In the world of real estate investment, there is a crucial element that makes everything work. Without it, the whole concept falls apart: property management.
As passive real estate investors especially, we rely on property managers to allow us to be passive in the first place. Without their diligent management, we would have to involve ourselves in much of the day-to-day operations of our investments: defeating the purpose of “passive” real estate investment!
Not everyone is cut out to be a property manager. If you’re a real estate investor who has decided not to take on the responsibilities of property management yourself, it’s vital to make sure your properties’ day-to-day duties are in good hands. On the flip side, maybe you’re an investor wondering what it takes to be an effective property manager. Do you have the right qualities for the job? Or how to you make sure you know you’re putting your investments in the right hands?
One of the biggest topics in real estate investing today revolves around property management and the struggles landlords have with either managing their properties themselves or hiring quality property management. It stands as one of the biggest and sometimes most confusing and hard decisions for a real estate investor to make.
The Memphis media recently published information pointing to a rise in rental rates and a decline in vacancy among Memphis multi-family units in Memphis (see the article here). Premier Property Management of Memphis has been seeing this same trend in the single-family homes that they have under management for real estate investors around the country. The trends have been moving toward a stabilization of rent and even slight increases in most of the neighborhoods that Premier Property Management manages properties. Here is a breakdown of the month of May for Premier Property Management:
With the recent completion of Memphis Invest LLC’s office space expansion for its sister company, Premier Property Management Group, and new implementation of traditional rehab services for those wanting to remodel their home, the family-owned company continues to do the majority of its business with out-of-town investors.
A 1,200-square-foot development on the west side of Premier’s existing building was completed earlier this year by the Memphis Invest rehab services. The expansion offers offices for the staff of five full-time and 14 part-time employees.
The addition is also equipped with closing office and tenant waiting room where tenants can come inside and wait for an appointment, make a rental payment, receive a receipt or wait for their closing.
Chris Clothier, director of sales and marketing, said Memphis Invest built a separate entrance just for Premier’s tenants.
“It definitely makes it a more formal process, which benefits everyone – not only the tenants but also the owners whose properties we’re managing because it really makes it a more professional approach to managing the properties,” he said.
Memphis Invest now also provides rehab services, refurbishing full renovations on more than 200 properties a year for investors around the world. A supplementary service company, Memphis Invest Renovation Services, renovates investment properties and performs rehab work for homeowners looking to upgrade their houses.
The majority of Memphis Invest’s clients – 75 percent – are located outside of the Memphis market. And it’s all due to exposure and the lure of Memphis investment properties, Clothier said.
“Local investors are just a little more timid about buying here in town because of their preconceived ideas about what Memphis is like,” he said.
Memphians are “insulated,” and often overlook the treasures right in front of them, Clothier said. And investors inhabiting other cities with a higher cost of living cannot buy properties there for $20 to $40 per square foot.
In fact, investors came this past weekend to learn about the Memphis market and the Memphis Invest process and, of course, to buy property.
Memphis Invest hosts these buying parties once a quarter, bringing in anywhere from 40 to 60 investors at a time, with 30 to 40 serious buyers, and the rest wanting to learn more about the market or Memphis Invest.
“We go to Graceland, and depending on the time of year, we’ll go to a Redbirds or Grizzlies game – just little things so they can see that Memphis is more than just the bad crime list that you hear about each year,” Clothier said. “There’s a lot more to the city than just that, and that’s really what these weekends highlight.”
But since the demand is so high, Memphis Invest is changing the event to the second weekend of every month, limiting the attendance to 25 investors who are qualified and ready to invest in the Memphis real estate market.
And now with its new 400-square-foot multimedia room at its 130 Timber Creek headquarters, Memphis Invest will begin these smaller tours the weekend of Nov. 6.
Just one weekend is all it usually takes for many investors to get hooked. They not only return to purchase more, but they also bring colleagues, friends and family to invest as well.
Brack Shaver of Fort Worth, Texas, attended the weekend event in April and returned this weekend, bringing his son with him.
Shaver, a registered investment adviser, said Memphis Invest spares him the one thing that matter the most – time.
“As an investor, you are always looking for a situation that lends itself to you that is turnkey,” Shaver said. “This way, I get a good property, it’s already been rehabbed – in my case, it’s already been rented – and I get a check every month.”
Brian Rowan, on the other hand, is one of the select few investors from Memphis. He has bought 15 properties from Memphis Invest and hopes to acquire five more within the next two and a half years.
“I want to get in, get out and have my properties paid for before the market changes,” Rowan said.
Many of our Memphis investment property blog readers might recall this blast from the past video from two years ago. The Clothier family, who owns MemphisInvest.com, decided it was time to make a promotional video telling clients who we were and why we thought we could help investors to be successful. I think from the testimonials included, you'll see we were successful!
Let us know what you think below!Memphis investment real estate buyer, Brian Douglas, talks about the turn-key process of investing in discount properties in Memphis with MemphisInvest.com. Brian has built a sizable portfolio of investment properties and views his portfolio as an addition or diversification of his existing retirement strategy.
So you all know that we are constantly working to improve our operations and educating ourselves when it comes to investing in real estate and we urge you all to do so as well. Last week we spent 4 days at the Fortune Builders Rehab Bootcamp in sunny San Diego, CA learning new processes and touring the properties that Fortune Builders are currently rehabbing. Ryan, who heads the rehab department at Memphis Invest, joined us in continuing his education. This is by far one of the best educational opportunities of the year and we are happy that Ryan could join us.
Kent, Jr., Brett and I had the opportunity to speak to the 300+ attendees in regards to systems implementation, business building and stayed over to give a special presentation to a select group of attendees on the inner workings of the Memphis investment property bus tours that we host. See below for pictures from last week's workshops.
Be sure to check out the Fortune Builders' home page for future events and make plans to join us for one of the upcoming educational boot camps. Even the experts still attend workshop weekends to continue to grow and learn as business owners.
See you on the road soon...
Chris
There are different laws around the country for both landlords and renters and you absolutely must know the laws that pertain to your area. That being said, here is the easiest way to learn those laws. First, contact local property management companies and ask for their guidance with local land lording laws. It may take more than one call, but be proactive and ask for their assistance. Most will be more than happy to answer a few of your top questions. Second, contact local landlords that advertise properties for rent in the local papers. Many times, with an offer to buy them lunch or dinner, a local landlord will spend time telling you how they operate and what they know about local laws. Finally, when you have a better idea of your market place and the local laws, you turn to a local attorney who specializes in representing landlords. They can assist you with the ins and outs of how to operate as a landlord to give yourself the best opportunity for success.
Once you have established a better understanding of your local land lording laws, you can also develop your lease. Chances are, if you will ask, other landlords will share their lease with you. Another possibility is that your attorney will already have a lease that they can give you to use. Using a proper lease is the best way to protect yourself when it comes time to collect late rents or possibly move towards dealing with a problem tenant in the legal process. Being clear and precise in your lease is the best way to protect yourself when it comes time to involve the local courts and laws as a landlord. Once you have a great lease, make sure you have a great closing process. Make sure that your tenant not only signs every page of your lease, but it is a good idea to have them sign key parts of the lease where the legal process is laid out. Cover yourself and your tenant to ensure your success.
Problems will absolutely occur when you are a landlord. From late rents, evictions, maintenance calls and even maintenance issues that have to be charged back to the tenant. All of these situations will occur to you as a landlord and you must be prepared form the beginning on how you are going to handle each of those situations and be consistent. I suggest you put it in writing and have that process filed with your attorney. Once you have committed it to writing and filed it with your attorney, you have no choice! You must follow that policy. That policy will spell out when a tenant is late, what the repercussions are going to be, when that process moves to the stage of eviction, when the tenant will be notified and again, what the repercussions are going to be. If you will follow the process you lay out, you will be moving in the right direction and the legal process will be easy.
Evictions are one of the few absolutes in the property investment business. If you are going to manage your own properties, then getting over the fact that you will have evictions to deal with is a must. Renters will pay late, they will push the envelope and some know every step to take to play the game of staying in a property for the maximum number of days for the minimum number of dollars. If you have created your lease based on what you learned form other landlords, management companies and your lawyer and created your process for dealing with tenants (and followed that process) then you will have a very good chance of winning the eviction as quick as possible and for the least amount of work and cost.
Investing in real estate and choosing to operate as your own landlord both can be very profitable and rewarding. Simply making that decision will not be enough. You must take the time to get educated and prepared to be a good landlord and out your contracts and systems in place. These simple steps will absolutely help you to become a better investor and a better landlord.
So after reading part 1 of this 2 part posting, hopefully you can sense where I am going with this advice. Investing in Memphis real estate can be very lucrative and a fantastic addition to a retirement portfolio. However, there are a lot of companies and individuals who make a living selling bad properties and bad investment in Memphis to outside investors. Heck, I am pretty sure that is a problem that occurs across the nation.
