All Forum Posts by: Brandon Kamm

You sure about the property taxes? We pay city and county here and no way $3100 a year covers both for that valuation/assessment. I have a good idea of what property you are talking about based on your description and that number seems way to low. I would think just the city could be $3100 year making county closer to $3800....likely higher. Just making sure you had your info all there as that seems extremely low for property tax here

I am having trouble through the banks working to use the equity with the hope of using it to improve a portfolio  and also to work toward acquiring more units.  Any thoughts on how some of you have been able to use your equity: just get one paid off and then use that property, having a lender grant a line of credit on that equity, other means aside from a cash out refi.

Portfolio includes a number of 2-4 unit buildings and a couple of bigger ones, most with a LTV currently in the 45-55% range. Properties would be considered B to A- ones and all have been owned anywhere from 2-5 years. Would the only option be working toward a cash out on a couple of them and hoping for 75%. I would like to use the entire portfolio and its combined equity and be able to work toward a line of credit of sorts, but that seems to be difficult these days.

An LLC owns them all, does it make sense to quitclaim to an individual owner and then refinance (if this option is even out there anymore)

There is a good amount of equity there, it just seems that with none completely paid off it is difficult to put that equity to work.

Thoughts from any of you that have encountered this?

I am having trouble through the banks working to use the equity with the hope of using it to improve a portfolio  and also to work toward acquiring more units.  Any thoughts on how some of you have been able to use your equity: just get one paid off and then use that property, having a lender grant a line of credit on that equity, other means aside from a cash out refi.

Portfolio includes a number of 2-4 unit buildings and a couple of bigger ones, most with a LTV currently in the 45-55% range. Properties would be considered B to A- ones and all have been owned anywhere from 2-5 years. Would the only option be working toward a cash out on a couple of them and hoping for 75%. I would like to use the entire portfolio and its combined equity and be able to work toward a line of credit of sorts, but that seems to be difficult these days.

An LLC owns them all, does it make sense to quitclaim to an individual owner and then refinance (if this option is even out there anymore)

There is a good amount of equity there, it just seems that with none completely paid off it is difficult to put that equity to work.

Thoughts from any of you that have encountered this?

@Brian Christensen we too handle management and to a much smaller degree investment sales in Memphis. It is a great city for investment if you have a good team and learn the city.   If you are serious about investing here @curt Davis should be at the top of your list of who to talk to, he has just as much turnkey experience here as you will find.

I would say with 95% certainty you have a bad apple.  More than likely there was no death, but even if so that's plenty of time to change utilities. 

I do believe there is a huge difference in change of service...does the leae indicate tenants to put utilities in their name? We have them sign a document stating when they will be shut off so there is no confusion.  If you were handling utility responsibilities and shut them off as a response to them not paying rent that's a different story, but if the leae states you aren't responsible for them then itsup to them to get them transferred or they will be shut off.

Having heard this story many times I would stay on top of them and the first time rent is late in the first three months go ahead and evict and save yourself the frustration and time.

 Bill, I wanted to follow up on a couple of the points you made in your post and your tough situation.  

I paid cash and own the property outright and can't afford the loss right now

Wouldn't selling the property and receiving some of your cash back be better than having the property free and clear but having to put money in it year after year and still taking a loss down the road.  I'm sure you are trying to be optimistic here, but based on where it is and who will live there, its going to be a struggle to keep this cash flow positive based on your situation.  Even when rented and having the income you will have expenses that will be incurred.  Management fees, leasing fees, and maintenance.  Believe me in this area you will have maintenance expenses no matter the shape of the property now.  With taxes and insurance coming as well its going to be tough for it to generate any cash based on the situation you have described.  What will ultimately follow will be the eviction, legal, set out and future make ready expenses that will occur with whomever you do move in the property.  You could find a tenant that does pay rent and take care of the place, but in these areas it often is reliant on an owner/manager who is very much on top of their property and  spend a lot of time keeping the tenants in line.

If I can really see the downward trend I will think about other options but markets fluctuate and so do crime areas.

I do believe you are overestimating the area and potential here.  Im sure most of the Memphis managers/operators/landlords on here would agree that this hasnt been nor will be an area of growth in the foreseeable future.  It hasnt been since the 1980's and based on trends in the city wont be anytime soon.  Sure markets change over time, but i would really think about a general statement such as that vs. an educated opinion from those who know the area.  If anyone from or in Memphis would argue that Parkway Village has any positive outlook i would be surprised.

Its always hard to stomach a loss, but sometimes the direct hit is easier than the slow bleed followed ultimately by the same direct hit down the road

Just to back up what some of the Memphis professionals have indicated, your best bet is to just dump it if you can for what you can get.  In the long run most likely you will end up pumping much more into the property than what you are able to collect.  As they have also indicated that is a rough area that is becoming rougher.  We are trying to stay away from that are on the management side as there are more problems with rent collections, vacancy, and tenant neglect of property than the time its worth putting into it.

I hate that you had this experience, but it should really be a lesson for all that when buying out of town and/or turnkey you should have a good relationship with the provider and really if at all possible visit the property and perform serious research on the city and area before investing.  It may cost some time and money but forgoing that can often lead to a poor investment in the long run.

@Curt Davis has the best advice for you.  That rent at that price is great in some neighborhoods but could be a red flag in another.  Depending on where exactly the property is will determine what type of tenant you will have which will dictate how it performs in the long run.  You must consider not just the tenant provided when you buy, but also what sort of tenant base you will have in the future.  Don't underestimate the importance of location in Memphis.

while I agree with you 100% the problem often lies with the owner not having or giving funds to the manager to clean, repair, and replace. I can't tell you how many times a property needed $2,000 worth of repair to have the owner only have $500 to do it.

Your point is right on but the managers hands can often be tied.