All Forum Posts by: David Katz

Just wanted to give a quick update here. It ended up being a fluke coincidence that was sorted out in a positive way. Glad I didn't make any hasty, rash decisions. As always, REI Nation was great with communication, kept me fully in the loop, took my concerns seriously, and made sure that everything in their control was taken care of.

Thanks for all the input.  I think I just really needed a gut check to stop me from being hasty.  I'm in this for the long-run, but sometimes its hard not to knee-jerk react to short-term issues, especially when they arise in quick succession.  Something like this was bound to happen, even twice.  You just would never expect it to happen twice immediately at the beginning.  But I think I just need to remain calm and keep my focus on the long-term.

And to the extent it wasn't clear from the above, none of this is REI Nation's fault. It was just a streak of bad luck. And if anything, its a comfort having them in my corner when facing something like this.

I purchased 2 turnkey properties through Memphis Invest (now REI Nation) in 2019. Everything was going well with both until about a year ago. For one home, the tenant went bankrupt in mid-2020 and stopped paying rent entirely. This dragged on for many months until the tenant voluntarily left in early 2021. Of course, none of that is the fault of REI Nation, given the unique circumstances of 2020. And that kind of thing happens from time to time.

Soon after, REI Nation placed in a new tenant to a 2-year lease. But now, only 4 months into a 2-year lease, the tenant has not paid their rent for August, made promises of payment, and have failed to follow through to this point. So just 4 months after one nightmare scenario ended, another one seems to be beginning. At this point, I don't know what the cause is. REI Nation is the gold standard, so I would like to think its not some flaw in the tenant screening process (and the other property is performing very well, and I have nothing but positive things to say about REI Nation). But regardless of the cause, I'm starting to question whether this is something I should continue with.

I'm only 34, so there is a long time to dig out of the hole.  But on the other hand, I have the option of simply selling the property and taking advantage of the great price appreciation that occurred over the past year (I bought for $156,900, and the estimates on Zillow, Trulia, Redfin, etc. say the value is getting close to $200k, though I take those with a grain of salt).  What would you do in this scenario?  

I recommended that to him for a few reasons.  I like the idea of a one-stop shop where there is never any confusion about who is responsible for what.  When dealing with multiple entities in various parts of the process, you can sometimes get caught in that grey area where both sides are pointing to the other party.  I like where all wings of the operation are answerable to you and to one another all the same.  If something goes wrong, the entire operation has an incentive to ensure it gets fixed.

Second, when the property management is fully in-house, it seemingly creates an incentive structure that more closely aligns with my interests as an investor.  A separate property manager is in the business of property management. That is how they make money, including through tenant placement fees and the fees they charge for issues that arise.  

But for a turnkey operation that has property management in-house, they arent in the business of property management. They are in the business of buying, rehabbing and selling properties to investors.  Property management isnt really how they make money, and the goal of offering it is to bring you back as an investor again in the future.  So the incentive isnt simply to just charge you fees so that the property manager can make money.  All of that is secondary to creating an experience that will cause you to buy a new property.

Finally, having everything in-house allows for more consistent standards, values and quality.  You could have a great TK provider and then be passed along to a subpar third party property manager.  But having everything under one roof seemingly allows for more consistency in how things are done (though diligence is of course required to assess a property management team, regardlesd of whether its third party or in house).

Anyone have any insight on this?

Aside from Memphis Invest (now REI Nation), what other turnkey companies have an in-house property management team? A friend of mine was considering turnkey, and I advised him to look for turnkey providers that actually manage the properties they sell (as opposed to passing investors along to a separate, third-party PM). I know Memphis Invest has their own in-house PM wing, but I don't actually know which other turnkey companies are also structured like this.

Yeah, I would be very wary if a turnkey provider tried to convince you to get an appraisal that wasn't from an independent 3rd party.  Its an absolute necessity, and MI was not only fine with it, but encouraged it.  When you deal with them, you will see that they stand behind what they do 100%, and never try and hide the ball when it comes to 3rd party involvement.  

Yes, third party appraisal

I have 2 houses with Memphis Invest and can speak directly to this issue.  I remember when I got my home inspection report on my 1st property.  Almost everything was good, aside from a few issues that needed some attention.  I flagged all of the issues and reached out to my closing contact at Memphis Invest.  Not only did they say they will address every single issue I noted, but they had already flagged them on their end and had already begun the process of getting it taken care of before I even reached out.  And when I bought my second property a few months later, they did the same again.  Coordinated to ensure every issue was addressed and fixed quickly, and sent me pictures to confirm that each issue was fixed to satisfaction.  

I own 2 properties with Memphis Invest and both are performing really well.  First property is a year in, and second property I purchased over the summer.  Neither has had a single dollar in maintenance so far since the houses were rehabbed so extensively.  Both houses appraised above cost (and one by almost $8,000, which is probably rare in the turnkey space).  

They take a number of steps to help ensure a safer investment for you.  First lease cycle is always two years, rather than 1, which helps ensure that they get tenants that really want to stay longer term.  They also have the tenants provide appliance such as fridge and washer/dryer.  Again, that helps ensure that you get tenants who have a vested interest in the property and have an intention of staying.  

Most important is that the service is really A+ throughout.  When you are this far away from your investment, and when you are this hands off, you need that peace of mind.  And they delivered at every stage and continue to do so.  At the onset, they talked me through every single detail, answered every question, addressed every concern.  And they are always prompt with their communications and I'm never left in the dark on anything.  I have already recommended them to others who are interested in turnkey, and would certainly do so again.  I myself am currently saving for a 3rd property.