We are super excited that we are only 1 week away from what has become a signature event for our company and a whole lot of fun. We have been asked a lot this past week about being able to attend if you have not registered and the answer is yes...but, we really need you to register first so we are able to prepare for the size of the crowd.
For counties and municipalities across the country, property taxes are the gift that keeps on giving. In both good and bad times, American cities and counties seem to find a way to burden their residents by raising these pesky levies. Since mortgage lenders often automatically shunt future property tax payments into escrow accounts each month, many equity-building homeowners don't even focus on the fact that they're paying hundreds or thousands of dollars per year to their local governments. This year, Shelby County, Tennessee, which is the county where Memphis is located, is assessing the value of every property and adjusting rates. Some are going up and some are going down. Event though we manage close to 1,600 single-family rental properties in Memphis, it makes sense to think about our own homes tax appraisal.
A clear trend in Memphis real estate has become apparent in the last few years. Due to a combination of factors, the inventory of available housing has been on a sharp decline. According to figures from a recent article in The Commercial Appeal, the inventory of houses for sale has decreased from 13,300 in January of 2008 to fewer than 6,000 in January of 2013.
I know it sounds a bit crazy, but when talking about Memphis real estate and the role that foreclosures have on the market, there are some words that just don't seem to go together. Take for instance using ‘Stable’ and ‘Foreclosure’ in the same line... or sentence for that matter. It sounds a bit oxymoronic, right? I am fairly sure, although not entirely positive, that is a word!
The Memphis Area Association of Realtors (MAAR) showed a tremendous increase in year over year sales for January to start 2013. The association released data entered into the MAAR data property records database showing over 1,250 sales for the month of January which was a 46% increase over January of 2012. The total number of properties sold was also an 8.9% increase over December of 2012.
Many Memphis real estate investors are buying their investment property as a long-term buy/hold strategy. The properties should produce a consistent return on investment, but the main strategy should not be waiting for value increases and then selling for a profit. Memphis is simply not a market where appreciation is the main investment prerogative.
Whenever we speak to real estate investors around the country, always sharing the story of our great city Memphis, Tennessee and more importantly what is happening with our real estate investing company, we tell investors that there is no White Board hanging on a wall with a business plan outlining the path to where we are today. It would make a great story if that were the case, but the reality is that we made some very good decisions early on and put ourselves in position to take advantage of opportunities when they presented themselves. Recognizing those opportunities and taking advantage of them has been the hard part. When you mix good decisions with the right opportunities and a little luck, you get a small, family-owned company that has grown from a handful of employees to a Inc. 500/5000 fastest growing company employing almost 40 employees, nearly 300 vendor employees, managing 1,600 plus investment properties with a value approaching $150 Million for over 600 real estate investors! And there is more to come...
We have always considered ourselves as business men first and real estate investors second. With such rapid growth over the past two years, like any good business owners would do, we have been on a constant search to surround ourselves with excellent people who can help guide our growth. In addition to simply looking for great talent and even better advice, we have also had to adopt new rules and the guidelines of a large and growing company by developing HR best practices, vacation policies, travel schedules, new computer systems, a more diverse roster of partner companies from closing attorneys to insurance providers, along with letting go of contractors who simply could not keep up to our standards.
We have also committed our company and staff to sharing data publicly so that interested real estate investors along with our current clients can track and compare our data with their results. Data such as property management numbers graphed and reported monthly, sales numbers reported quarterly and beginning during the 4th quarter of 2012, renovation permits reported monthly. The permits was a big issue to us as our contractors pulled over 400 permits on properties in 2012. Of course, not every property needs a permit and not every action taken on a property has to be permitted. None the less, we have begun reporting the numbers of permits that contractors are pulling monthly on properties we are renovating and managing. None of this is required and certainly not necessary to conduct business. We do it as a way of providing transparency for our clients, interested investors and unfortunately, because sometimes we have to do it to set the record straight!
With all of the changes that the company has undergone in 2012, we thought now would be a perfect time to look back at those changes, report some final numbers and take a look at where we expect to go in 2013. Be sure to let us know what you think at the bottom of the article!
We will remember 2012 for several reasons, but mainly because it wore us out! Very quietly in the fourth quarter of 2011 we began exploring opening a second office in another city. Dallas, Texas was a natural fit for us since it is where we had lived for so many years and we had family and business ties to the area. We opened an office in Dallas during the Spring of 2012 and opened Dallas Invest, GP and had a fantastic year. We were able to complete 55 transactions, open our property management company, hire three full time employees, host two small tours of our properties to help us work out the kinks in the new city and over-all finish with what we felt had been as smooth a process as possible. We have been repeatedly asked about the website DallasInvest.com and all I can say is it is coming, but not until the time is right for rapid growth in Texas and we are not quite ready yet. We still have some work to do to ensure that the investment process and the customer service experience are the highest level possible.
So now we know that the Bass Pro Shops plan to be right on track with the opening of the Memphis Super Store in Downtown Memphis Pyramid and just in time for the Holiday season of 2013. I think this gives Memphis real estate investors a big reason to cheer. The positives of a project like this one go far beyond simply economics. As Memphis continues to reach out and recruit more major international companies to relocate to Memphis, having family friendly attractions that also add to the tourist draw of the city can do nothing but improve the cities positives. That growth makes for a stronger over-all real estate market in Memphis.
Preachers encouraging squatters? A recent NBC news report revealed an unusual development in the housing market. In one Atlanta neighborhood, residents and church members have seen a rise in distressed property that is foreclosed and then abandoned, growing dilapidated and becoming what neighbors call "crime magnets." In order to preserve their neighborhood, residents have encouraged families to move into distressed property, fix it up, and keep the neighborhood clean and safe. This approach is being encouraged to prevent neighborhoods from sliding further into disrepair and decline while also trying to bring in families from shelters and off the streets, especially during the winter months. I can't say that I agree with this approach, but I understand where they are coming from. I also think there may be another option.
Another month has come and gone and it feels like the Memphis real estate market continues to heat up on multiple fronts. There are definitely conflicting numbers being released by different groups all wanting to paint the real estate picture in Memphis a certain way. Home sales are up and sale prices are up. But, foreclosures and short sales are also up and while it appears homes are selling for slightly higher prices, the pace is still way off from what a normal housing market looks like.
