All Forum Posts by: Stephen Marshall

I'm looking to work with investors who don't want to be landlords and want higher returns on their money than what is offered by more traditional investments.  I offer first lien real estate notes on fully remodeled houses in the Memphis Metro area in our rent-to-own program.  We borrow 75% of appraised value, pay 12% interest only for 24-months. Here's a deal available right now:

2790 Normandy Cove, Horn Lake, MS 38637

Appraised Value:  $67,000

Loan Amount :  $50,250

Interest Rate:  12%

Term:  24 months, interest only

Monthly Interest Payment:  $502.50

Please inbox me, if you are interested in this deal or others like it.

you can subscribe to red bell or real quest for comps if you don't have access to MLS. I've also used the sold feature on Zillow and my county tax assessor website, both of which are free.

Good luck.

Welcome Andrew.

Posts don't equal experience.  Thanks for the response.

Okay, if you are reading this post, you’ve more than likely thought about investing in real estate.I’ll even go one further, I bet most of you still haven’t made your first investment.

Maybe the idea of buying a fixer-upper is a little overwhelming because you know nothing about home remodeling or repairs. For some it’s just procrastination, I mean you live near a great rental market that still has cash flow positive deals, but something always seems to get the way. For others the idea of being landlord sounds like too much of a hassle.Maybe you just can’t find the perfect deal or the prices where you live are so high you can’t find a deal that will provide positive cash flow to support the investment.

I’ve got great news: you can still invest in single-family houses without living in a place that has properties that provide cash flow. You don’t have worry about finding the perfect deal or worry if your “partners” are leading you in the wrong direction. You never have to pick up a hammer or a paint brush, or even know someone that can. And best of all, you never have to deal with the headaches of being a landlord, especially an out-of-state landlord.

Here’s how you do it, professional real estate investors all over the country are looking to partner with private lenders. Do you have cash sitting in the bank making less than 1% in interest? How about a forgotten 401k account or perhaps you want to get out of the stock market and invest in something that you understand and have more control over. Using cash or a self-directed retirement account, you can make loans to knowledgeable, professional real estate investors that need short-term access to cash for investment purposes.

Cash flowing real estate is the ultimate security for your capital. Barring a major catastrophe, the value of well-located single family home won’t go to zero because people always need a clean, well-maintained, safe and affordable place to live. I bet the owners of Bear Stern, Enron, GM and AIG wish they had that kind of security with their investments.

So how does it work? I’ll use my company as an example. We often partner with passive investors that want to be part of a deal without involving themselves in the details of a real estate deal. If the investor needs to roll-over a retirement account to make the loans, we normally connect them with our preferred self-directed custodian. If they have cash, we skip that step and get right into the mechanics of the deal. First, we only borrow from one private lender for each house (our one house, one lender policy). This makes things less confusing for all parties.Second, we provide all the project details to our prospective lender including, pro forma, exit strategy, property description, inspection report and a property appraisal. This allows our lender to do a complete due diligence on the project.

If the private lender is comfortable and wants to do the deal, everything is done through our closing attorney. We typically borrow 80% of the after repair value of the home and the private lender gets a note with a 60 month maturity that pays 8% interest annually. At the end of the 60 months, the principal of the loan is due in a balloon payment. In addition to the note, the lender receives a first lien position on the property and an assignment of rents if the note is note is not paid. Basically, we pay interest every month or the lender gets the house and the rents.

So let’s do the math, a $50,000 loan at 8% interest would translate into a monthly payment to the lender of $333.33 per month. Assuming the note isn’t paid off before it matures after 60 months, the lender would have received $20,000 in interest payments and would be paid the original principal of the loan, $50,000.

Becoming a private lender is the ultimate passive approach to real estate investing.

About the author: Steve Marshall is a franchisee of HomeVestors in the Memphis area. His email address is [email protected]

Most people that consider investing in real estate never buy a single property.  The biggest reason for this lack of action is that most people don't have the time to source deals, rehab, rent and manage a rental portfolio or flip a house.  This lack of time is very understandable with the demands of work and family not leaving enough hours in the day to take on a part-time job in the real estate industry.  Don't let this lack of time stop you!

Build a network of people that can help you achieve your real estate goals.  If you have seed money (cash, self-directed retirement funds, etc.), good credit and the ability to conduct detailed due diligence on investment opportunities, you can build a team that will help you.  Here are four ways you can invest even if you are a busy professional...

1.  Work with a reputable "Turnkey" provider

"Turnkey" companies source distressed properties, rehab, hire professional management, load the property with a qualified tenant and then sell the property to a passive cash flow investor.  This approach is the easiest path to building a real estate portfolio, but you will pay a premium for the service.  Make sure the numbers work for your objectives and check out the company you are working with before giving them any money.

When you buy a "Turnkey" property, plan to hold for at least five years.  These aren't flip opportunities and you will likely need to pay down debt with cash flow and experience some appreciation before exiting the investment.

I have worked as a wholesaler with several reputable "Turnkey" companies in the Memphis market.  We've worked with Memphis Invest, Buy Memphis Now, Mid South Home Buyers and Memphis Cash Flow. 

2.  Work directly with a Wholesaler

You've probably seen the "bandit" signs on side of the road that say "we buy houses for cash."  These advertisers are likely real estate wholesalers.  Wholesalers spend their time and money seeking distressed sellers that are looking to rid themselves of a property without going through the traditional real estate sales process.  These properties are placed under contract or purchased at significantly discounted prices and can be assigned or sold to another investor.

My company is a franchisee of HomeVestors, the "we buy ugly houses" company.  We wholesale more than half of the houses we buy to other investors that actually rehab, rent or sell the property.  Buying directly from a wholesaler is the lowest cost approach, but you will need to source the rehab, management and all of the details in between.  If you work with the right wholesaler, they can refer you to people that can help with repairs, management, etc.

3.  Work with a Real Estate Agent or Broker

This is how i got started 10 years ago. Find an agent that specializes in foreclosures, bank owned or understands the HUD bidding process for investors. Using an agent is the most common way for time constrained, new investors to source property. Buying houses this way won't be the cheapest approach, but having an agent help with the issues that come up before closing can be a big time saver. Also, they may be able to help with property management and refer contractors.

4.  Work with an experienced partner that has time and know how

Find a joint venture partner that has time to source deals, rehab and handle the management process.  You may put up the money or down payment and they can do all of the work.  Remember to get everything in writing so there are no misunderstandings at a later date.  Another good idea when working with a partner is to develop an exit plan(s) in advance.  You may also consider sitting down with a lawyer to discuss the partnership.

Use one or more of these suggestions and you'll run out of excuses for not building your real estate investment portfolio.

About the author:   Steve Marshall is a franchisee of HomeVestors in the Memphis area.  His email address is [email protected]

Let's get all of the stereotypes out of the way.  Yes, owning affordable/low income housing is more challenging than your typical A or B class property, you will experience more repairs, turnover and maintenance.  However, if you have the right partner, the right property, the right rehab, reasonable expectations and a seasoned manager, the returns are fantastic. Here are 6 simple rules to follow when buying "C Class" property which should help sleep better at night...

Rule #1:  Find a Local Joint Venture Partner

Nothing beats boots on the ground, especially if you are investing in place where you do not live. In my opinion, having a local joint venture partner is worth its weight in gold. If you are buying a C class property, the JV approach is much better than working with a Turnkey provider because their financial interests are aligned perfectly with yours.

Rule #2:  Avoid The War Zones

All lower income neighborhoods are not the same.  In many cases they change street by street.  This is where your local Joint Venture Partner and Professional Property Manager can come in handy.  They can keep you away from the worst neighborhoods.  Keep in mind that there is generally some crime in lower income areas, it comes with the territory.  The trick is to stay away from the really scary stuff.

Rule #3:  Never Overpay

Let's face it, you buy affordable rentals for cash flow, not appreciation. So it is very important that you buy right on the front end. If you get into a fully rehabbed property at $30-$40k, I would never expect that property to appreciate more than 1 or 2% per year. With that said, always try to buy at a 10% or higher CAP Rate (Annual Rent - Annual Expenses / Purchase Price). Make sure you fully load the expenses! Don't forget to account for debt service, taxes, insurance, management fees, repairs and vacancies.

Don't get too hung up on comp based valuations because there aren't generally many retail sales to compare to.  Just make sure the investment has a good rate of return.  If you can enhance your returns using leverage, all the better.  Just be prepared to have a higher than usual down payment and a shorter term loan.   

Rule #4:  Buy a Fixer-Upper--Not a Property That Should Be Torn Down

Don't buy a property that isn't worth fixing.  The house you select doesn't need to be perfect, but try to buy one that only has deferred maintenance issues like paint, roofing and maybe a new HVAC system.  Stay away from major plumbing, electrical issues, etc.  

Rule #5:  Don't Over Improve

You want the house to be safe, clean and functional.  You shouldn't buy the most expensive finishes or spend too much on landscaping.  There is limited appreciation upside and you should keep that in mind when contemplating what improvements to make to the property.  Remember, the only reason you buy this class of house is to generate monthly cash flow and provide lower income families a decent to live.

Rule #6:  Hire a Seasoned Property Manager

I think this one speaks for itself.  The most important step when renting a property in any asset class (especially C) is to make sure you have a manager that appropriately screens prospective tenants and has the resources to manage the day-to-day needs of your customers.  I would also recommend finding a manager that is comfortable working with the local housing authority and understands all of the rules and regulations.  Many of your tenants may be on some kind of government subsidised program and this knowledge is critical. 

About the Author:  Steve Marshall is a Memphis based HomeVestors franchisee and has been investing in Memphis area real estate for more than 10 years.  Mr. Marshall's email address is [email protected]. 

A significant part of the Memphis Metropolitan Area is in North Mississippi, specifically in Desoto County (about 200k residents).  Southaven, Olive Branch and Hernando are very good investment opportunities with multiple exit strategies, including wholesaling, buy and hold and retail flips.  Very middle class and growing quickly.  I consider it a much better play for appreciation than Memphis proper and rents tend to be higher.

that's great.  I would just ask if mailing over three counties is spreading your marketing too thin?  Maybe focus on a specific zip code where their is a lot of investor activity?

Also, you have to mail consistently to get results.  Don't give up if you don't get a deal on the first mailer or two.

HomeVestors of Memphis has a great low cost rental property for sale in Memphis, Tennessee.  We are asking $15k for the property and it needs about $15k in rehab work to be rent ready.  The property will lease for $625-$650 per month.  We have an in house rehab crew that will complete the rehab for cost plus 15%.  We can also introduce you to the best property management teams in the City of Memphis.