[Calc Review] Help me analyze this deal

[Kelly Pierce]

View report

*This link comes directly from our calculators, based on information input by the member who posted.

So I had a discussion with Memphis Invest and got vague numbers of potential deals they have. I went with the cheapest one discussed (very briefly) and did a quick calculation. I feel like I'm using the calculator VERY wrong or something. According to this even if I paid cash for a property at the rents they are claiming there is only a 2.25% ROI (if the CAP rate is 7%) which I don't yet know for sure. Really I'm not claiming anything wrong AT ALL with Memphis's deals but potentially with my calculations. I was looking to do something like that with 20%-30% down but it was so upside down it didn't make ANY sense.....again unless I'm using the calculator wrong. I did a Webinar where they (very quickly) went through using the calculator so I thought I had it down???

[Chris Clothier]

Originally posted by @Vinay H.:

I am sure if you look at what Memphis invest is doing - they are probably buying these wholesale for 50k a door, spending 10-20k on a fresh coat of paint and carpet and then marketing them as turnkey to out of state. Their profit is coming from selling it at list price to you and also take a little off the top for Property Management services. In addition, any shoddy workmanship they may have done (which typically they do on these quick flips) will be your responsibility to fix. 

I would not proceed on this unless you and a trusted home inspector can actually walk through the property in real life and see with your own 2 eyes.

best of luck 

Hi Vinay,

I am sure you are trying to give positive input to the OP on this and your advice to use a home inspector is a great piece of advice.  Unfortunately, your comments about my families' company are far off the mark.  I would welcome you to follow the advice from your first sentence and take a look at what Memphis Invest is doing and has been doing for the past 16 years.  We are not a new company nor a fly-by-night house flipper looking to turn quick profits with shoddy workmanship.

In 2018, we spent over $45 million renovating 900+ properties in seven southern and midwest cities.  We currently manage over $650 million in single-family assets for very intelligent investors from around the country and those investors are adding over 1,000 properties to their portfolios in 2019.  We will eclipse the $1 Billion in assets under management in the next 24 months.  We have been active members here on BiggerPockets for the better part of 10 years and have earned a reputation for impeccable integrity and never shying away when we fail to hit our standards.  This has helped to cement our reputation as the best of the best.  We routinely work with and share best practices with other turnkey companies.

While there are many bad actors within the industry as there are in any industry, please be mindful as you post not to insinuate that all turnkey companies operate the same.  We in particular have worked very hard to separate ourselves and comments of shoddy workmanship and quick, meaningless renovations are an insult to our team and the work they do.