All Forum Posts by: George Chang

Welcome to BP!  I'm eager to learn from your experiences as I just started my investing career with a property in Bethlehem

Great post!  I am currently closing on a property in Bethlehem and this post will be super useful!

Awesome to hear that this is working out for others as well!  I'll actually be doing the same for a closer out-of-state property search, so I'll look through this thread again and do everything all over again.  Well worth the effort though!

Hey @Ryan Zomorodi - I had done the exact same thing when buying 3 properties in Memphis (and looking to go down again!).  Since I'm from New York, I had to maximize my time to really see the area.  Here's what I've done:

• I booked appointments with a few agents, brokers, etc.  This really got us going in the right direction because you get a good feel for the areas you'll be investing in.  You'll see what areas you'll want to keep on investing in and where you'd rather stay away from.
• I talked to a few property managers prior to my visit and made appointments with them.  This is critical because, as an out of state investor, you won't be actively managing the day-to-day activities.  These guys will be your eyes and ears.  Also, ask if you can see some of the properties they manage (maybe just on the outside?) and see if you like what they've done.  This would be like a 2nd tour of the area, after your ride with the seller.

I'd also eat in various parts of town because these everyday places (restaurants, shopping malls, grocery stores) are also where your tenants will be eating/shopping, so you get a good feel for the convenience of the area.  This would further guide you when you decide to buy another property in the area.

Good luck and enjoy Memphis!  Keep us updated on how it goes :)

@Douglas Skipworth thanks for the confirmation!

Hey everyone - my family has purchased 2 units in Memphis (looking to purchase more soon) and we're trying to see if our PM contract and fees are within "normal" range.  

We have family friends in the area who own investment properties as well, so they will be doing the day-to-day PM responsibilities.  One thing that may stand out is that these family friends also buy for us and recommend houses they think are a good fit.  They are our boots on the ground and have lived in the area for over 10 years, so we rely heavily on them.  We have visited Memphis, and seen the areas they invest in and I'm confident that they know what they're doing and that they'll handle everything really well.

Here are the fees in the contract:

• House Acquisition - price plus 1.5% (minimum $1,000)
• Cap Ex/Rehab costs - if <$5,000, there is a 15% service fee.  For >$5,000, there is a 10% fee.
• Tenant Acquisition/Lease Finding - 50% of 1st month's rent
• PM Rental Fees - 10% of rents
• Re-lease Fees - 25% of monthly rent, not to exceed $250.  Is this a bit high?
• Repairs - not stated, I think this is part of the monthly rental fee of 10%
• Eviction - not stated (will follow-up on this)

I think most of these figures are in the ballpark range, but I just want to make sure especially with the house acquisition fee.  Additionally, this would be good for me to know in the future when our family friends stop PMing.  I want to think long term for our business so learning about the normal fee range would help with estimating future income.

Thanks in advance!!!

George

I would agree with @Douglas Skipworth's comment about extracting the profit, although I would modify that statement to say they take the equity out of the house.  Some houses have a bit of equity appreciation potential if you buy at a low price and rehab yourself.  I believe that these companies do the purchase and the rehab for you, so you're left with the final product at a higher price point with less room (if any for appreciation)

With that said, if you're an out-of-state (or out-of-country) investor, then this may be your only option.  If you don't know anyone locally that could do everything for you, then I would definitely suggest the Turn Key model.

As part of my own due diligence, I had visited Memphis Invest and was extremely impressed by what they offered.  I took a tour of the entire facility and everyone was extremely professional.  If you do invest with them, I know you'll have a great product and a great team to provide that support.

 Do you have the zip codes for the Raleigh/Bartlett and Hickory Hill area?  I have taken a drive down to Memphis and am trying to recall what parts I have seen.

I would also agree with Cordova being the nicest area, along with Germantown (although that may be getting further from the downtown area)

I'm also looking at the Las Vegas market and I'm a bit confused when it comes to the expenses, especially when considering HOA fees.

From speaking with an agent out there, he says that his personal investments have around $400-500 cash flow per month. I think that this only accounts for HOA fees & 100% cash paid at purchase.

Would you consider other expenses, like repairs/maintenance, capital expenditures, etc. (like in the rental property analysis tool) when looking at a Vegas property?

I hadn't thought about that and you have a great point there.  As someone just starting out, understanding the "true" value/return behind these studies is something I have to focus on a bit more.