All Forum Posts by: Dean H.

@Lee Warren

RUN

Ericka Grant Ericka your husband and you are in exactly the same situation as my wife and I. I know many will preach leverage but although I never say never at this point in our lives we knowing what we have. We really like single family, We look at it as multiple savings accounts that as things arise in our future retirement we can sell one now and then to enjoy the fruits, if it was a couple of multi family that would make a bigger hit on our portfolio. Our future involves buying, rehabbing and renting sf hopefully forever in increasingly nicer areas until enough is enough and we are about half way there. Cash flow is paying for a couple of project houses a year now and that speed works for us. This is our system and I know the experts will tell you we are wrong but this wrong cashflows nice for us!!!

@Craig Hansen

How about a Mini split system?

@Henry Tse

Henry, I'm an out of state investor with sfr and multi's in Memphis. I have been blessed with a great team that makes what I do work well for me.

My advice for what it's worth would be to stay away from multi family at least until you have invested there for a while. Multi works for locals but it just isn't the same as your used to on the west coast.

@Mark S.

Kevlar vest packing a 9mm? I'm a rough neighborhood type of guy !!!

Seriously

I like the jeans and boots with a Carhart pocket T

Then I take a light weight set of coveralls for the crawlspace / attic areas ( that's where you learn everything )

Take a great LED flashlight

I've had them so bad I burnt the coveralls !!!!

@Abdul Azeez My rent figure was a combination of rent 0 meter, Zillow, and my gut( is 85% of Zillow correct). The biggest problem I see with renting this house is the fact that its attached. A lot of your potential renters are moving out of multi family and at 1000 + bucks there are a lot of true single families available and they are tired of the noises thru the wall.

@Abdul Azeez I probably should have read all of the thread but my question is what gave you the idea the property should be rented in 30-45 days? It appears to me you are asking in the higher range of rents for the area was this your decision or property manager? Personally I would say renting that home in that market could be 60 days easy, it's kind of a "transition" area and timing means a lot to those tenants digging up first, last and perhaps a deposit.

@Alex Craig Thanks for "localizing" comments. I never ventured out of my areas of interest far so I know there are great rehabs and turn keys done there. My quality comment came from the " Chicago " crew projects. You guys have been at it long enough that you wouldn't be in business operating that way.

@James Wachob I really tried to get to you but the natives held me captive with their agenda. Let me know the tour dates. Its just a plane ride !!!!

@Alexander Price My point at the start of my post was I never ventured out to the better turn key type properties. I don't want anyone to think I was bad mouthing everything there. My goal was to convince the IT people in Palo Alto to open there eyes before jumping in blind.

I think so much of Memphis I'm closing on another piece of it next week!!!

@Raj I. Careful what you wish for Raj. I have purchased a few 4-6k and put an average of 17k rehab into them to have b- to c+ rentals grossing 550-650 per month. I have a great team in place and I make it work but you end up with a quit claim deed you probably can't clear up for a couple of years so your all cash tied up or hard / private money. Run the calculator carefully you might figure out that 70k MLS or turnkey looks pretty good afterall

I visited Memphis last week ( 2/7 - 2/10 ) and was blessed to have wonderful weather to tour a wonderful city. My goal was to meet and greet as many of the people that have helped me assemble my portfolio of properties there as possible, plus meet more of the fine professionals active in Memphis real estate. I achieved about 35% of that goal and to those I missed I apologize and hope for a raincheck soon.

With the help of my team on the ground I toured extensively, viewing my properties, the fine city, and areas of future investment interests. Then I drove neighborhoods of interest again both day and night to attempt to get a feel for areas and talk to some local folks. I buy, rehab, and rent in C+ to B areas so my thoughts relate to these areas.

Inventory. Endless in my lifetime. A few years ago I was concerned about them all being bought up and missing out, probably not of concern now.

Activity. Wow I think anyone with ambition and a hammer is working a rehab of some sort in the Memphis area. I ran into a couple of crews that were down from Chicago because its " crazy busy here" I walked a couple of projects and overall quality of workmanship is a concern.

Tenants. I have been around west coast land lording all my life. This is a different world! In the areas of Memphis I invest in it will forever be difficult to have a stable tenant base. They for the most part are good people that need good housing but throw your 700 credit, first and last plus deposit, and abiding by lease terms ideas out the window. Probably a bit harsh but be prepared. They just have to many options.

Asset valuation. When the locals say block to block they mean block to block. Memphis, like many mid west cities, has thousands of vacant lots , burned out houses not cleaned up, and just plain depressing areas. Be very diligent picking properties as this affects the "true" value tremendously. Remember these burned out shells will probably eventually get cleaned up but I don't think banking on infill using up all the vacant lots is prudent. The appraised value of that house and the true value of that house could be two wildly different values.

Leverage. I'm anti debt as I get older so take this to heart. I never say never but please be careful borrowing to the hilt anywhere other than solid "A" properties. Odds are your not going to appreciate to equity and the less than stable tenant base and crazy cap ex are going to make ample reserves mandatory. Your only a fire next door that isn't going to get repaired away from " true equity loss "

Exit. Huge concern. This has been beat to death on BP so I'll be brief. I'm buy and hold hopefully forever. If I had to liquidate today I think an investor would jump at the package, I strive to have the nicest house on the block and the tours show I'm getting close. With the current credit market and the retail customer base in the area reality says retail would be a tough option.

Rant. I don't understand why the City of Memphis and Shelby county don't consider dropping the  tax rate on multi family. I might be shooting myself in the foot tenant wise but this would really help cleanup the depressed areas. Taxed at the single family rate I think investors would snap them up but the true net just gets killed as it is.

Closing. I had a great time and learned a hell of a lot from some great local folks. My biggest concern going forward I learned from a little old lady waiting for her dinner at Bill's BBQ. I don't remember what started the conversation but after explaining my situation and her knowing of two of my projects she asked a simple question. " what are you going to do when you rehab so many you run out of tenants" Food for thought, without serious economic growth in the region we could literally improve our way to lower returns.

Above is just my personal concerns and observations. I didn't want to come off negative but wanted to open some eyes including my own. I will continue to invest in Memphis

Wonderful opportunities await!!!

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