Memphis Invest - 3rd Quarter Review and 2017 Update

[Chris Clothier]

Memphis Invest – 3rd Quarter Review & Update

I used to write these updates each quarter and post them here on BP, but to be fair, I put my focus on other tasks and projects and rarely got around to it these last few quarters. With a lot going on over here and A LOT of discussion going on in the forums about Turnkey real estate, this felt like a good time to do another update. We have also been made aware of several trolls reaching out to our clients through DM and even harassing them offline by email. If someone is willing to troll my clients in private, who knows what other BS they are peddling in private to other investors. Hence, a good time for a little transparency.

We are going to post this on our Blog as well with a little more in-depth detail.

I want to be clear about this data and what it is and what it is not. We have a pretty clear and very high expectation of ourselves, our team and our company in general. Just because we post this does not mean we are necessarily better than any other company nor does it mean we are better fit for individual investors than other companies. At the same time, not everyone in our space is capable nor willing to publish this kind of data. So, take this as an indication of our company and don’t try to read more into it about the industry or other companies.

As of 11/1/17

Property Management

Properties under management at Premier Property Management and PPMG:

Memphis – 3,147

Dallas – 1,103

Houston – 163

Little Rock – 25

Oklahoma City – 25

Total Properties – 4,462

Total Rents paid out to clients – approx. $30,250,000 (this number annualizes at roughly 7.9% to 8.1% of total asset value under management).

Total Properties that have gone vacant in 2017 – 688 (on pace to turnover approximately 19.5% of the total portfolio). This will represent six straight years of having 21% or less of the entire portfolio experience a turnover.

Less than 1/4 of the owners whose properties are managed by our company experienced a vacancy so far and that number will end at less than 1/3 by year end. Put another way, almost 70% of our owners have not had a vacancy this year.

Total evictions across all 5 cities year to date – 54

Total Lease renewals – 1,026

How big of a deal is the 1,026 lease renewals?

A common knock thrown around about buying Turnkey real estate by those that clearly have no idea what they are talking about is that they never work in the investors’ best interest. Those 1,026 lease renewals are a direct alignment of interest. The average rent on our global portfolio is close to $1,200. We charge 1st month’s lease up fee.

So, in essence, by doing the right thing and working hard to KEEP residents in our clients’ properties, we have given up over $1.2 Million in revenue year to date. That money flows directly to an investors bottom line rather than our bottom line.

Purchases and Renovations

So far in 2017, our entities have contracted 733 properties for us to buy, closed on the purchase of 642 properties and transacted to clients 565 properties.

Our renovation departments have paid $20,091,597 year to date in material and labor to renovate those homes. That is an average of $31,295 spent per property. A rough estimate would be $21.50 spent per square foot on renovations inside and out.

We have recently been licensed in additional states. Expect to hear in the near future from Memphis Invest on growth into Alabama, Georgia, Missouri, Kentucky and possibly Ohio and Kansas.

Investor Breakdown

This one has always been of interest to a few of my friends here on BP (@Matt R. and @Jay Hinrichs) . It is always fascinating to look behind the curtains and see where the demand for something like this originates. Unlike popular belief, interest and demand for Turnkey investments is not relegated to the uneducated, brand-new, west-coast real estate investors. More to the point, satisfied investors who are having their expectations met, do not continue to build their portfolios.

Year to date, 238 investors have purchased their first property with Memphis Invest. That group of investors has purchased an additional 151 properties this year.

80 new properties have been acquired by investors who have owned for two years.

37 new properties have been acquired by investors who have owned for three years.

17 new properties have been acquired by investors who have owned or four years.

10 new properties have been acquired by investors who have owned for five years.

35 new properties have been acquired by investors who have owned for longer than five years.

647 investors own one property

413 investors own two properties

193 investors own three properties

97 investors own four properties

212 investors own five or more properties – this group has a special designation within our company. They are in the WOW Group and this group of 212 own a total of 1,423 properties.

425 Investors reside in California

155 investors reside in Texas

107 Investors reside in New York

70 Investors reside in Tennessee

58 Investors reside in Florida

52 Investors reside in Colorado

52 Investors reside in New Jersey

Massachusetts, Hawaii, Virginia and Pennsylvania have over 35 investors each

I figured these were a few of the metrics that actually mattered!

A quick sidetone about Turnkey real estate (I am working on an article for BP on this right now....)

As with any industry, Turnkey real estate works really well and provides a perfect solution for some investors. For other investors, the idea of buying Turnkey is a complete turnoff. However, there are actually turnkey real estate investors who don’t care if you think they are making a mistake or if you think you know more about real estate than they do! I happen to have a couple of trolls here on BP who have been sending unsolicited direct messages and harassing emails to some of my clients who would dare to mention that they are having a good experience here on BP.  That is going to come to an end very quickly.

Just like any industry, there are good companies and bad companies. There are good individuals and bad individuals. I'm not here to point out who is good and who is bad.  We have a very particular way that we operate and what we believe.  We receive over 12,000 inquiries a year into doing business with our company and we are very particular about the type of client fits best with our company.  So, make no mistake, the passive investment industry in general and the concept of buying property labeled as Turnkey specifically is not going away. It is simply a matter of each buyer being properly educated and willing to dig deep into due diligence to make sure their expectations will be met.