Frayser haters, check out this video from The Ellen Show today!

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Frayser haters, check out this video from The Ellen Show today!

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

I have only been active on BiggerPockets for a couple of months, but it's pretty clear that BP hates the Frayser neighborhood in Memphis*.

There is no doubt it's a challenge rental market, but great things are happening there.

Look at this video Ellen posted today.  It's already got almost 50,000 views!  We have residents that attend this school.

https://www.youtube.com/watch?v=ettmmf2MioQ&feature=youtu.be

BP, please quit hating on Frayser!

*expect for BP'ers Derrick Craig, James Martin, and Aaron Fowles, who constantly stick up for Frayser!

Investor's Guide to Memphis Real Estate
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James Martin
Property Management · Memphis, TN · Member since 2009 · 667 posts · 362 votes
10y

I'm with you Douglas and understand what your trying to convey! I have clients call me quite often that only have $50k to spend. After giving them all of the disclosures many are very happy to move forward with purchasing in Frayser and other alike areas. The reason most shop with my company is that we are very hands on & active in low income areas. We have a great record with renovating and renting these homes. I personally wouldn't suggest these areas for long term investments, but they are great for short term with the proper management. The point I believe Douglas is making is that you can do well in these areas with proper rehab and management. I mean who wouldn't want to do what's easy? Unfortunately, someone has to clean up the mess other companies have made selling these investments as B class properties knowing they were D's.

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    10y

    Nice positive story and effort.  Sadly its going to take a lot more then the Ellen show and some money to fix the bigger issues happening in one of the worst zip codes in the country.  God bless the teachers who are trying.  I think its the things happening in the children's homes and neighborhoods that are the biggest problems.  

    Also, this video does not change the fact Frayser is in general a terrible area to invest. This is only for locals, not for out of state investors.

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  • Douglas SkipworthBusiness Member
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    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Thanks for the reply. 

    I did a little research this AM and here's what I found out about our experience with Frayser.

    We have 173 properties under management in 38127.

    The 173 properties are owned by 68 owners (none of whom manage the properties themselves, in fact 42 of the owners are non-Memphians).  

    I personally have an interest in 31 of those properties so that leaves 142 for 67 owners, which averages just over 2 properties per owner.

    Only 10 of the properties in Frayser are For Sale right now.

    All that to say, there are plenty of non-locals who are doing fine in Frayser.

    My contention is that the most important part of investing is purchase price and manager.

    By the way, the Ellen video has now been viewed over 120,000 times in the last 24 hours!

    Investor's Guide to Memphis Real Estate
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  • Corey Melkonian
    Real Estate Agent · Watertown, MA · Member since 2015 · 366 posts · 77 votes
    10y

    Great story Douglas, thanks for sharing.

    1Reply
  • Douglas SkipworthBusiness Member
    OP
    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Thanks, @Corey Melkonian.

    The video's been viewed over 200,000 times now!

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Douglas Skipworth  This is good info.. however the other side of the coin would be how many out of state investors have been wiped out In Frayser.. I suspect it would be quite a few  My self included  unfortunately .   But its good to see you local folks jumping in and buying this stuff up.. your the one's who will make the difference in the long run.

    I have a tri plex there that I have rehabbed and rented I offered it to one of the folks you mentioned and my best offer was less than I paid for it.. the person just looked at what I paid for it at tax sale   did not account for my rehab money and offered me less.. I think he knows being out of area we will tire of it and the local will end up picking up the crumbs.

    I will check with the guy we did this with if we have an issue with management we will give crestcore a shot at it...   There is no real spin here for out of area folks its Russian Roulette in my mind.... 50/50 chance of a wipe out if not worse.

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  • Douglas SkipworthBusiness Member
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    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Thanks, @Jay Hinrichs.

    You know we're happy to help however we can.  Just let me know.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Douglas Skipworth  I will I will get you the address off line.. maybe you can sell it for me

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  • Douglas SkipworthBusiness Member
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    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Now, you're talking, @Jay Hinrichs!

    This is my favorite post you've put up on BP since I've been active! :)

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Douglas Skipworth  gets even better I sent you the address a minute ago..

    I forgot we owned this thing....

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  • Douglas SkipworthBusiness Member
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    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    Awesome!  Thanks again, @Jay Hinrichs.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Douglas Skipworth  and frankly I don't even know if this is in Frayser or not.. I do know its in Memphis as I fund a few investors there that like to buy at tax sale... but we usually are in and out of them this one is lingering. 

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  • Douglas SkipworthBusiness Member
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    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Jay Hinrichs,

    I'm on it.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    I think it comes down to investing philosophy and and tolerance for risk versus extra perceived yield.

    The national median housing income is about 53,000 on average. My clients on the commercial side we are looking at median income areas above 80,000 and preferably above 100,000.

    In Cali and New York you have a lot of over 100k income pockets but cost of living is high. Go to other states and the top areas tend to be around 100k or more for that state. It's not the only economic driver but it helps. At least Memphis is a warm belt area although I don't see retirees flocking there. 

    As mentioned the what I call "local legacy investors" will make the most impact. They tend to look at things from a transformation perspective and helping the area where they live. An outside investor looks at amount of capital deployed, exit strategies,risk, and return.

    We have some investors here on BP who also invest on the fringes of areas hoping they can turn around. Sometimes it works and they do very well and move the money into more solid markets with less risk and other times they lose their shirt.

    It's just like appreciation play gambling in Cali but instead betting on an area turn around play.

    Myself and my clients stay away from this type of product but there are plenty of others who find it attractive. 

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  • Michael Mcghee
    Wholesaler · Memphis, TN · Member since 2015 · 49 posts · 28 votes
    10y

    @Jay Hinrichs who does your title insurance regarding your tax sale properties. I currently use an entity that has to use Chicago Title but would love to have another option. 

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Michael Mcghee  don't know but I use Chicago here in Oregon quite a bit..

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  • Michael Mcghee
    Wholesaler · Memphis, TN · Member since 2015 · 49 posts · 28 votes
    10y

    @Jay Hinrichs thanks im assuming they are the leaders in that area. 

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  • Douglas SkipworthBusiness Member
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    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Joel Owens,

    Thanks for chiming in!

    I totally understand your perspective/philosophy.  There are so many different ways to succeed in real estate investing, which is why I like it so much.

    I look forward to the day that I can only focus on the $100k income areas!

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  • Mike Zipf
    Software Engineer · North New Jersey · Member since 2015 · 56 posts · 25 votes
    10y

    Wikipedia has some interesting statistics about Frayser.

    Wikipedia Frayser, Memphis

    "Ethnicity statistics

    Black: 2074.2%
    White: 23.9%
    Hispanic: 1.2%"

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  • Account Closed
    Investor · Memphis, TN · Member since 2015 · 105 posts · 68 votes
    10y

    Man forget Ellen and that whole video.  I work at a school in Whitehaven and stand in front of Millbranch traffic for 30 minutes each day with a stop sign making sure the parents and students in my school at least have the opportunity to get into traffic without someone barreling into them at 40 miles per hour.  Where's my celebrity endorsement?

    Sarcasm aside, I do what I do because it's the right thing to do, full stop.  Hundreds of teachers do the same thing each day without seeking media coverage for it (do you really think this was an accident).  What this video shows is that there IS work being done all over Memphis to provide a safe atmosphere for its children.  Those kids that are being walked home by those teachers, and the ones who ride out from my school each day, are going to be the ones that make or break Memphis.  

    There are enough areas in this city that are just on the fringe that one generation will either rehabilitate them or sink them.  If they sink, the city sinks with them.

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  • Douglas SkipworthBusiness Member
    OP
    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Mike Zipf,

    That's bizarre.

    I'm guessing it should really read

    Black: 74.2%
    White: 23.9%
    Hispanic: 1.2%

    which gets a very close to 100% and is probably accurate.

    Thanks for sharing.

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Hi Douglas,

    Most of my clients are high net worth millions to ultra high net worth ( over 25 million ) so they tend to be risk adverse. Return isn't the most important thing to them.

    A value add deal to them might be buying a mid development project in a great area or getting something at a great cap rate that is above what the market is trading at. The sellers sometimes will give a great deal to very strong buyers as they know certainty of close.

    So they still want a deal just in a different way. Many lower income areas serve a purpose because of the low entry point with required money down to purchase a property. They sometimes throw off higher yields but you have to work for it. So it helps entry level investors get started if they buy right.

    If someone has a job making 50k a year for example and trying to break free from the job and they are typically younger in age then they like pushing yield trying to reach goals sooner.

    Someone with 5 million generating very high returns never having to work another day in their life but does it when they want to out of enjoyment tends to buy quality only. I still know some wealthy investors that play in that space but most move on to more passive assets.   

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  • Douglas SkipworthBusiness Member
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    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Account Closed,

    Keep doing what you're doing!  We need people serving every day in every way to make Memphis awesome!

    I'm just trying to let the BP community know that there are people out here like you and me that are not giving up on this great city.

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  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    10y

    Not investing in Frayser is nothing to do with giving up on a city. Memphis is great and as investors your obligation is to maximise return and minimise risk so location is important. Taking an altruistic view and investing in bad areas to try and make them better is a compassionate idea but absolutely nothing to do with sensible investing.

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  • Douglas SkipworthBusiness Member
    OP
    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Joel Owens,

    That makes sense to me.  Thanks for the details.

    As you can imagine, your average clients looks way different than our average client.

    That said, most of our clients look forward to the day when they can be your client instead!

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  • Douglas SkipworthBusiness Member
    OP
    Rental Property Investor · Memphis, TN · Member since 2014 · 1k+ posts · 1k+ votes
    10y

    @Dean Letfus,

    I agree with you and I apologize if you felt I implied everyone should invest in Frayser.  

    All I'm saying is for people to quit ripping on Frayser so hard on BiggerPockets.  I have admitted multiple times on BP that 38127 is a very challenging area, but there are plenty of investors out there doing okay in Frayser.  I created the original post just to shed some positive light on something good happening up there.

    We need all kinds of investors to make the Memphis market strong.  Thanks for  doing what you're doing!

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