All Forum Posts by: Phillip Gainey

I'm not really angry. I just don't like being accused of slander for pointing out a vendor who consistently charges too much for properties. You and others seem to agree that is way too much.

Of course you have to do due dilligence. When did I ever say you didn't? Part of that is knowing what is too much, and why.

PG

Sorry, owning properties is NOT low risk, turnscrew or otherwise.

Passive? Yeah, you passively get a call from the pm telling you the tenant has moved out a month early without saying anything. You lose a months rent. The security deposit is half months rent and you'll need to spend it all to get the place ready for the next tenant who will be found within 4-6 weeks. Actually, the half month SD wasn't enuf, please send another $300, there is a hole in the roof.

Passive? Yes, as you passively receive an email from the pm who informs you that the tenants haven't paid the rent. They swear they will have it paid by the 18th. You got a similar email two months ago.

Passive? Yes, as you passively get another email on the 18th from the pm, telling you you can sit passively waiting until next month for this months rent as the pm takes the tenant to eviction court.

Owning propeties ain't passive! Owning the note you bought on the property, at a hefty discount is more passive and less riskier. But even then, some will default and you have to sue them to take over the property, sell or otherwise dispose of it.

Want to make 5% passively and safely? Buy utility stocks or CDs!

PG

I'm not basing my value on zillow. You're right, it does flucuate and is inaccurate. But in a FALLING market like this it tends to be way OVER market value. So if you see asking prices from someone consistenly HIGHER than the "zestimate", you need to raise your eyebrows, and be a little suspcious.

Then if you look at other metrics, like the GRM, and see it is really low for a given neighborhood, if anything, that would tend to confirm that the asking price is probably high. And it is. I paid $72k two years ago for a similar renovated mid century brick ranch that rents for 950. Bought another in a similar property in a similar area, fully renovated, for $50k that rents for 900. Both turnkey. And both properties were much lower than the zestimate. The zestimate was way out there on the high side.

If an unsuspecting investors in New England want to pay $75k for 825 in rent in average memphis neighborhoods, let them. But they can do much better even from other turkey companies.

Pardon me for telling the truth.

PG

Earth to Daryl: This is the section of BP where people can ask about, and provide their opinion about the products or service (including prices asked and paid) offered by RE companies. I have bought turnkey properties in Memphis. Based on my experience, HIS prices are too high, even for a "turnkey" vendor. If I saw others, I'd point them out too. Yes, that is negative, but many naive and inexperienced investors interested buying memphis properties out of state, might be interested.

For example, I bought a fully renovated property from a turnkey company two years ago not far from his property mentioned above for $72k, and it's been rented out at $950. Built same year, 1965. Also brick. One more bedroom, 300 more square feet. For 3k cheap, and 125 more in rent. TWO YEARS AGO. And prices have fallen since then!

Do you think a fellow CONSUMER on the sidelines might be interested in that kind of info? Sorry if you think it is negative and aggressive.

PG

Brandon,

Be honest. Would you pay 5-10k over the estimate on Zillow under ordinary circumstances?

Would you buy a 50 year old rental property in and average neighborhood in a zip such as 38116 for 75k that only rented for 825 a month? Thinking it would be some kind of cash cow?

I'm not saying you have to be staunch advocate of the 50/2% rule of thumb. But like I said, GRMs like that are what you expect to see in California. Not an average area of Memphis.

TC

What about maintenance?

PG

Brian,

Check your inbox.

PG

Jon,

All cities have renters a landlord can "sell" to. But in memphis it's difficult to even find an applicant that doesn't have at least one financial judgement against them. So I have been told by several Memphis pms. That being the case, it gives me little solace to know that there are a larger proportion of the population there that rents. I should have found a market with a smaller but adequate rental base without a "deadbeat" culture.

PG

Like any biz, it's a matter of working with the right people. Whether buying real esate, lending, or buying notes. There are always people looking for $$ to fund deals. The more capable they are, the more passive it can be for you.

You're going to have a hard time finding hard money at 9% unless you have a grandma with a fat IRA.

PG