Memphis Made Newbie Ready to Learn and Grow

[Account Closed]

Hello Bigger Pockets Members,

I'm really excited to get started here and not only change my life through real estate investing but more importantly, improve the standard of living of others here in Memphis and beyond.

About Me:

I currently work as an SEO consultant for an ad agency in Memphis full time. When I'm not optimizing websites, I'm reading or listening to audio books on real estate investing constantly. I really got inspired by Brandon Turner's book: "The Book On Investing in Real Estate with No (and Low) Money Down" and The Art of the Deal by Donald Trump. I'm currently working on assembling a great team here in Memphis ( CPA, lawyer, realtor, contractors...etc)

Why I'm Investing in Real Estate:

I see real estate providing me the opportunity to achieve financial freedom and the time to focus on helping others achieve their goals outside the 9-5 sheep farm. I also like to travel and cook which gets expensive.

My Initial Strategy

Master my local market, Cordova TN. Initial invest in distressed single family homes under 200K with intent to buy and hold here in memphis, specifically focusing on the Cordova-Appling area

My Goals for 2016:

• Acquire at least rental properties by the close of 2016. One of them being my first home.
• Generate at least $750/month in cash flow.

Looking forward to learning a ton, making lasting relationships and give back to the community.

Cheers,

Michael

[Alex Craig]

@Account Closed

Some advice as a local who has been doing this since 2007.

Use Jimmy Luke as your CPA.  He will save you thousands.  All the big investors use him.  He owned 150 or some homes in Memphis until he recently sold them in 1 transaction.  He knows the investor market inside and out.

Try to avoid contractors. Do you first rehab yourself so that you understand the work that is being done and how long it takes.  You should know if someone is charging you to much simply by the time it took you to do it. I once had a electrician try to charge me $1,500 to replace all the outlets and switches.  I learned how to do it and I was able to do a home myself in 6 hours. I did not think he was worth $250 a hour considering my attorney only charges me $220 a hour and he went to school for 6 years to become an attorney. You should act as the contractor and sub everything out.  But, if that is not your desire, then be careful on contractors working on rental properties....never let them get ahead of you.  Really, don't let them buy material at first. You do that.  Then when he proves himself to be a good contractor, you can release that control.  

Realtor: use one that owns rentals, otherwise, they don't truly understand the biz.

$750 cash flow --- that is a huge amount.  Don't do that in Cordova, do that in Germantown, Lakeland in areas with homes built before 1990, or Collierville.  Even midtown 38104, parts of 38111, 38112 and 38107 will get you max cash flow.  $750 is aggresive, I would think you are still going to net 10 to 12% on that cash flow after your purchase price.  You can get $400 to $500 cash flow on a much cheaper home. If you did that, then you would have 2x the tax breaks.  Most of Cordova is saturated. Countrywood is my favorite area.  Stay out of the homes built after 1990 in Cordova, Arlington and Lakeland.  To much competition with hedge funds. The newer construction homes are way over saturated due to hedge funds who most of which wanted newer homes.  They bought a ton of owner occupied homes and turned them into rentals.

Management: do that yourself, but don't waste your free time on finding a tenant.  You will pull your hair out with 30 phone calls a day, 29 of which are dead leads.  Then you will cuss all the way home when that 1 lead does not show up to the showing even though you called him 30 minutes before hand to make sure he was showing up.   Hire a PM company for that. I would be happy to do that.

Most important, take action.  Good luck!