Mid South Turnkey Homes. Should I invest with this Memphis turnkey?

[Nida Kazmi]

Hi Guys,

I was connected to this company through Jason Hartman, and have spoken with them and trying to do my due diligence (also contacting local realtors and other similar companies including http://midsouthhomebuyers.com/

Just want to be sure that these guys are reputable. midsouthturnkey.com

Is it worth it to purchase and rehab homes in Memphis still? I am looking at 3/1 or 3/2 priced around $40-70k with rehab 35K with rents at $1100/average a month. I buy the home with agreement that they rehab it, and retain the extra 20% ARV after rehab

Please let me know if youre familiar with Kenny Shaw and MidSouth TurnKey

Thank you!

[Corey Eiss]

Hi Nida,

I have been very happy with my turnkey properties I have bought in Memphis!  I have been investing in Memphis for about 7 years.  My opinion is that it is a good way to start investing in an out of state area.  These days the numbers on turn key properties in Memphis are getting harder to cashflow especially if you are leveraging the deal.  I agree with others that not all the companies are created equally and I would take the time out to compare them.  I would take a trip and meet with different companies.   I would definitely take a look at the fee structures.  From my experience the maintenance on the properties could really eat into your cashflow.  So I would make sure there is not a big premium on maintenance from the PM.  Overall Memphis is a great area to focus on like always you want to have a great team to work with!

[Nida Kazmi]

Quote from @Corey Eiss:

Hi Nida,

I have been very happy with my turnkey properties I have bought in Memphis!  I have been investing in Memphis for about 7 years.  My opinion is that it is a good way to start investing in an out of state area.  These days the numbers on turn key properties in Memphis are getting harder to cashflow especially if you are leveraging the deal.  I agree with others that not all the companies are created equally and I would take the time out to compare them.  I would take a trip and meet with different companies.   I would definitely take a look at the fee structures.  From my experience the maintenance on the properties could really eat into your cashflow.  So I would make sure there is not a big premium on maintenance from the PM.  Overall Memphis is a great area to focus on like always you want to have a great team to work with!

 Thank you Corey, that's a great and thorough high level perspective. As for Cash flow, I think it depends on the deal structure as you mentioned, but also strategy/approach (cash flow vs building asset, holding long term). Not many markets out there in post covid era with 'great cashflow' now and definitely not until rates come down. Nevertheless, a trip is in order. 

[Engelo Rumora]

Quote from @Jason Hartman:

@Nida Kazmi - The most accurate answer is... they're all good until they're not. All of the partners I've onboarded over decades start out great, only a small number will go the distance. Here's a POSSIBLE, or even common, view of how it goes: 

1) Launch: They gush about how appreciative they are that we revolutionized their business and life. Awesome gratitude - off to a good start! 

2) They get busy dealing with all the mundane day-to-day stresses and business responsibilities at which time quality, responsiveness and service may, or may not, suffer.

3) Sometimes... This is the kiss of death shows up. They become arrogant (opposite of gratitude) because business is great so they get greedy, and complacent, too.  One of my favorite quotes from Napoleon... "The most dangerous moment comes with victory."  

This is why clients need to stay in touch with us and monitor the tides in these human affairs. 

Hi Nida,

I'm a bit late to the party but better late than never I guess lol

In the search bar here on Bigger Pockets or even a Google research will reveal a lot of info about certain companies.

I'd always like to joke around and say that "Google is your best friend" when looking to work with someone new lol

I'd like to second Jason's comment who has been around the turnkey game for a long time and has probably conducted due diligence on many if not all turnkey providers over the years.

Not many have stood the test of time and I'm proud to say that we have.

Not intending to plug my company as we have many battle scars that started from day 1.

But still here and still battling away 🤓

Why we survived and thrived unlike many others was keeping our operation small and boutique and only doing deals on our terms.

Low volume sales and thorough investor pre-qualification (As not everyone that has a pulse is necessarily a good fit for what we can provide).

Some investors did better than others but one thing I can happily say is that we always did our best for all.

I believe a very important component to any "true" turnkey company is that the penny ultimately drops must drop with them.

Meaning, if you invest and things don't go the way as planned it is entirely up to them to rectify.

No finger pointing or passing on the monkey to someone else (Like a realtor, contractor or PM).

A true turnkey company stands behind it's properties, rehabs and in-house property management.

Key phrase here is "in-house property management".

Everything must be under the same roof and the provider must take all responsibility for the outcome of that investment.

Wishing you much success

[Stephen Williams]

So I am dealing with issues with Midsouth Turnkey.

I was referred to them by Jason Hartman's team for the BRRR process they are working. The contact with them was great until it wasn't. The house was bought first week of decemeber with a finish date planned for March.

The went over the time for completing the work and blamed it on the snow in the area.  That was fine by me but the communication was not only poor but non existent.  I also have a property with Midsouth Homebuyers and they send me a message anytime something abnormal is happening and it is right away. 

 Once they went over the time allotted in the SOW contract (90 days) I suddenly was not getting responses from them.  I then heard from their PM team that they were getting the paperwork done for a renter who was going to be on Section 8.  I get told at this time they have the inspection happening soon and the renter should be in the house.  

Another month goes buy and I send and email and leave voice messages and nothing.  So the next time they sent an email about homes that were available for investors i replied and told them I was coming to visit in memphis.  They were presenting the operations and showed me my house.  The power was not even connected yet.  I asked why is it taking so long.  They tell me the original project manager had a family emergency and had to leave so Kenny took on the project himself.  In all of this they have continued to start new projects and leave mine to sit.  I believe it is because the house went over budget with the first project manager so the solution is to just ignore it.  But I'm finding out these issues with the project manager when I come to visit in person and ask questions.  They assured me all they needed was for the power company to come hook up the power so they can get the HVAC technician in to ensure the HVAC system was good then they can do the finishing touches while the house has Air conditioning and power.  There were hardly any cabinets and a door had been busted open where someone broke into the house due to it sitting vacant for so long.

They apologized for the lack of communication and assured it would be better but I have had no calls or emails returned again.  I sent a message on whats app and it showed Kenny read the message and didn't even take the time to reply.

I reached out to Carrie with Jason's team who reached out to Kenny and he assured her he was going to reach out to me.  I have not heard from him and he has ignored my phone calls.

Maybe this is a one off but it kinda sucks that as a first time investor with them I have been left in the dark and it seems my project has been blown off but I definitely would not recommend them.  I can understand hiccups but there is no excuse for ignoring emails and phone calls when there is a problem.