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Archive for May, 2010

Memphis real estate investor Mark Anderson of MemphisInvest.com talks Property Management

Mark Anderson of MemphisInvest.com shares a couple of insights and tips with Memphis real estate investors that he deals with on a daily basis here at MemphisInvest.com.  Mark is an integral part of the team and offers some great advice through his one-minute video series.  be on the lookout for more!

Categories: Tips & Advice

Real estate investment companies use smoke & mirrors??

You know how when a magician comes out and explains to the world how other magicians pull off their tricks?  Well, that tends to anger all of the other magicians and I think we can all understand why.  After all, their exact tricks, even their way of life might be threatened because  someone would have the audacity to let their audience know how they use curtains, smoke and mirrors to pull off their illusions!

Marq Cobb, Director of Sales

Well, unfortunately for a lot of other home wholesalers and supposed turn-key operators, that is exactly what I am about to do.  The truth is I am tired of other companies piggybacking off of our reputation, our marketing, and even misleading others to believe they are somehow connected to our company in order to convince investors to do business with them. 

MemphisInvest.com has spent years developing a loyal base of customers and continues to grow that base on the strength of the services and products that we offer.  To have others ride that wave is to be expected….but, at some point everyone has to stand on their own feet and actually practice what they preach.

So, I’ve made a list of questions to ask next time you talk with someone who is bombarding you with direct mail because they were able to find out that you have bought property from MemphisInvest.com.  This short list should very, very quickly help you separate a guy trying to make a quick buck from a legitimate company that is set up to manage real estate portfolios for their clients.

There are lots of companies out there that want to sell you a house, pat you on the fanny and say , “Good luck with the rehab and/or property management. Let me know when you’re ready to buy another house.”

If they are not offering rehab services, property management, along with connections to lenders, appraisers, closing attorneys, CPA’s, and insurance agents (as we do), then they are not turn-key.  And let us not forget the most important part of the equation.  The follow up process after you close on a purchase is key to your success.  Ask them what their plan is for communication and if the answer is call us anytime – turn and walk away!  A real customer service plan involves actually servicing the customer by reaching out to them, not the other way around.

  • Do you provide back end property management for your clients?

We own Premier Property Management, and we currently manage over 520 properties that we have sold to our clients over the last 5-7 years. We do not advertise to manage other people’s properties. The reason for that is we want to focus on the clients who bought property from us, and take care of those clients. Our clients love the fact that we will manage their houses for them because they know it means we will only sell them high quality properties in solid areas of town if we are agreeing to manage them.  What is stopping other companies from selling you terrible houses in bad areas and doing shotty rehabs if they don’t have to manage them? What do they care?  I have heard the Clothiers say many times how this is the most important service we provide and easily the hardest to provide well.  We have 3 meetings a week with the staff of Premier Property Management as well as with the rental agents handling the marketing  and believe me, this is a VERY important service that MemphisInvest.com and the Clothiers take seriously!

  • Will you please send me names and numbers of clients who have bought multiple properties from you in the past?

This is self-explanatory. If they cannot provide this for you, then a) they have no established track record or book of business or, worse, b) they can’t think of any past client who would say anything nice about them.  In reality, everyone can usually provide referrals, but what are you going to hear from those referrals?  Luckily for MemphisInvest.com, you are going to hear about our company and our services, but you are also going to hear from our clients that everything is not always perfect.  That is where I begin to beam with pride in our staff.  Because a majority of our clients will tell you that when things are not perfect, we begin to excel.  Quick reaction, decisive decision making and doing our absolute best to keep customers “in the know” on how we handle any problems that arise, have been the biggest advantages we have built over other companies.  It is a commitment to customer service and responding quickly and correctly that allows our clients to tell the “whole” story.  That problems will arise, but they are taken care of – always.  See how many of those types of referrals you get from other companies!

No matter where in the country you live, I’ve usually got several clients who live in your area who will be happy to speak with you about their experience with us. They may not give us an absolutely spotless review every time (some will), but I think they will all tell you that when problems do come up, Memphis Invest takes care of them in a way no other company would.

  • Can you tell me a little about your company’s track record? (i.e. the number of houses you sell per year, and how long you have been in business)

This may sound like a funny question, but the truth is that this is a very difficult, at times cut-throat industry. The weak, the apathetic, and those who enjoy 40 hour work weeks simply do not survive in our world.

One of my favorite phrases that I talked about all day is “economy of scale.” Who is going to be able to get you access to the best Memphis investment properties at the right prices and get you the most bang for you buck on rehab projects? Your answer is a company that buys 20-25 properties a month from the banks and in turn does 20-25 rehabs/month. It’s common sense that you get a much better deal when you can buy in bulk.

Would you rather work with a guy who works out of his truck and sells a house a month or a company that sells over 200 properties a year, has established a name for itself on the national map, and has a client list that spans from coast to coast? It’s not a bragging right (but it is), it’s that if no other companies can match our track record because they haven’t provided the level of customer service that we have year after year.

These are just a few suggestions the next time you get a mail out from some clown who says he provides turn-key Memphis properties to investors nationwide at severe discounts. Well, no, he probably doesn’t, but you should definitely give him a call and get the answers for yourself. I just wanted to give you a cheat sheet  to be able to see behind the curtain of the magic show.

Marq Cobb
1-901-751-7191
marq@memphisinvest.com

Categories: Investment News

Real Estate Investment funding is tight even with rates dropping

If you are keeping up with the recent news on mortgage rates, home prices, refinancing options and anything whatsoever having to do with investment real estate, there is a common theme emerging.  Investors are finding  fewer and fewer options for financing, but the best options – using Self Directed Retirement Accounts, paying cash, converting stocks, bonds, CD’s into tangibale real estate assets – are finding unbelievable deals!

I was reading this morning a great article by Jonathan Berr online and it pointed to a mix in the news real estate investors and home buyers are receiving.  The drop in pricing for mortgages is fantastic – too bad it doesn’t correspond in more application approvals or actual loans getting closed.  I have linked the article here for you to read for yourself:

Great article from Jonathan Berr on Daily Finance

With mortgage rates at historic lows and shadow inventories finally beginning to get pushed through, it appears as if there are great purchase opportunities for investors to use some forms of leverage to build their portfolios right now.  With new products being announced and promoted by Memphis Invest like the non-recourse lending program coming out this week or the short term funding program announced in early May, there are options for investors that never existed before.

But with mortgage applications expected to double with the low mortgage rates, if you are an investor, stick with the lenders that we know are working with investors and don’t get in line behind your traditional lenders.  They are already buried and expected to only get worse.

If you are interested in using your self directed retirement account and obtaining non-recourse financing to provide some leverage, contact me by email and I will give you the details on a fantastic new product being offered by one our vendors.  As always, Equity Trust Company, is the go-to company when it comes to self-directed retirement accounts, so if you need information on opening or using a self directed account, I can put you in contact with Amanda Hollbrook as well.

As I read the news lines each day on investment real estate and what’s around the corner, I can only tell you to tighten your belt and get ready for a wild ride to the finish of the greatest real estate transfer in history!

Chris

Categories: Investment News

When Buying Memphis Investment Real Estate Size Does Matter!

Size matters when it comes to rental properties.  The average size of a new home

Mark Anderson, MemphisInvest.com

has more than doubled since the 1950’s and people have grown accustomed to more space.  If a house is too small, it usually is more difficult to rent or sell.  Does that mean you should avoid small homes?

At Memphis Invest, we consider anything less than 1,000 sq. ft. to be “small”.  We rarely recommend the purchase of a home this size.  However, on occasion, it may make sense if the location is desirable and the house size is consistent with the neighborhood.  After rehabbing hundreds of homes over the last few years, Memphis Invest Rehab Services has come up with a few ideas to make small homes seem bigger than they really are.

–        Change the layout.  Look for walls that can be moved or taken out completely.  Usually, the best place to do this is between the kitchen and living room.  Changing the layout of the bathroom and kitchen to maximize space and functionality is also a good idea.

–        Push out and up.  This is ideal if there is a second floor or a room with low ceilings.  You want to push the walls out and the ceilings up.  Vaulting the ceilings can completely change the feel of a room and help those who suffer from claustrophobia.

–        Use nicer finishing materials.  A small house can be a negative, but one benefit is it should cost less to rehab.  It is simply cheaper to paint a 900 sq. ft. house compared to a 1,800 sq. ft. house.  Therefore, you may have additional room in the budget to use on better light fixtures or appliances.  A few extra sizzle features will grab the attention of the potential buyer/renter and take the focus off the size of the house.

–        Staging.  This strategy is more appropriate when doing a retail flip but studies have shown that houses that are staged sell quicker and for a higher price compared to homes that have not been staged.  Keep it simple and don’t use bulky items.  Once again, this helps to take the focus off the size of the house.

For most real estate investors, your focus should remain standard size homes that are more sellable or rentable, though if the circumstances are right and you are willing to go the extra mile (or have Memphis Invest Rehab Services help you) small homes can make big profits.

Categories: Tips & Advice

Introduction video for real estate investors to MemphisInvest.com

This week we pulled a blast from the past out o our archives and actually wondered why we quit using this video introduction for real estate investors to Memphis.  Check it out and tell us what you think:

Chris

Hard Money for Memphis real estate investing questions answered

On Wednesday of last week Chris Clothier put out an email about a new program we are offering that will give investors the

Director of Sales, Marq Cobb

opportunity to purchase investment property in Memphis with less money out of pocket than other purchasing strategies. Almost immediately, my inbox was flooded with inquiries from clients, competition, and even other lenders wanting details on this program.

I thought this would be the easiest medium to answer all of your questions. First, let me hit the highlights of the program for buying property in Memphis.  Although these were clearly stated in Chris’s email, let me clear up any confusion:

  1. This program is ONLY available for investors purchasing properties from Memphis Invest. The lender has insisted on exclusivity because we have a longstanding relationship and because of the amount of trust and faith they have in our company and business model.
  2. This program will only work on properties #1-4 (including your primary occupant household), meaning if you already have 4 mortgages and you hope to buy a 5th property , you will have to do so using another strategy.
  3. The minimum loan amount for the program is $50k, so your purchase price + repairs on the property must be > $67,000.
  4. The transactional costs are very low for this type of purchase. There is a $995 origination fee plus ½ point per 30 days until you refinance. You will still have refinance closing costs on the back end.
  5. The refinance loan will be at 75% of the ARV.

Now, if you’re still with me and you think this type of purchase strategy will work for you, then let me walk you through it.

  • You find the property at 123 Main Street on the Memphis Invest site and see that it is $65,000 and the repairs are $10,000. You see that the after repair value of the home will be $100,000.
  • You get pre-qualified with the lender and send in your signed contract for the house, along with a check for half of the repairs on the property as earnest money. The lender will fund purchase + half of the repair amount in the short-term loan.
  • The lender orders the appraisal up front.  This is convenient for the investor because you will know exactly how much money you will need to bring to the refinance closing up front, avoiding any surprises.
  • The short-term lender then closes and funds the house for you. The deed will be recorded in your name and you will need to get insurance on the property just as if you owned it for cash. You will close with Sharon K. Anderson, our closing attorney here in Memphis, either in person or via FedEx.
  • The short-term lender will disperse half of the rehab amount to Memphis Invest for repairs. We will already have the other half from you.
  • Once the repairs are done, the appraiser will come back to the house to make sure the repairs are done and will sign off on his original appraisal. The file will go into final underwriting and the lender will refinance the loan.
  • Since in this case purchase + repairs = $75,000, with roughly another $2,000 for the transactional funding and another $5,000 in refinance closing costs, and you’re now at $82,000 on a house that has been appraised at $100,000.  Since the lender will refinance at 75% of $100,000, you have just bought a Memphis Invest property and only used $7,000 of your own cash. In this example, that is almost 1/3 of the cash you would have put down on a 20% down conventional purchase.

Some ideas on this subject that I think are important to point out:

Þ  I think it is great to have the refinance lender refinancing their own short-term loan.  They have to refinance the house in order to get their money back, and it is in their best interest to do so as quickly as possible in order to do more loans.

Þ  Some of our properties will be better suited for another purchase strategy. Several of our properties will have the investor bringing less cash to closing using 20% down rather than this program because ARV’s are deflated in some areas.

Þ  On average, you can expect to bring about $10,000 to closing on all of our properties using this program. We had 3 properties that had investors bringing less than $5,000 when Chris’s email went out on Wednesday. By Friday they were all gone. The average amount that an investor brings to the table on a 20% down purchase today, including closing costs, is $18-21,000.  Bringing an average of $10,000 to the table makes it easy to see why we think this program is such a home run.

If you’re ready to make a move (and why would you not be at this point?), then check out the available investment properties in Memphis and call me as soon as you have found a few properties that you like. I’ll help you run some numbers and we’ll pick you out 2 or 3. We’re encouraging everyone to buy in bulk, because as I’ve covered in previous blog entries, your safety is in numbers in this business.

Contact Marq Cobb or David Meeks at 901-751-7191 today to get started!

Marq Cobb

Categories: Investment News

Customer Service is key for real estate investing in Memphis – Part 2

When I first wrote my customer service post, I had not planned on writing a second part, but there was something else that I thought was equally important that I learned during my dinner at the Chart House.  It is called RESPECT!

The restaurant just oozes class from the second you walk through the door.  Rich mahogany, brass railing, beautiful vintage period photographs and gleaming glass with unbelievable views of the ocean.  But that’s not what makes this restaurant stand out.  It is the staff, the attention and respect they show to their guests.  It is the demeanor with which they deliver that attention that shows they are a well trained unit with each employee knowing and understanding his/her exact role in the customer service process.

Now, the lessons I was watching play out in front of me on this night were just beginning.  In every equation, there are always two sides and the experience you receive as a customer can be heavily influenced by your own actions and your own willingness to show respect.

I am a people watcher if ever there was one.  I have spent my entire life studying people:  their habits, their actions and reactions, their tendencies and interactions – watching and learning from these insights has always been of special interest to me.  Watching and learning from inter-actions is one of the most important techniques I have used to grow as a business man.

On this night, I had the pleasure of watching a young woman proceed to completely charm and break down any barriers between her and the staff at the Chart House, to the point where service was a pleasure for those providing it.  She worked the room and every staff member that she came in contact with and left many of them with beaming smiles.  You could tell from her actions that dealing with people was her specialty and I mused that she was definitely in the sales business.  You could tell, from whatever distance you observed, that she had charm and class and knew exactly how to make those around her feel instantly comfortable and ready to serve her every need.

Keep this point in mind, because in life, opportunities surround you everyday to service the needs of others and build not only a great rapport, but to also remove any barriers that people sometimes put up.  You can do this by not only remembering someone’s name, but repeating it to them as you ask them questions or make comments.  If a host/hostess or server takes the moment to speak with you, make sure you extend the courtesy of pleasantries, by addressing them by name and thanking them for their time and service.  Again, every person she came in contact with, was melted and she received the best service in the restaurant.

You will absolutely make their day by repeating their name to them.  All people respond to hearing their name and everyone I have met genuinely responds when others show them attention.

On this particular night, I watched as many of the restaurant patrons sat oblivious to their servers, the tenders, the hostess – everyone else in there restaurant.  I completely understand, and know, that at times we can all get caught up in conversation or our own circumstances.  But, I watched this young lady work the entire room at every stop and you could tell that she was the center of attention from the staff.  It all came from her willingness to show kindness and respect even though she was their client.  It certainly paid off in her getting the best table in the house and excellent service all night.  I knew I had observed someone with rare people skills and a special talent – someone whom I could learn a thing or two from.  As I left that night, I realized that when trying to provide great customer service, sometimes it’s the really little things that will make all the difference.  Watching her that night, reminded me that it is those little things in our every day inter-actions with people, clients included, that can make the biggest differences in how we are treated.  That is the type of person I want to be around every day.

At a restaurant with the reputation for top-shelf service like the Chart House, you do not always see patrons willing to return the pleasantry and appreciation for great service.  Often, that service is expected.  But watching her, I was reminded of a lesson that I had learned long ago and have carried into my business life ever since.  Always treat people the way you want to be treated.  When you do, good things happen…

These are the types of lessons that we can all learn, no matter the business we choose to operate or the endeavor we choose to pursue.  Great people skills go a long way!

Chris

Categories: Tips & Advice