Memphis Invest - Chris Clothier

[Steven Roffer]

I was recommended to talk to Chris Clothier and Memphis Invest at a recent meet-up here in Los Angeles, when the subject of turnkey buying of rental properties out of state came up.  I contacted them and am now having a call with one of their Investment Advisors tomorrow.  

Does anyone here have any experience with them?  Anyone holding property from them?

I have read a number of forums on them and the one negative thing that has come up a few times is that people seem to end up paying more for their turnkey properties. Anyone have any experience with this?

[Ali Boone]

Hey Steven! I haven't bought a turnkey from Chris to speak directly to working with them, but I have met with him (I also work in turnkeys) and I really like him and value how he runs his business. I've never heard a bad review from anyone who has bought through him. And he is a really cool guy, regardless of business! Him and another colleague of mine celebrated International Pancake Day together at IHOP a couple years ago (true story). Great guy, I think MemphisInvest is great, and if I were interested in Memphis they are the only ones I would buy from for my own properties. (no, I don't make a referral fee for pushing them, for anyone concerned)

I live in LA as well and have only bought turnkeys myself. Yes, they are more expensive, but with that expense comes a ton of expertise and relinquishing of risk and responsibility, and experience, necessary if you were to take on all the work yourself. It's worth every penny in my opinion! I don't think turnkeys are for everyone, and if someone does have experience and know-how on how to do it all themselves, then certainly I recommend doing it yourself. But if you are like me and have no experience (and more importantly, interest) in doing everything yourself, then turnkeys are a great way to go.

[David Cook]

I have not invested with them but their reputation is excellent.  I grew up in the Memphis area and you could likely find better deals if you wanted to take the time to learn the market and shop around.  If you aren't interested in learning the market or concerned you might make a costly mistake they are an excellent option.  Their property management services are also highly regarded from what I understand. That's worth its weight in gold if you are trying to operate from out of state in my opinion.  So you know I'm not affiliated with Memphis Invest in any way.  

[Curt Davis]

@Steven Roffer

What exactly do you mean by paying more, as compared to what?  Are you meaning paying more then the home is worth?  This is where regardless of whom you are buying from you do your due diligence.  If you were purchasing using bank financing there would be an appraisal done and that is one way the purchase price to appraised value would be known.  

[Steven Roffer]

Thanks Ali!

Since you're big on Turnkeys, are there people you can refer me to that you have worked with successfully???

Also, do you know Mike D'arrigo in Indianapolis?

Steven

[Steven Roffer]

@kurt. . . . I'm simply reacting to what other people have written here.  Perhaps "More" than if they had found the house themselves and it wasn't turnkey?

I'm going to check out your website.

Cheers.

Steven

[Billy Maloney]

@Steven Roffer

I am currently working with them to get my first deal. My whole reason for going with them IS their reputation. I was just more comfortable working with them because there are many people who have nothing but good things to say about them. 

It does seem as though you can get better deals out there if you know what your doing or go with a smaller companies with less over head. The way I look at it is I am investing in a proven system and paying a bit of a premium for that. 

That being said I have a feeling once I get this deal done I'm going to want to explore better deals with those smaller companies or do some of the work myself. We ll see. 

If you got any questions about their process let me know. I am about half way through it.

[Steven Roffer]

Thanks @Bill Malony!

Steven

[John V.]

@Billy Maloney

Hi Billy,  How's the progress coming along? I may be interested in contacting them as well. Let me know, thanks.

[Billy Maloney]

@John V.

Hey John

So far things have been great.  My place is rented with a new 2 yr lease. I have a overqualified tenant who is getting a healthy pension income each month.  My 3rd check is coming in this week. Smooth sailing so far without much worry. Let me know if you got any more questions. 

[Michael Brito]

Originally posted by @Billy Maloney:

@John V.

 Billy, I am also curious to know how everything is going with Memphis Invest. I am thinking about working with them. Please continue to update us on your experience!

[Billy Maloney]

Hey @Michael Brito Everything is still rolling. It almost feels like I should be doing more. I plan to get on a call with the PM next month to figure out what are some of the things i can do to up keep the property.  Changing filters, checking on the tenants anything like that. If anyone has any suggestions please let me know.  Money is still flowing in. No problems yet.  I think I cant really say if it was a good investment until a few years go by and i dont have any problems.  

[David Malott]

Originally posted by @Billy Maloney:

Hey @Michael Brito Everything is still rolling. It almost feels like I should be doing more. I plan to get on a call with the PM next month to figure out what are some of the things i can do to up keep the property.  Changing filters, checking on the tenants anything like that. If anyone has any suggestions please let me know.  Money is still flowing in. No problems yet.  I think I cant really say if it was a good investment until a few years go by and i dont have any problems.  

 I was thinking of investing through them but so far have only gotten as far as getting their info. How's the cash flow with your property? Are you able to get $150 to $200. I don't mean to be nosy but that's kind of what I'm looking for as far as monthly cash flow is concerned and was wondering if that's possible through a turnkey. 

[Curt Davis]

Steven, yes you do pay more with a turnkey as opposed to finding the deal on your own. You have to weigh in whether it is worth it to you or not. If your investing out of state then I would say it is worth it especially with the  continued support you will get long term. You should not have any issue getting $200 in monthly cash flow unless your vacancy and maintenance factors are higher then needed. Good luck 

[Jake E.]

All I can say about Memphis Invest is that they are great. We sell wholesale deals to them all the time. They know what they want and move fast. I've had the opportunity to sell to them, watch them do their rehab, then rent it out with great success. They have a great business going and they do a great job for their investors. Again, I'm only on one end but I've seen them go to completion. Of course do your own due diligence @Steven Roffer but from what I've seen, they are business to build relationships the right way. Have a great one!

[Jay Hinrichs]

@Jake E.  your going to get flooded with E mails from folks who want wholesale deals like Chris gets  :) 

[Billy Maloney]

@David Malott Not being Nosy at all this what Bp is for. Im an open book.

I am cash flowing 195$ after 7% vacancy 5 % repair 5% cap Ex and 10% Property management.  It was a great experience for me as my first investment.  No complaints yet.

Its still only been 6 month though. I m currently searching for a non turnkey properties to see what kind of return I can find. If you have no experience in REI like I did TurnKey is a great way to get your first property and get an idea of the . I personal bought on the higher end price to attract better tenants. I paid 153k 5 br 3 ba.

[David Malott]

That looks like pretty good numbers. Thanks for the info.

[Jay Hinrichs]

@Billy Maloney  how about property tax's  I would think you need to add those to your fixed costs as well.  right now your at 27%  were many say 40% is a more accurate number over the long haul..

Me personally I always used 45 to 50% and if I did better fine..

Good luck with it though sounds like you have a very nice property indeed that might actually have a good chance of some appreciation especially if its in Dallas area..

[Billy Maloney]

@Jay Hinrichs yah i didnt mention taxes but i was including them. Its actually in Memphis so may not be as much appreciation. 

[Joseph Q.]

Originally posted by @Billy Maloney:

@Jay Hinrichs yah i didnt mention taxes but i was including them. Its actually in Memphis so may not be as much appreciation. 

 Great to hear that you are having a good experience.  I hear a lot of arguments against turnkey, but I think if you find the right team it can work.

Any reason why you chose the Memphis market over others?  I'm also looking to invest out-of-state and there's a lot of great job and population stats for Memphis and elsewhere.  

[Jay Hinrichs]

@Billy Maloney  are you in the city or in the county... just for others who may not know..

in the Memphis market if your in the city limits you pay a city tax AND a county tax  so tax burden is higher than if you buy in the county... something to think about and be aware of when you buy in Memphis.. and of course Texas we all know about property tax's there.

[Russell Brazil]

I think @Justin B. may have bought a couple properties from them

[Alex Craig]

@Jay Hinrichs  Jay, few properties in Memphis just have county taxes.  The north side of 38128, SE 38125 and spot areas of Cordova.  Also, to note, the city taxes you pay are for the specific city the home is located.  In other words, if the home is in Bartlett, you pay Bartlett taxes, not Memphis taxes.  The suburb taxes are much cheaper then the city of Memphis taxes.  But always county taxes, which you did note.  Don't you think $150 a month for a goal is to low? That is only $1,800 a year after expenses. 2 months of vacancy would cost most leverages buyers at least $900 in mortgage payments and $900 for tenant placement, not to mention the soft cost of getting a house ready such as yard maintenance and utilities. If there happens to be an eviction, then double those cost.

[Jay Hinrichs]

@Alex Craig  I can only go on the OREO I had in Memphis and my CFO pointing out that we had not one tax bill but two.. so I know in certain areas of the city there are two tax bills and I am thinking if your only in the county and not in a city limits you only have one tax bill. 

27% for fixed overhead with professional management as I stated I believe is not sustainable over the long haul unless you get some really really great tenants.. or the house was basically a new construction home... and of course there was no money there for tax's which could make this scenario close to break even I guess. but regardless it was nice of him to share, if his cash flow with 27% fixed costs is 200 a month.. and a 150k house with 20% down plus closing costs was probably just shy of 40k that seems to be about a 5% return COC if everything goes right... if the tax's were not accounted for then it would be less and if the scenario you suggest manifested itself then it could be break even or negative cash flow.. .But that's the rental.. game.. I remember when it was just great to have break even cash flow and your tenants were paying your mortgage.. ( well that West coast thinking LOL)... I am sure he will be fine... since he has a 2 year lease to start with and its not section 8 so you don't have the 5oo to 1,500 a year annual inspection costs that comes with keeping your proprety on section 8...

[Alex Craig]

@Jay Hinrichs  I have heard about those days were you were hoping just to cover the mortgage from several individuals who have been in the business for a very long time. 4.75% rates sure help in creating cash flow. There is no doubt, the key to success in this business is the long term tenant.  It is impossible to make any money flipping a tenant every 12 months; it did not take me long to figure that out when I started building my own portfolio.