All Forum Posts by: Ryan Haley

Does anyone have any personal experience as an investor working with Memphis Turnkey Properties? I'm selling a property in Columbus, Ohio that should hopefully close in mid-November (2019) and I'm looking to do a 1031 Exchange with an out of state, reputable turnkey property (I live in Colorado). I've been looking at Memphis Turnkey. Any suggestions about them or anyone else? Or any other capital redeployment strategies?

Originally posted by @Jay Hinrichs:

Originally posted by @Ryan Haley:

Originally posted by @Jay Hinrichs:

Originally posted by @Ryan Haley:

@Jay Hinrichs What you're describing (24 offers on a single property!!) is what makes me wonder if we are in a mania phase, which is usually what happens right before the bubble pops. As Warren Buffet says, "When everyone is greedy, be fearful; when everyone is fearful, be greedy". Sounds like this might be a good time to be a contrarian investor to me...

or to be a new home builder like i am doing.. if there is a shortage of inventory create new inventory.. fill the need.. 

I am not a landlord so cant speak to that part of it.. and I am always or always try to be a value add investor.. I always want equity day one.

Touché, and I applaud both your desire/ability to meet a very real need, as well as your business-savvy in profiting from it. On the flipside, though, how many builders in 05-07 were salivating in markets just like what you're describing, and started major projects at the height of the demand cycle, only to be left with delinquent mortgages and vacant lots (or worse yet, vacant finished projects) when the bottom fell out all at once?

Answer Many  however keep in mind our banks wont let us get out over our ski tips..  we can only do 12 specs at once and if they dont sell they will term them out for me.. so I cover my bases pretty well.. I have no desire to put myself into a position of default.. 

but there is risk in everything we do and on that project we made a little over 2 million NET on that in the last 4 months  so i will take it.. and run to the bank.. on a personal side I own no rentals and i have zero debt I own my homes free and clear .. so yes is learned. last go around..

Sounds like you learned your lesson and are doing things right this time around (and btw, as a Navy vet, thx for your support of vets with VA loans others won't accept). Unfortunately, from looking at a lot of data, many others haven't learned their lesson and/or haven't really had a "last time around" to learn from...would that everyone operated as you are now :)

Originally posted by @Jay Hinrichs:

Originally posted by @Ryan Haley:

@Jay Hinrichs What you're describing (24 offers on a single property!!) is what makes me wonder if we are in a mania phase, which is usually what happens right before the bubble pops. As Warren Buffet says, "When everyone is greedy, be fearful; when everyone is fearful, be greedy". Sounds like this might be a good time to be a contrarian investor to me...

or to be a new home builder like i am doing.. if there is a shortage of inventory create new inventory.. fill the need.. 

I am not a landlord so cant speak to that part of it.. and I am always or always try to be a value add investor.. I always want equity day one.

Touché, and I applaud both your desire/ability to meet a very real need, as well as your business-savvy in profiting from it. On the flipside, though, how many builders in 05-07 were salivating in markets just like what you're describing, and started major projects at the height of the demand cycle, only to be left with delinquent mortgages and vacant lots (or worse yet, vacant finished projects) when the bottom fell out all at once?

@Jay Hinrichs What you're describing (24 offers on a single property!!) is what makes me wonder if we are in a mania phase, which is usually what happens right before the bubble pops. As Warren Buffet says, "When everyone is greedy, be fearful; when everyone is fearful, be greedy". Sounds like this might be a good time to be a contrarian investor to me...

Originally posted by @Account Closed:

Thanks for the compliment, Jon. :D

Back in the day (1999 - 2004) we loaned to 80% ARV but the max we will do is 70% and that appears to be serving us well. Our program is very specific - for rehabbers only and it is a private loan not a hard money loan. Meaning I underwrite it exactly as a conventional underwriter would in terms of income, assets, DTI and the borrower's credit. In addition, we are very careful with values. I work with one appraiser and one appraiser only. No exceptions.

I am proud to say that I've been brokering and personally underwriting this program in CO since 2002 and we have never had a foreclosure. We have had 3 deeds in lieu that we turned for a small profit and have had several note extensions but so far no foreclosure so I think we make good decisions.

We charge 4 points and 15% interest only and that seems to price us a tad out of the market here but it is on purpose since we have limited capacity.

I have a friend that runs a rehab fund in CA and he gets 6 points and 10% interest. My borrowers would laugh me out of town if I charged 6 points and my lenders would laugh me out of town if I only charged 10%, so every market is truly unique.

I could loan at 70% as-is all day long but that would put me in the foreclosure bail out business and I have NO interest in that business. I like investors and I love being able to provide the strong ones with maximum leverage with our 100% loan to cost (LTC) loan.

@Susan Lassiter Lyons, I'm also in Colorado and interested in learning more about becoming a hard money lender. I know a guy here in Woodland Park who has been lending at 12% to a developer or investor of some kind who operates in Colorado Springs (who hasn't responded to my inquiry to get in touch yet). 

I'm looking to lend money at a 12-15% annual rate, paid monthly. As an example: I would lend out $50,000 and within 1 month begin to receive passive income ($500/month @ 12%; $625/month @ 15%), with the option to get my money back within one year, at which point I could either: 1) cash out, 2) continue to just "let it ride", or 3) add to/subtract from the principle amount to change the monthly cashflow I'd be receiving at the same rate of return/interest (or negotiate a change in interest rate after the first year).

Obviously, I'd need to know that that the borrower is strong; both in terms of their current finances/ability to pay the interest and then the principle back; as well as their business operations/prospects to sustainably keep things going for the foreseeable future. If you (or anyone else reading this) can help or want to talk more, feel free to respond here or in a private message. 

Originally posted by @Frank Jiang:

One can infer the severity of a boom/bust cycle through leverage.  The severity of the 2008 downturn occurred because lenders were injecting a huge amount of capital into the housing market.  Basically, anyone who had a pulse could get a loan.

In today's market, lending regulations are still pretty strict.  It's unlikely that we'd see a similar sort of collapse.  We are more likely to see a much more "normal" deleveraging.

What I have noticed is a lot more private money is deploying into real estate again relative to the last five years.  I personally believe that a lot of appreciation in homes is being driven by investors and funds as opposed to actual buyers.  It's certainly not a stretch to think that investors are starving for investment vehicles in this crazy low-interest rate environment.  This makes me believe that the effects of the next downturn are going to be:

- More regional than national.  Is appreciation in your market being driven by actual people who want to buy homes or is it being driven by firms hoping to turn entire city blocks into rentals?

- More dependent on asset category. Million+ dollar houses will behave very differently from entry level.

^Everything above is just one person's anecdotal observations!

This time around, we may not see a debt-fueled collapse in the real estate market, but we may very well see one in the "covenant-lite", high-yield corporate debt market. This article, written within the last week by an Australian, corroborates what veteran American economist John Mauldin (who predicted the last Great Recession, albeit his prediction was a bit earlier than when it ended up happening ) has been saying for a couple months now: there's another train wreck coming, but this time the epicenter will be from the high-yield corporate debt world vice residential real estate. 

I'm certainly not a fan of doomsayers and being motivated by fear, and no one can time the market; but I think it's not a matter of if, but when and how bad. Irrespective of the merits of any of these predictions though, it never hurts to have your financial house in order by aggressively paying down debt, building up cash reserves, and positioning oneself to capitalize on attractive asset prices, whether that's from a downturn/correction/crash or just from spotting an opportune deal that will do well in any economic environment. 

Arnie Abramson would you recommend setting up an LLC in Texas to purchase tax deeds? I currently have an LLC in Ohio for a property I own there, as well as an LLC in Wyoming for a company that does not involve real estate. How tenable, in your opinion, is it to be living in Colorado in purchasing tax liens/deeds in Texas with online options at this point in time?

@Paul Wiseman BP recommended a book I just read called “Profit by investing in real estate tax liens“, by Larry B. Loftis, Esq. I think he does a pretty good job of explaining the overall process, even though the book was written in 2005.

@Sean Dawson North.  Like I said, a lot of them are still boarded up and it’s a really rough street, but I knew that before I bought and the Realtor/property manager was very upfront about the fact that the street was really bad. I had a team of people on the ground who I trusted and evaluated it from every possible angle I could think of before purchasing, but as people  on this thread  have said before, only time will tell if this is truly good investment. So far, it’s been pretty great though, as an out-of-state investor pretty much getting mailbox money with monthly conversations with my property manager

Richard Leyba tejada Unfortunately, in order to be able to best serve her existing clients, she’s not taking on any new clients at this time. The good news is that they do such a great job servicing their clients, the bad news is they are not able to service as many clients as could probably benefit from them in order to keep their standards up