All Forum Posts by: Chris Clothier

Phillip -

Here is how we reached the numbers on this property. the purchase price is actually $72,900 and it was sold today with contract pending at $70,500 even. That being said, it was entered incorrect on our site and our assistant used those number and posted it at $74,900 on BP. That is minor and I ran the numbers at that price to show how we reached our calculations.

Cost - including $16,000 in completed renovation $74,900
25% down payment $18,725
Financed amount $56,175

Assumptions

Financed at 5.25% for 360 months $310
Taxes - City & County $137
Insurance $ 25
Property Management $ 74

Monthly costs for the property are $546.

We estimated the property would rent for $825 and that is the number we used in calculations. The property actually is awaiting the closing of a two-year lease with first year at $825 and the second year at $850 with a $1050 deposit retained by the owner if and when the tenant moves out.

Rent $825
Costs $546

Monthly cash flow is $276.

Very few of our 292 investors actually look for cash flow from properties for expenses - say living expenses. A majority are looking for the positive cash flow as a passive investment. That being said, each has a different calculation for vacancy and maintenance costs but we recommend calculating 10% of the gross rent for a vacancy and maintenance cost. By doing (and documenting) extensive renovations on the front end to the properties, it raises the initial price, but we are seeing a drastic reduction in deferred maintenance and holding costs.

Lastly, this particular property is being purchased by an investor for $47 per square foot after all costs which is an extremely good deal. They are paying $56,900 for the property and $16,000 for the renovation for a total price of $72,900. The property was assessed within the last two years at a value of $91,000 and at $825 the rent multiplier is at 1.13 which is not our best property, but it will perform better as rents improve.

Those are the numbers on this particular property.

Phillip - please accept my invitation to discuss if there is anything we can help you with here. It may be that we cannot, but if we can, the offer is there. You are absolutely entitled to your opinion and I respectfully disagree with some of what you've posted on our properties, but welcome the chance to speak directly with you.

Chris

Ibrahim -

Believe me, the last thing I want to do is get involved in this query. But it stems from my asking Phillip to not comment on my property listings with negative remarks about how overpriced we are, if he will not speak with me one on one. Since seeing his first post I have offered to try and help with his negative investments here in Memphis, but he has not responded. I have only offered my assistance. Nothing more or less.

But he has a right to his opinion and right to ask about me. One thing you will not see on here is a bunch of brand new registrants posting how great I am. I don't know if we have any investors on BP, but I do know as I stated in an earlier inquiry about my company Memphis Invest, that an interested investor can talk to as many of the 292 investors we serve as they need to get a good feeling about how we do business.

Now, how about the numbers on this property.

Jon -

I absolutely agree with your point that not all investors need a company or service like mine and it absolutely comes with a cost. But I wanted to point out that not everyone lives in or has the time to be actively involved in their investing. If they do, there is no reason to use a turn-key vendor. That term in itself is so overused that it would make a great thread to ask what really is the definition of turn-key. Every one of our investors have full time jobs or live in markets where cash flow with low entry price just isn't possible. In that scenario, our investors look to a company like ours to handle the transaction for them and absolutely pay a premium for that service. But it is a big responsibility to treat them fairly and help ensure they are successful.

Chris

David -

You are responsible for everything in regards to the property. You are the owner. If you lease it to a tenant and spell out clearly what they are responsible for and they don't follow the lease...guess what, you are responsible! If you own real estate your name is on the line.

Chris

Roy -

My input is 2 simple things.

1. Do not try and go it alone with the IRS. The expense of having a qualified and seasoned CPA who has fought with the IRS for the rights of tax filers can not be under-estimated. IF you owe tax then they cannot assist you except to make sure that you are not over-taxed or asked to face any undue burden in the process. I know many investors who thought that they could face an audit alone only to be absolutely run over in the audit process and their proof over-ruled. Even those who were meticulous in their record keeping.

That bring me to my second point.

2. You cannot, according to the most recent horror story of an audit being done without professional help, count the travel time to and from your units towards your full time real estate duties. So if you spent 10 hours on a Saturday working on your portfolio with a lot of traveling to check on properties, collect rents, visit the hardware store, etc... the IRS is only interested in the time actually spent on those activities and not the time traveling between them. If your properties are spread out and you spend hours traveling to, from and between, it could be difficult to prove your hours spent.

That being said, each of us are only entitled to the deductions allowed by law and a good CPA or tax professional can always help you prepare your taxes to take advantage of every deduction allowed. Jon made some points about disallowed deductions that can be carried forward as losses. There are some many subtle nuances when it comes to the law that I could not recommend any stronger seeking the advice of a professional before and during your audit.

Best of luck with your investing,

Chris

Hey George,

I have worked with ETC for the past 3 years and am going to speak at their investment conference in New Orleans in September. I think they are a quality company and can probably assist you to make sure you are operating within the rules of your SD RothIRA. That being said, take a look at Kevin's responses and threads and you will see that he might be the most knowledgeable on BP when it come to SD retirement account investing so his advice is probably spot on.

Best of luck with your investing,

Chris

Brian Levredge said it right:

It would seem that this guy has a number of evictions on his record, which would all come up in a credit check. How this guy has been able to burn that many people, is somewhat mystifying to me.

I think the comments about signing off on conditions on the front end and using video to document are both great tips as well. It is crazy that the court systems would allow someone like this to keep doing the same thing over and over.

Hey Brian,

Thank you so much for your response. I will tell you though, that Curt Davis is a part of another company named Memphis Investment Properties, LLC. The company founded and operated by my family is MemphisInvest.com. I can tell you that Curt Davis is a good guy and will be helpful. We concentrate on a little higher end property than Curt and do a little more work on the front end, but they are good people who will do their best for you if you choose to invest with them.

If you would like to meet when you are in Memphis to get multiple perspectives, I would be more than happy to meet with you. Best of luck with your investing.

Chris

Phillip -

Since you began attacking my listings on here several months ago, I have invited you to contact me to see if I could assist or help with the obvious problems you are having here in Memphis with other vendors.

Please be fair in your posts and let readers know that you have never taken the opportunity to speak with me or anyone from my company about our services or properties. As I state on here many times, we have built an excellent reputation for being transparent and honest. I welcome your thread asking for information on me and my company, but I also respectfully ask that you at least have some working knowledge of a company or individual before you begin to slander them or their listings.

I have no idea who you have done business with here in Memphis or who currently manages your properties, but as always, my door is open if I can assist you.

Best Regards,

Chris

Joe in Ohio,

I am familiar with Investor Nation and familiar with their business model. One thing they do differently that hurts their business as was noted by Phillip is that they do not have a vested interest in the most important part for out of state investors and that is the Property Management. They made a conscious decision that they wanted to focus on the properties and leave the PM to who they consider experts.

As is the case with Phillip, if they do not know how the day to day operations of PM are going it is hard to provide good service. I wouldn't say they are 'chronnies" with anyone in Memphis as that implies they try to hurt their clients, but they do not own their own PM company and that puts them and their clients at a real dis-advantage.

I will tell you that I think they buy good properties in good areas, but I'm not a big fan of the rest of the model and I cannot speak to the renovation work they do.

If you decide to move forward with them, I would be happy to help you get a list of property management companies in Memphis and I don't think they make you use one they recommend.

Hope that helps -

Chris