All Forum Posts by: Kirby Davis

@Caroline Kennedy - I live and work in Fayetteville. Have been here for over a decade. Just built a new home here, invest here (though in a slightly different way than most - we agricultural investments that have been great), and am well-connected in the community. My son attends U of A and is a licensed realtor (so he can write offers for us mostly, but he also writes offers and provides data, inspections, etc... for others we know). We also own a roofing and exteriors company in Fayetteville. I'd be happy to chat any time. I think I have a pretty balanced view of the market from being a part of the community, to working in the main industries here, to investing. I love NWA! 

If nothing else, I can give some tips on who to avoid. :) 

We built a short term rental property last year. The builder shorted the contracted square footage by 366 square feet. This was built in a new construction neighborhood, and the builder actually did this on 8 of the lodges. Several owners, including us, withheld payment and asked for meetings with the builder to resolve the issue equitably. 

The builder met with one owner and offered a verbal settlement, which he withdrew a month later. 

The builder refused to meet with the other owners and sued us all for breach of contract for not paying the full amount. We have counter-sued for breach of contract for not building to the scope of work and consolidated our separate lawsuits into a joint lawsuit. We currently have 3 liens on our property - 1 from the builder, 2 from subs for small amounts. 

We met in mediation yesterday. The builder offered each of us different amounts, and even stated he would not settle at all with one owner. If we settle with him, he will not sign anything to indemnify us from subs or guaranteeing he will pay the subs. We are past the date that further liens could be filed against us. However, subs could potentially lodge small claims against us. One sub has done so already with 2 of the other owners. 

Does anyone have experience with this? Any thoughts on settlement without indemnification and the likelihood of actually being pulled into small claims court? 

For reference, we withheld only the amount that tied to the discrepancy based on a sq ft cost to build. Others withheld more. The builder placed a lien against us for more than we withheld, and he's offered to settle with us by eliminating his lien plus paying us $4100. Our lawyer believes he's wanting to settle with us (he made us the best offer by far) for 2 reasons: 1. He believes the lien against us is most likely fraudulent, as it's higher than we withheld. 2. We have in writing that we withheld exactly the sq ft price of the discrepancy based on conservative calculations and asked to meet so we could resolve the issue fairly and equitably. We followed up offering times we could meet. His only response was that he was unwilling to meet and was pursuing legal action. So we have written documentation that we tried to resolve the issue, made a good faith payment withholding only the calculation for the discrepancy, and he refused to even speak with us. (This will look bad in court. He can argue that the others withheld an unfair amount if we are not part of the lawsuit.)

We are looking at an off market opportunity - 40 single family houses - all on the same street, all currently rented. What kind of financing options would exist for this and what are the terms? It would be a purchase price between $1.1MM and $1.3MM depending on how the numbers look.  

 Considering Fort Smith for the same reason - better returns. 

I’m also in NWA, and I agree with the rest of you - the rent here doesn’t work with the housing prices. Looking elsewhere for better returns but always keeping my eyes open for something here that makes sense. 

@Todd Clifton - what kind of returns are you seeing on these family package deals? 

That's a great question, and I think you nailed the issue - there's not a standard definition/criteria beyond it can be rented in current condition. Though, that interpretation can vary because different markets really require different things to be considered "rent ready." This is not my area of expertise, by any means, but please thoroughly vet out any turnkey provider (or anyone else you do business with - realtor, contractor, prop mgmt, etc...) I have seen a lot of turnkey providers advertise properties in Memphis (I'm from Memphis, grew up there, have to go back frequently for family) with very misleading info. 

@Andrew Postell - I read through your post. Great info! I do have a quick question. Can your LLC loan you the purchase price and rehab funds under one "mortgage," and you refi to pull the full amount back out in less than 6 months?

Example - purchase a property for $60k with $15k for rehab funds, total "mortgage" from your LLC at purchase is $75k. Could you complete the rehab in 45-60 days and refi the mortgage through a conventional loan at 60 days, paying off the $75k mortgage to your LLC?

@Kalen Jordan As a native Memphis girl, I’d say run from this. Fast.

People invest in Frayser. People make money in Frayser. Most people lose money here. It’s definitely not a B neighborhood. C- to D.

Memphis area is very hard for out of state investors. The difference in a block or even a street can be astounding. Finding good property management in these areas that aren’t just slum lords pretending to be good property management companies can also be difficult. Memphis is not for the faint of heart. Lots of opportunities. But you need to know the area inside and out. Know who you’re working with.

This does not fit what you’re looking for. Numbers look great. They aren’t accounting for months of no rent, eviction costs, complete rehabs during turnover, stolen appliances, missing hvac units, etc...

Also, appreciation in Memphis is tricky. I wouldn’t buy expecting it. I’d buy expecting a $50k house to be a $50k house. If appreciation comes, which it has in very few, very select areas, awesome! Don’t ever bank on it here.

What kind of returns are you seeing in that area? Currently looking in Gatlinburg area but open to other options, as we are trying to scale in proven areas.