All Forum Posts by: Cory Jones

Hi everyone,

I was wondering what local Memphis investors think about investing in Frayser (38127 zip).  I have experience dealing with rentals in Frayser and know what its like (I have 3 homes there - considering buying a 4th very soon).  I'm wondering, however, if i should stop investing in Frayser and focus on finding deals in better areas like East Memphis / Colonial Acres.  Here are the pros/cons as I see it:

Frayser Pros:  Excellent cash flow (when rented to a good tenant), cheap homes (roughly $40k or less), rougher area.. but not so dangerous that I won't go to the house to do work (during the day of course).

Frayser Cons:  Home values will probably never appreciate much, dealing with low-income tenants who often only make partial payments (always seems like I'm chasing them down), risk of break-ins when vacant, I've NEVER had a tenant give notice to leave.. they've always been evicted due to lack of payment, flaky handymen/repair people (maybe this is common everywhere).

So is it smart to be investing this way.. chasing the cash flow?  Or, is it wiser to focus on better neighborhoods to get better tenants and potential home value appreciation.  Seems like i would need to spend double (80K to 100k) to get $900/mo in rent in a good area (e.g. Colonial Acres) as opposed to 40K in Frayser to get $675/mo.

Any advice you all might have would be greatly appreciated.

Thanks!

Cory

Hi,

I'm looking to sell a 3 bed 1.5 bath condo in the Memphis area.  It is probably only worth around $20K and it is occupied by tenants right now.  How would you all go about selling a unit like this?  Should I try to sell it as a occupied unit to an investor?  Or, should I move the tenant out and sell it to a conventional buyer?  

If anyone has referrals for agents to specialize in these types of deals please let me know!

Thanks,

Cory

Douglas/Tina - thank you for the referral.  I will reach out soon.  Tas, I totally agree with you.  The thing that's difficult in Memphis is that the line between good/bad areas is so fine.  You could have one street that is great, but a very dangerous neighborhood just a few blocks away.  This makes it tough to find the right properties because you never know if that property falls right on that line or not.  Here in Utah its totally opposite, bad areas tend to be secluded in one pocket and not mixed in throughout the city.  My view could be off but that has been my impression.

Hi everyone,

I have been investing in Memphis for the past 4 years now (now have 8 single family homes) and I am looking into small apartment complexes in the area.  Does anyone have some good contacts (brokers/lenders) in the area?  I am new to this area of real estate (multi family) so I need someone who is patient and willing to educate me on apartment investing.  Appreciate any help you could provide!

Thanks,

Cory Jones

Hi Everyone,

My brother and I are having a hard time finishing up a rehab project because we've been dealing with unreliable contractors.  We're trying to find reliable/affordable guys to help us get things knocked out.  Does anyone have some good contacts that they'd be willing to share?  Right now we're really need someone who does both framing and carpentry.  I'd also like to find a good HVAC person and roofer.  Appreciate any help you could provide.

Thanks!

Cory

Thanks David for the post.  The problem with this area is that the "sales price" that shows up in Zillow are all over the place.  In the same neighborhood there will be sales data that shows one house for $5K and another for $80K (I even saw one that said a 3 bed home sold for 1.2M.. obviously there is something wrong with this).  You'd assume the 5K properties would be a total wreck and they usually are but it even shows a house that sold for 60K that looked totally gutted and another that looked decent for 20K.  So its hard to estimate and trust the numbers when you see these things.  That's why I'm wondering if anyone has done an actual appraisal.  Thanks again.

Hey everyone,

I'm looking to do a HELOC on a few of my rental properties in Memphis, TN and some of the banks I've talked to require the homes to appraise for $50K +. My properties are in Frayser and are all 3 bed 1.5 bath. According to Zillow (not sure how accurate Zillow is in this area) my property values range between $42K to $52K. Do any of you have homes in this area and (if so) have you done an appraisal recently? I'd really like to know how much these things will actually appraise for.

Thanks!

Cory

Hi Everyone,

My name is Cory and I wanted to reach out to you all to see if you (or someone you know) is an experienced real estate investor. I'm a young guy (30 - feels fairly young) with a wife and 2 kids and I live in Utah. Since buying my first rental property I've developed a passion for real estate investing and I've enjoyed the process so much that I'm aiming to one day make this a full-time career and leave my job. My goal is to sustain my life/expenses through passive income and ultimately pass that along to my kids one day. I bought my first unit back in 2012 and I've been trying to scale up ever since. I currently own and lease 7 single family homes in the Memphis area and this has been a big personal achievement for me. However, I'm worried that I'm focusing a bit too much on the ghetto areas with cheap properties (despite the good returns) and may be missing out on bigger opportunities in MFR. I have no desire to fix/flip, I want to find units that I can hold for the long haul.

So my question is.. have any of you considered this and taken the leap to full-time investing? Was your experience good/bad? Would you mind sharing your strategy and/or your story about your success? Any advice you could share would be greatly appreciated.

Thanks!

Cory

Hi Everyone,

My name is Cory and I wanted to reach out to you all to see if you (or someone you know) is an experienced real estate investor. I'm a young guy (30 - feels fairly young) with a wife and 2 kids and I live in Utah. Since buying my first rental propety I've developed a passion for real estate investing and I've enjoyed the process so much that I'm aiming to one day make this a full-time career and leave my job. My goal is to sustain my life/expenses through passive income and ultimately pass that along to my kids one day. I bought my first unit back in 2012 and I've been trying to scale up ever since. I currently own and lease 7 single family homes in the Memphis area and this has been a big personal achievement for me. However, I'm worried that I'm focusing a bit too much on the ghetto areas with cheap propeties (despite the good returns) and may be missing out on bigger opportunities in MFR. I have no desire to fix/flip, I want to find units that I can hold for the long haul.

So my question is.. have any of you considered this and taken the leap to full-time investing?  Was your experience good/bad?  Would you mind sharing your startegy and/or your story about your success?  Any advice you could share would be greatly appreciated.

Thanks!

Cory

Great pointers, thank you all.  I like the advice to diversify in my area and also the advice to focus on higher-end areas for MFRs.  My concern, as some of you have confirmed, is that with MFRs the vacancy rate and turnover will be higher.  Like Alex Craig said, being in a desirable area with lots of tenant options is key to getting good tenants and filling the vacant units quickly.  I will say, I have had pretty good luck the last two years on my homes (although I had one house that went through 3 tenants in one year due to non-payment issues - I think it was just a run of bad luck).  My biggest concern in this area is vacancy.  I would rather have my tenant living for free than leave it vacant for an extended period of time because of the risk of theft and vandalism. 

I'm assuming the issues of vandalism and theft are less common in the higher class MFR areas than they are in Frayser.. is that correct? I guess that would be the tradeoff, taking a lower cap rate for a safer area and better tenants.

Also, on MFRs, what does your debt coverage ratio look like?  I personally have lived off of the 3/1 rule where I make sure I have 3 houses to pay on one loan, I've found this to be a safe strategy to quickly pay down debts.  But this is for houses, what is a good ratio with multiple units?  Also, what is a good occupancy rate in Memphis?  Are you always north of 90%?  

Thanks again for all your advice.  

Cory