Our Investment Philosophy

“Better Properties”, “Better Areas”, “Better Investments”

 

There are a lot of Turnkey Real Estate Investment Companies out there and we all basically do the same thing.  But when you REALLY ANALYZE each of our business models, there are some differences that separate us.

So what is it about Memphis Turnkey? What is our business philosophy and our approach to investing?

Well, first of all… we are a FULL SERVICE Real Estate Investment and Property Management Company.  Currently, we are managing over 315 properties in house.. both for ourselves and our customers.  So we’ve learned a thing or two about property management.  And, it’s these lessons that have helped shape our philosophy and approach to investing.

Simply put, we believe that:

Better Properties in Better Areas make Better Investments

You see, you’re not just buying a house or investing in a piece of property… you’re investing in an area, a neighborhood, and a city!  It’s important to know what’s around you and what’s happening in that area so that you have options now… and in the future!

After analyzing the performance of properties in our portfolio, we’ve found that the upper “B” class and lower “A” class… in the long run… tend to perform better than the “C” class properties.  “C” class rent in the $500 – $700 range and sell for less than $40,000.  “B” class rent for $850 and up and sell between $75,000 and $100,000.  This is just a rule of thumb that serves as a good industry guideline.

The reason “B” class houses tend to perform better is because of the tenant.  Turnover kills cash flow, and lower-income properties are more prone to turnover.  Upper “B” and lower “A” class properties usually attract a better class of tenant:

  • People with a career instead of just a job
  • People looking for a specific neighborhood to live in
  • People who are looking for a home- a place to take pride in (even if they’re renting)
  • People who have well-thought out criteria for why they want to live in a specific area, such as: school districts, etc.
  • People who are more autonomous when it comes to routine property maintenance (i.e. they can take care of a small problem themselves, instead of calling the management company to change a light bulb or a fuse!)

You see… IT’S ALL ABOUT THE TENANT!!  That’s the secret to having a well-performing asset in the long-run.  Tenant retention, and less turnover.  And for that reason, we target better properties.  Because IT’S HARD TO PUT GOOD PEOPLE INTO BAD HOUSES!!

In addition to targeting areas that will attract better tenants, we also look to go the extra mile on the renovations. A house that looks good and is renovated right will rent faster, more consistently, and have less turnover. This is because the tenant’s will have a house they can call home and take pride in. So, for renovations, we do the house right and renovate to a high standard including:

  • Servicing the Mechanical System(s)
  • Replacing roofs or cleaning roofs that are only a few years old and have good life
  • Adding decorative lights, matching faceplates, and replacing switches on the interior
  • Replacing countertops in kitchens and vanities in bathrooms
  • Replacing old plumbing and electrical systems per inspections
  • Adding new shower heads, faucets, supply lines, etc to plumbing fixtures
  • Checking crawlspaces
  • Conducting thorough electrical inspections
  • Adding decorative landscaping to the exterior to give the house nice “curb appeal”

These are just some of the details of what we do on our renovation projects. We look to complete our renovations in such a way that the house will be the BEST RENTAL property on the street and the house of choice among quality tenants.

This is the Core Philosophy behind Memphis Turnkey.  We target better houses, in better areas, and attract better quality tenants.  The way we do this is by being as selective as possible in the areas in which we buy, and doing a quality job on the renovations!

The ares of town we like to focus on (but not limited to) are: Bartlett, Southeast Memphis (38141, 38125), Lakeland & Arlington (38002), Cordova (38016, 38018), Whitehaven (38116), Oakland (38060), and Colonial Acres (38117).

Now, we still sell “C” class properties, and we have several in our portfolio(s).  I, myself, have several lower-income houses that are performing great so I can’t knock them too bad.  Each investor is different (different strokes for different folks!).  But, in general, we’ve found that the properties that rent for $850 and up tend to yield stable, steadier rates of return and attract a better class of tenant.

Cash Flow is the name of the game when it comes to investment properties. Lower-end properties look better on paper, but when analyzed further don’t perform as well as their pro forma numbers indicate. Higher vacancies, turnover, and maintenance costs EAT into your cash flow (1 turnover a year can wipe out your cash flow!). This is why we target better properties. After all, as Mike Butler says in his best-selling book “Landlording on Autopilot” you want to be “in the investment business not the hotel business!” The goal is to acquire properties where tenants will want to stay forever! That is how true passive wealth is built.

Please Contact Us if you have further questions.