Estate

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Alex CraigBusiness Member

Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes

10y

@Dwayne Jones There is not a doubt money can be made in lower income, "C" class, ghettos's, etc. what the proper term may be. Memphis is a big city and these areas have good people living there; maybe they would choose to live in a nicer area with less crime, but financially they are not able. These people certainly want the same thing that every other renter/home owners wants and that is a place they are proud to pull up to every day when they come home from work. There are a couple of Memphis TK providers who have done a great job turning boarded up homes in 38127 into the nicest house on the street. I have managed homes in these areas and personally, not a fan. While I agree, homes in the burbs can be trashed too, but the way we manage homes in lower income areas vs. the way we manage homes in nicer areas is night and day. For example, I had 2 of my personal houses go vacant this year at the same time; one in Lakeland and one in 38109. The house in Lakeland I did not worry about as I had the tenant send me a video of his move out. The house in 38109 as the tenant was moving out, I had the furnace, H2O tank and AC unit pulled and put in my storage unit. I literally had my rent ready crews painting the outside and landscaping the yard while the tenants UHaul was in the driveway loading up. I know my vacant home is far more likely to be vandalized in these areas as I have seen that scenario far to many times and importance of getting rented is so important. Every day that house sits vacant, the chances of vandalism go up. I don't put cages on my AC units in Bartlett, Cordova, Lakeland, Collierville and true East Memphis; in 9 years in business, never a unit stolen there. The reason we do not manage homes in those areas for other investors anymore is the amount of resources I had to pull for a successful move out such as the one I did on my own personal property in 38109. Call me negative, but I have seen to many houses gutted in these lower rent areas.

I agree with @Curt Davis, these homes for the most part should be left to the locals as the management often times can be more intensive. While there are good mgmt companies for this space, keep in mind the monthly PM fees taken in are less simply because the rental amount is less, which could leave a company to run a little leaner then necessary. I manage 450 homes with an average rent close $900 a month. If my avg avg rent was $700, I know for sure I would need 2 more employees, yet my revenue would be smaller as vacancy is higher. Property Managers are most profitable at low vacancy as the monthly management fee is the best profit center. 8 to 10% of $0 is not profitable. If I were in this space, I would want to work with a company that had at least 250 homes.

I am well known on BP for not having the nicest things to say about "C" class properties, but I always finish by saying there is money to be made and I know local people making money in C class. I have 2 of my 17 homes in C class and do just fine. The story about my 38109 house; that tenant lived there for 6 years and was the sweetest lady in the world. When she lost her job and had to take another job making less, I lowered her rent by $50 to keep her there. I hated to lose her. @james martin and @Douglas Skipworth are 2 prime examples of local investors doing well in lower income areas. I simply like to paint a devils advocate view of these types of properties because out of state investors tend to see the #'s on a Pro Froma for this type of property and get all excited without knowing the challenges and importance of a top notch team to help them succeed.

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Dwayne Jones

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Investor · Memphis, TN · Member since 2009 · 54 posts · 49 votes

10y

@Alex Craig I was not directing my comment at you but since you responded I will respond to your post. First, just because you've manged several hundred properties across Memphis and have a perspective yours is not the only version. Everything you stated may be true but my underlining motive and experience is different than yours. So who do you think sold all those subprime houses that are now vacant in Frayser and available for investment property? Why can't the residents afford housing or get fair appraisals when selling homes? These are real questions. Honestly, I know it's impossible to know all of your neighborhoods and/or tenants but have you ever visited a local church or school in the communities of your rentals? They are people and not just investments for me. I"m sure your background and journey is not the same as mine but that doesn't taint my perspective or end goal. I don't like to put religion in here but as a servant who has compassion for people I may not be your typical investor. I've rehabbed houses Frayser, Westwood, Binghampton, and other areas through CDC's, private individuals, and for myself with varying levels of profit but always a satisfied customer. The units off TIllman were a great project for the Binghampton CDC and now houses elderly for the Church Health Center. The House of Orange Mound, My Cup of Tea, and many other projects have been completed with the focus of helping Memphis as a whole by helping individuals. As stated before everyone has an investment goal and my approach is not solely based on the final dollar. I built in Fayette county 12 years ago in Rossville, Eads, and Oakland with financing from Tom Luck bank president of the Bank of Moscow and Bank of Piperton before it became Fayette County Bank with the new building on HWY 57. So, I've been in this journey for new construction to rehab for over twenty years. My comment was an observation of individuals who obviously enjoy life and the benefits of investing a certain type of way. Some people don't want to go through the trouble of reinventing communities unless it benefits them. Have you heard of equity? Sounds good but most haves are not willing to give to the have nots. Cooper-Young was the hood up and down New York and most of the streets down to Airways. Uptown was an extension of North Memphis and Broad and the Binghampton developments are being gentrified. Oh, what about the new Crosstown project that was vacant for over twenty years. People who want to see change find or have the capital and invest to revitalize communities for their personal benefit or profit with no regard to the original residents. If you knew some of the people and why they live the way they do maybe you wold understand beyond the numbers. Nothing personal but I stand my by opinion and respect your view as well. I accept being a different type of investor and I've talked with @Douglas Skipworth a few times and he understands my journey. He has also taken time to meet me in the "ghetto" to see a different perspective. This is an open invitation if you are interested.

Memphis Investors and Investors in general

Memphis Investors and Investors in general

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