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welcome everyone my name is mark hart with memphis investment properties and reading company realtors and today i'm going to show you the exact process for how to build a portfolio of income producing single-family rental properties we've helped over 600 investors build a portfolio of cash flowing rental properties all from the comfort of their home and today i'm going to show you that exact step-by-step process of what makes memphis such a great market to invest in in real estate and also how can mip and radiant company help you build a portfolio so let's dive in before i begin i have to say this reminder of the managers of memphis investment properties do not provide legal advice all prospective investors are encouraged to seek their own legal guidance all financial information is deemed reliable but not guaranteed performance and projections are estimated and subject to change the managers shall be held harmless if returns are not met all investments have risks and investors are urged to perform their own due diligence all right we got that out of the way so let's dive in and i want to share a little bit more about my personal story and my background of how i came to be working with and partnering with mip i'm originally from the suburbs of chicago so i'm a huge bears fan and i grew up in a wonderful family to where my parents always taught me as long as you get great great grades in school go to college get a great job work really hard for 40 years and hopefully you'll be able to retire in your 60s and that's exactly what my dad accomplished but he worked very very hard to do so and so much so that i really got to see him during the work week and i'm really proud of him but i always thought in my mind there had to be a better way right how can i accomplish financial independence or financial freedom earlier in my 50s or even my 40s so i set off to college at the university of denver in colorado and originally i was set to be a real estate major my grandma was one of the top real estate agents in missouri and so i figured that would be the best plan of action and quickly diverted from that plan and actually became a hospitality major because du has one of the top hospitality programs in the entire country and i just fell in love with the mountains i love nature love skiing and my new goal at the time was to manage a country club or a hotel or a ski resort in the mountains so as soon as i graduated that's exactly what i did i was an assistant manager at one of the top private country clubs in all of colorado and absolutely loved what i did but i was trading my time for money and i saw that i was going to be stuck in this rut working into my 60s and potentially into my 70s and so i just started asking the members of this prestigious private country club who would they'd fly in on private jets into aspen and they'd spend all summer with their families uh and i just thought to myself you know what could they be doing with their careers to give them that type of flexibility because to me that's the dream and i so i just talked to every single person i could and half of them were big oil money from texas and i like the environment a little bit too much so pass on that well the other half were real estate investors and they actually owned rental properties and income producing rental properties so i just started picking their brains asking their questions asking them as many questions as possible and they told me to read the book rich dad poor dad by robert kiyosaki and i did and it completely changed my overall paradigm and that's when i knew i had to go and stick with my original plan which was to become a real estate investor and along that path i met my now beautiful wife in the top left hand corner here and she said i'm going i'm moving to memphis to go to southern college of optometry to be an eye doctor because they have one of the top optometry programs in the country and i originally said where's memphis i had no idea where it was and it was somewhere out east and we packed up our bags moved to memphis i right away got a job with mip memphis investment properties and have never looked back so now i'm very blessed to own multiple investment properties here in memphis and it's great to have an actual path to financial freedom that's actually accomplishable due to these passive income cash flowing rental properties all right so the original mindset and the original plan this is exactly what my father does is to just invest in the stock market and then hopefully as long as you can live on about a four percent return then you'll be able to retire and as you can see the actual returns from the s p 500 after tax since 1950 are a measly 6.8 and that's just not enough to actually scale or to be able to accomplish financial freedom early a few decades early in your 40s or your 50s and so that's where the question arises how can i safely and passively diversify from the stock market and this is exactly where memphis investment properties and single family turnkey rentals come into play so on every single investment that we have we have a pro forma a lot of our investors say well i don't want to see a pro forma i want to see the actual returns of an actual investor who has already done it just years ago so that's what i did i pulled a portfolio of one of our owners he has three rental properties he bought all three at the same time in 2016 and below are his actual returns now he and one of the the best parts of owning real estate is that you don't you don't have to pay cash you can put 20 down and finance the rest so this is assuming a 20 down conventional loan and when you factor in the cash flow the depreciation the mortgage principal reduction and the tax savings yes that's correct his total roi was over 50 percent and that's what we love about owning rental properties is that you don't just get one type of a return you get multiple types of returns and in terms of appreciation it's actually leveraged appreciation as well so we'll dive into all of these items here and show you exactly how you're going to get and that type of return but what another reason why i picked this portfolio as well is because one of the worst things that can happen is an eviction the tenant doesn't pay rent and so you have to legally remove them from the property and that's going to increase your vacancy and you're going to have a a turnover with extra turnover costs and so that happened on this individual's portfolio and he still got over a 50 return year over year which is just mind-blowing and just great to see so we try to keep our overall proformas very conservative uh and very realistic so let's show you exactly how you can accomplish this and i want to dive into one investors the roberts family who we absolutely love and here's a review that they left for the mip and the reading company team i made my first investment through this company back in 2017. since that time i've been very satisfied in all aspects of my experience with memphis investment properties paired with reedy and company property management by all i mean the pre-sales intro to the memphis market and their company the property renovation quality the sales transaction process the ongoing property management the communications when needed the property performa performing at reasonable accuracy and last but certainly not least the caliber of people that i've interacted with there i'm back for additional property investments if you're a passive real estate investor i highly recommend that you take a look at this company wow we really appreciate that overall google review and it's great to be able to create a long-term and deep relationship with our investors we've met the roberts family multiple times and they're actually locals here in middle tennessee so first things first when you're trying to build a portfolio of real estate you have to pick a market and after analyzing all the markets across the country we found that memphis tennessee is the best we personally own rental properties in different markets and now we've just brought everything back to memphis because it's just given us the best return on our investments so first things first for those of you that don't know where memphis is located that's going to be the little sun at the southwest corner of tennessee and what's great about memphis is that we have a very warm and mild climate so that is that helps and in terms of the real estate investment and it also allows it to be a great place to live so i'm from chicago originally to the north where we have a big snowflake because it is freezing cold during the winter you're going to get feet of snow and it's brutal no one wants to do anything during the winter and that translates negatively to a real estate investment because tenants don't want to move during the middle of a snowstorm and also as the owner of a rental property what's that snow going to do to your roof if you have feet of snow on your roof and what's that snow going to do it could freeze the pipes uh it could freeze the water pipes the sewers and that's just an addition that you do not want to have an additional risk that you don't want to have in your overall portfolio so fortunately here in memphis this is the mid-south we'll have a small dusting the school shut down for a week because no one knows how to drive uh in the light light snow that we have and it's kind of comical coming from chicago then also in the atlantic ocean and in the gulf you'll have hurricanes so what that means for the real estate investor is that your property could potentially flood or you may have to have flood insurance and what's great about memphis is all these storms dissipate by the time they get to us so none of our properties need flood insurance that's really important and just reduces your overall risk and that's the goal when investing in real estate is there's a thousand things that could go wrong so how can we mitigate those risks and that's what we're going to do every single step of the way then to the west you'll have tornado alley and fortunately we are memphis's nickname is the bluff city because we sit up on a bluff right on the mississippi river so storms tornadoes dissipate around the city so we don't have to worry about major tornadoes coming through so what's best of all is that frommers voted memphis the top city in the world to invest in in 2019 actually in may that's when we normally have our in-person live memphis in may event so would love to have you guys come next may come meet the team and see memphis for yourself the next thing that's really important to dive into when you're looking at a place to live and to invest is the city's ability to manage their debts so this just means what are the overall assets liabilities and how does that rank up to the other 75 largest metros across the united states well memphis is blessed to be ranked 33 out of the 75 largest metros on their ability to manage their debts beating out almost all of our competitors for the these turnkey markets like kansas city st louis houston dallas and also larger really popular areas like l.a san diego sacramento san francisco so on and so forth so what this means is that if we weren't good at managing our debts well the city is probably going to end up raising taxes and that could also mean raising property taxes which is just something that you want to keep low right now in memphis our property taxes comparatively on an annual basis around 1.1 of the purchase price when in texas they're double that to triple that so we want to keep these costs low and there's a good chance of that happening because of our government's ability to manage the debts all right so now we're going to dive into the overall economy and the industry that we're going to have here in memphis and here's a beautiful map of where memphis is located in the united states and we're not located in the center of the u.s geographically but we are located at the center of the united states based off of population so what that means is we can put goods packages on a plane a train a truck and get to more major metropolitan cities and more people than anywhere else in the united states of america so why not if you have an e-commerce business have part of your supply chain management and a major transportation and logistics presence in the memphis market and that's exactly what we have and that's what's great about what's happening right now in the world is that retail is slowly dying with the rise of businesses like amazon and amazon and these other large companies are here in memphis building multiple distribution centers and just improving our overall economy so it's great to be on the right side of trends when you're investing in a market so memphis we have a very diverse economy we do have the distribution that's the most popular most well-known but we also have an incredible medical community as well as manufacturing community so we are called the distribution center for north america so when you think of memphis you think of shipping packages and this all stems from our air cargo hub or our airport which is the busiest air cargo hub airport in the u.s and the busiest in the western hemisphere and the second busiest in the entire united states of america the busiest is hong kong china so as you can imagine goods getting made in china put on a plane and they can be fully loaded down we have the really large runways the ones that are two miles long so we can fly and land planes and when they take off fully loaded they can get to anywhere in the world direct so because of our location and our government we now have the number one fastest growing industrial market in the united states of america i'll say that again because this is huge for the future and being on the right side of trends we have the number one fastest growing industrial market in the usa so what does that mean we're building more distribution centers so we can sort and ship more packages faster quicker and more efficiently which what does that do that creates more jobs and the individuals that are working in these large fortune 500 companies like nike amazon fedex are going to be the individuals that will be renting these single-family properties from our company so that's how this all gets tied in together that all of that together leads us to be one of the top 10 cities in the entire u.s for job seekers so even right now with covid going on there's multiple opportunities for our residents and our tenants to gain employment if they so choose so if they lost their job in hospitality or the music industry well maybe they can pivot over to the distribution or manufacturing industry and still be able to pay their rent which is really really important so diving into a few of our major employers the largest and the most popular is going to be fedex so fedex is home headquarters with all the white collar jobs are going to be here in memphis as well as all the blue collar jobs here in memphis as well so they're the largest employer in the entire state of tennessee located right here in memphis so we're very blessed to have them here they're also doubling down on their infrastructure here in the market and that's shown by a 1.5 billion that's billion with the b investment that they're making into the memphis market right now as we speak adding to the statistic of us being the fastest growing industrial market improving their current infrastructure and adding more this is giving and during covid they've been giving 30 000 plus employees an actual raise even during the pandemic so just great to see they have a huge impact on the memphis and the memphis economy then another really popular employer is amazon they're trying to be a direct competitor with amazon and it's great they're competing because at the end of the day that helps the memphis economy so they're coming they've come in and they're building multiple distribution centers very very quickly uh they're actually just about to open their seventh distribution center uh here in tennessee uh and they're overall contributed their con their investments have contributed to an additional 4.5 billion into our state's economy so an incredible presence and they employ over 1500 full-time associates in the memphis area and they have over one million square feet of overall footprint so it's great to see them coming into the city adding more jobs providing more employment and making it a better market for our real estate investors now another really famous really large really popular employer is going to be nike they built this 2.8 million square foot distribution center on the north side of town next to frasier and raleigh and this is nike's largest distribution center in the world and this is one of the largest distribution centers in the world of all businesses and this is so successful that amazon actually bought the parcel right next door uh on this photo it'll be to the west and they're adding more uh more jobs more employment in the area which is helping all of our investors so nike right here has 49 football fields under roof with this distribution center which is absolutely incredible to see uh and as what our tenants are telling us on a constant basis is hey i just got a job at nike i'd like to place to live in raleigh or fraser so i can be close to work so we just listen to our employers that's where we go and we we create these opportunities near major employers all right then here is the big man himself mr warren buffett and he just bought one of the intermodal units here in town so there's seven class a railway lines these are the railway tracks that will cover a regional footprint and there's seven that cover the entire united states of america and what's great about the memphis market is that five of those seven connect in memphis so what did warren buffett do he bought the intermodal unit where they all connect so if someone wants to put goods on a train in florida and they wanted to go out to california it only has to stop once in memphis but you have to pay mr buffett so he bought it for a few hundred million dollars he's added in a few more hundred million dollars to uh improve on the infrastructure and just it's great to see for the memphis economy then pivoting towards our medical presence we're very blessed to be home to st jude's children's research hospital whose focus is on eradicating pediatric cancer what's incredible about saint jude's is they've actually built uh hotels quote unquote for uh the patient's family so the patients the patient's family will never see a bill ever it's a complete non-profit incredible organization and they're adding one billion dollars to their hospital expansion and construction started in 2018 should be expected to be finished next year and it's bringing in 5 000 construction jobs which is absolutely beautiful to see for our overall economy so not only do we have new construction going on improving our large transportation and logistics company our medical facilities but we also have a massive building boom downtown so we have in total 19 billion dollars of development going on throughout the city which is absolutely incredible to see but a lot of it is also happening downtown so we've done all the blue collar new construction developments but we actually also have the class a white collar developments going on and here's a picture of an example of one beel which is a mixed use development they have office space retail hotels it's right located on the river and it's great to see because it's attracting the higher income earners to the city as well because memphis is a top city for technology jobs uh because our corporations continue to cultivate creativity and we have a low cost of living some of the lowest amongst the entire country so not only do we attract the hard-working blue-collar folk in america but we're also attracting the higher caller higher income white-collar jobs as well all right so overall the memphis market is a linear market as opposed to a cyclical market so it's great that we're a linear and you want that because that means memphis is boring slow consistent and predictable and that's exactly how you want your investment to be when you're trying to rely on this passive income for retirement as opposed to a cyclical market which is more of a boom or bus market to where it does really well in the good times but really poorly during the bad times and that's what we love about the memphis market it performs well during both even in 2008 during one of the worst housing crashes in history we were able to when our properties went vacant because people lost their jobs we were able to find new tenants for exactly the same rent that we originally had pre-crash now that's a big deal because that means for our investors and our personal properties we were able to continue to cash flow consistently and predictably as opposed to some other markets like in california or in nevada to where when the tenants moved out because they lost their jobs well they couldn't re-rent the properties for the exact same rental rates so they had to lower it sometimes as much as 20 to 30 percent meaning well now you can't cover your expenses anymore so you have to be out of pockets your negative cash flow every single month and that's one way some people went bankrupt but the blessing of memphis is that we're a linear market and we didn't have to do that another blessing of being a linear market is the the lack of over building in a lot of cyclical markets like in florida for example they've been building like crazy new construction properties selling them to homeowners in class a neighborhoods and when 2008 came around there was an oversupply problem they had too many properties available and since the credit markets pulled out and the individuals couldn't get a loan anymore to buy these single-family properties to live in well then they just canceled the contracts so now the developers got stuck with thousands of brand new construction houses and instead of just going belly up they decided to put up a fight so the developers would just flood the rental market why not just turn my house into a rental to help cover my expenses during this awful crash that's exactly what they did so what the real estate investors in those markets found out is that when the leases came to expire in their rental properties their tenants said i'm not going to renew from you because i'm going to go rent a property across town in a better neighborhood it's a brand new house and it's for the exact same rental rate so why wouldn't they so now the individual investor had to lower their rates because the rental market got flooded and that's another way investors can go belly up but that did not happen in the memphis market which is great to see we were only building 4 000 new construction homes a year and as opposed to over building like they were in other markets because we're building on a linear level as opposed to a cyclical level and now we've only been building at about 25 percent of that rate so we also have an under supply problem because the new construction houses that are getting built today a class neighborhoods three hundred and fifty thousand dollars or above so that means the current stock under three hundred and fifty thousand dollars the rental properties that we're talking about today they're just going up in value because there's no new supply but that's what the majority of americans can afford so that's why it's a great asset class to be a part of all right so the memphis market when you think of memphis you think of cash flow that's what we're all here for to create positive income on a monthly basis and we're able to do that because we are a large metro with one about 1.3 million people that's growing on a consistent basis we're also able to do that because we have really high rents and low sales prices comparatively and the reason we have that is because over 50 percent of memphians rent and 40 percent of the overall metropolitan statistical area are renters and by having those really great rent to value ratios that results in great cash flow but you also need to make sure you have really low competitive taxes so our taxes are about 1.1 percent of the purchase price we also have low insurance costs because we have a group insurance policy for you to get set up on makes it very easy and that just lowers your expenses and increases your cash flow what else increases your cash flow is what the tenants will pay for they're going to put all the utilities in their personal name and pay for them all they're also going to bring the their own appliances that's correct i said appliances because it was a shock to me when i first heard that we will go above and beyond and put in a new dishwasher a new vent hood the fan above the stove but the tenant's gonna bring everything else and that means when the ice machine breaks in the fridge you're not gonna get a maintenance call and you don't have to worry about it that's on the tenant to pay and to fix themselves then finally the tenant is also going to take care of the exterior yard work on their own dime now we don't expect them to plant roses in the front yard but they just need to make sure that they maintain the yard and perform basic landscaping so by the tenant having bearing the burden of those additional expenses they don't fall on the investor which is going to increase your cash flow and all these reasons coming together are why memphis is one of the best cash flowing markets in the entire united states of america but not only are we a cash flow market now because of everything that's going on with our economy the governments our location we're also getting some incredible appreciation that's right i said appreciation because most folks only think of memphis as a cash flow town but we are doing very very well in terms of appreciation and we like to go based off the numbers and the statistics so over the last 30 years year over year appreciation is 2.5 now as things have been improving for the last ten years it's been three percent year over year and since 2016 we've been appreciating it five percent year over year and what's amazing about owning real estate is if you bought the property in cash that five percent appreciation would be a five percent return on investment but what's wonderful is you can get a conventional mortgage and put 20 percent down so that means you're putting 20 percent down but you get to keep all of the appreciation so let's do some math if you purchase a rental property in memphis for a hundred thousand dollars which is right around the average sales price that we have you'll put twenty percent down so twenty thousand dollars if that goes up five percent or five thousand dollars you just got five thousand in equity but you only put twenty thousand dollars to get that return that's a twenty five percent return on investment and this has been happening year over year over a year since 2016 and this is one of the main reasons why our in our actual example in the beginning of this presentation you saw that investor get over a 50 return because leveraged appreciation is just two beautiful words and it's great to have both it's great to have cash flow and appreciation because normally appreciation is just the cherry on top but hey if it's actually happening in your market it just doesn't get any better than that so memphis has been voted to be the 10th best appreciating market in the entire united states of america for 2020 and that's just absolutely incredible to see all right so with covid going on it's absolutely a terrible pandemic and we thought that you know the world was ending at the beginning of the year just like everyone else did and so we didn't really know how it was going to impact real estate and the rental market uh and the memphis market as a whole but now we have a great understanding because memphis has been the third least impacted market in the entire united states of america from covent right down the street you have nashville they're one of the top five worst impacted markets from covid so it's just great to see that even during the bad times this is the benefit of being in a linear market that we're still able to perform our rents have actually increased since covet has started and that was shocking we didn't think anyone was going to want to move let alone rent a new property during covid but what we're seeing now is a massive flight from dense urban downtown cities and they're moving out into the suburbs because if you're going to be you know quote unquote on lockdown and you try to stay healthy you might as well have a yard you might as well have a house with some more square footage so that just means renting a property a single-family home in the suburbs and that's exactly what we do on a daily basis so our rental demand has actually increased since covet has started which has been a great blessing of kovid and we've had more rental demand since covet has started than ever before in the history of our company every single investor that's bought a property from us since covent has started has been on a two-year lease with a four percent rental increase written into the lease between year one and year two we've found a tenant for exactly our target rent every time and that tenant has either moved in physically or they're actively moving before you as the investor close on the property and sign on the dotted line so just great to see now the negative of course has been the individuals that lost their jobs because they were in the hospitality or the music industry or something that was negatively affected from covid so our collections rate did drop uh but it was only about one to two percent and were really shocked by that as well uh so we've just been as a company helping our tenants and educating our tenants say well if you've lost your job in the hospitality industry well you can go work at fedex or amazon who are actually hiring right now because there's an actual surge in e-commerce because everyone's still buying goods they're just buying them online and shipping them to their house so there's still employment in the market it's just in a different industry all right so that was it for the memphis market we absolutely love it all of us here uh on the executive team are personally investing here in the memphis market and so now that you understand more about what makes memphis a great place to invest well now you need a great team to be your boots on the ground for you someone that understands the entire process with the experience to create these types of returns and that's exactly what the reedy family has been doing for over four decades here so here's a beautiful photo of the entire company that we have it started owned and founded by mr jim reedy himself his wife debbie their daughter amanda their son brad and jay and it's great to see how they just created this wonderful family atmosphere and now it has grown into a very large business here so they as a family have over 46 years of experience in the memphis market in real estate because mr reedy got his real estate license in college and they've been doing the same thing in the same place this entire time buying renovating selling leasing managing owning and cash flowing this entire time so this is something to where they just have tremendous experience mr reedy and the reedy family they're absolutely brilliant the knowledge that he brings to the operations on a daily basis are just next to none mr reedy is in the office every single day helping this business grow and so before he decided to help other people accomplish their goals he wanted to accomplish his own and that's great to see because that means he got to work out the kinks to really figure out you know what needs to be done how do you renovate where do you buy how do you manage so he built up his personal portfolio to over 400 single-family homes here in the memphis market which is a massive accomplishment absolutely incredible and that's what he started the property management company around to build and to maintain his current portfolio so then he was able to pay off those loans very very quickly and now he's been selling the single family homes and moving into larger multi-family apartment complexes accompl apartment buildings that are 100 units 150 units very large value add business or properties because that should be the next step for every investor it just takes a lifetime to do and that's what we want to be here for we want to create a long-term lifelong relationship together and we love building really deep relationships with our investors and we want to help you get multiple properties we don't want to just stop at one we want to help you get multiple and one of the largest portfolios and deepest relationships that we've ever created has been with some of the largest hedge funds in the world building and land technologies cerberus man group just to name a few and we've helped them build a portfolio of over a thousand houses a year and we manage all of those homes for them on the back end as well so we learned a lot from that relationship and we're very blessed that when they came into town into memphis they were doing their due diligence just like you may be on who's the best turnkey provider to work with in the memphis market or in the country and these hedge funds picked us and that's something that really gives us a competitive advantage in the marketplace because just gives us more experience and real estate is not rocket science there's only a few things that can go wrong and when you've done thousands and thousands of transactions and renovations which in total the readies have done over 6 000 renovations you know what to expect and when you know what to expect you can plan on it in the beginning so you're going to see two different businesses we say memphis investment properties in radian company these are both owned by the reedy family mip this is the turnkey brand where we purchase renovate and sell properties to you as investors and then ready and company is our back and property management in-house property management division so both owned by one family and actually operated in the business uh in the office space behind on this picture here it's an old ethan allen furniture store 22 000 square feet so we're one of the only companies in the united states of america that has every department under one roof so our process everything that is under this one roof this is our proven turnkey process that allows us to be replicatable and duplicatable at will that we've been working on and dialing in pulling the kaizen effect for many many decades now so number one is the purchase so we go out and we buy distressed properties in neighborhoods where we know quality tenants and qualified tenants want to live near major employers and we want to make sure that we can get that property for enough of a discount so we can perform a new renovation and a new rehab so we go in and we say how can i add as many maintenance preventers as possible so our tenants are the happiest because when they see a house that has a new 30-year architectural single roof new hvac new water heater new hard surface floors and updated cosmetics all throughout well they know that they're not going to have many maintenance calls and the less maintenance calls they have the happier they are so that means the longer they stay and the longer tenant stays the lower your vacancy is going to be and the higher your cash flow is going to be we also want to perform this huge renovation on the front end because that allows you to wrap the cost of that roof into the mortgage because let's say the roof cost ten thousand dollars well you're only putting twenty percent down of the cost so that's two thousand dollars of the roof as opposed to maybe buying a property online on zillow that has a little bit you know better rent to value ratio but it has a 20 25 year old roof to where in a few years you're gonna have to replace it and pay a hundred percent of the value you're gonna have to pay ten thousand dollars so the math makes so much more sense to have the full renovation on the front end and wrap as much of that cost into the mortgage and that allows you to have a better tenant so then once the renovation's done the entire time we're looking for a tenant we're going to help you buy the property so this is going to be the normal acquisition that you're probably accustomed to just like buying your primary residence we will be your real estate agents we will hold your hand through the entire process we've helped hedge funds do this and we've also helped individuals that are just out of college that don't even own their own property their very first house so we will make it as easy as buying something on amazon that's the goal that we're trying to accomplish here so you're not going to actually own the property and close on the property until you're 100 satisfied with the home inspection and the appraisal so all of our properties are contingent on home inspection and appraisal and financing as well so for home inspection once the renovations are done we're going to get a third-party home inspector to come into the property and make sure that you're buying something of value that has actually received a quality renovation when they come back with the list of five to ten items we'll actually just give that to our construction crews and fix almost every single item on that list for free at no additional charge to you then in terms of appraisal we set our sales prices based off of a comparative market analysis so if that appraisal comes in low we will actually renegotiate the sales price with you and normally what we do is we just meet in the middle so if it comes in low two thousand dollars we'll lower the sales price half and have you come up half but statistically speaking our appraisals come in over value so you get some free equity day one and that amount is two thousand three hundred dollars so that's something that really separates us from other turnkey providers you'll actually get some free equity day one and it's a fully renovated house so then once you actually own the property you have the deed you've closed uh a mobile notary will actually come to your house or place a business so you can sign the closing document so you never have to leave your house then we will get you set up on the property management side so you'll have your own point of contact and they'll be the ones to collect the rent they'll be the ones to deposit that rent into your checking account of choice on a monthly basis and make sure that no matter what happens with this rental property you never have to come to memphis unless you want to we'd love to have you come we'll show you around buy you some barbecue but at least you have that peace of mind to know that we're here to be your operators of your business that you're creating and we just want to help you and be your team be your boots on the ground to accomplish your goals so first step in the process is we purchase these distressed assets and here is a map of all the properties that we purchased in the last year in memphis so we have a big competitive advantage because we have all of this internal in-house data because of our size because we plan on doing over 300 renovations this year and so we know exactly what these properties have rented for in the past that have received our renovation and have gone through our leasing process so that's why we're able to hit our target rents the way we are so that leads to our renovation style what's great about our renovations is that we're going to use in-house crew members and we're also going to buy our materials in bulk so that'll allows us to install higher quality materials because we get them for a discount and that just results in less maintenance for you less cap x for you in the long run so here's some before and afters that we're going to dive into on the exterior in the front at the top you'll see at the top left the old ragged house the top right is a beautiful finished product here so first things first is going to be the roof you'll be able to see at the right hand side how the roof is a 30-year architectural single roof you can notice that because the shingles are actually laid over on top of each other as opposed to the top left to where they're laid next to each other so it uses less asphalt shingles and it lasts longer so it's our goal to put on a new roof and these new major items and we do it almost every time if the roof is only a few years old but we're gonna leave it but we'll let you know we'll also repair all the any rotten wood uh on the house we'll repaint the entire exterior put on brand new iron security doors for the safety and security of the tenants as well as perform basic landscaping here's a beautiful before and after of a nice bathroom nice once the renovation is completed here and so what they look like on the left that's what allows us to buy these properties for such a discount and that allows us to put more new items into the assets so we come in and put in new tile backsplash new tub new tile floors you always want to make sure you have waterproof hard surface floors throughout the whole property not just the bathrooms as well that's a big big point and then new vanity new toilet and this is just something that to where we want to make sure that these properties are clean safe and functioning tenants here in memphis they don't need everything to be white and to be full of glitz and glamour you want it clean safe and functioning because they're coming from the properties on the left so when they see the properties on the right they're absolutely stunned and that's another reason why we're able to rent these properties so quickly so we don't have to put in granite countertops we put in uh four mica countertops it'll last multiple tenant turnovers we'll put in uh the brand new tile floors and as well as new kitchen sinks with new plumbing underneath and then here's a perfect example to where the cabinets that's just the case-by-case basis a lot of the times cabinets are in beautiful shape so we'll keep them and paint them if they're not they'll be brand new but we'll make sure that you understand what that is before actually purchasing a property and then finally upgrading all the plugs switches and electrical fixtures as well so here's the before and after of the living room we wanted to show you what the luxury vinyl plank floors look like these are waterproof floors they're incredible because a lot of our tent or our competitors will just put in carpet which works fine it's just less expensive on the front end but you're gonna have to replace it every turnover it's just oh it's just gonna it's the way it is and that's why we put in the lvp floors because it costs a little bit more but it'll last multiple turnovers so that's the idea and the mentality that we have here's a beautiful paint job that we have with the white trim we buy all these buckets of paint by the pallet full so we get a big discount as well as in the future when there is a turnover let's say we need to pop up one shingle of the floor we can do so because we have a big pallet full in the back same thing with the paint we get that at a discount we don't pay retail price for our materials we get it at a discounted price so on average we're doing about a 30 000 renovation that's with in-house crews and that's with our discounted materials so if that was something that you were trying to do on your own and hire your own general contractor to go to home depot and paid retail price well that would probably cost 35 40 000 to where the math just wouldn't make sense so then we're going to help you purchase the property once the renovations are done so you do not close until the construction is 100 finished we're going to make sure you have professional photos we're going to take a professional video which is also going to include drone footage so you can see the roof we just really want to bring the house to you and we want to make sure that you're 100 confident in the quality and the value of the asset that you're about to purchase so while we provide you agency representation nothing better than a google review so this is what ron said mark sean jennifer and the rest of the team have been fantastic to work with i was a frequent customer last year purchasing four properties from mip every transactional experience was completely professional responsive and always with their best clients interest in mind they are on the ball with every aspect of turnkey properties from start to finish they even have their own property management company who are phenomenal as well and that is coming from someone who has had good and bad pms thank you thanks again mark for everything i am always happy to work with you keep up the great work so that's exactly what we're trying to be replicatable and duplicatable for you as well so now you actually own the property it's yours you have the deed uh and now you need someone to manage it and the blessing of having and working with a turnkey provider like ours that has that's fully vertically integrated from top to bottom is that we're already managing this home we've already been searching for a tenant and that allows you to get cash flow quicker which is ultimately always the goal so property management is in our opinion the most important and the hardest aspect of the entire process you have to have a great property manager because it doesn't matter if you have a beautifully renovated house a bad property manager can place a tenant that might not be the best they'll damage the home and then there goes your cash flow and there goes the assets so it's great to have this in-house with a lot of experience we have over just under two decades of experience mr reedy started this with his wife in 2002 and it has grown naturally to have 80 employees what's great is even during covid we didn't have to lay a single person off we even hired more people during the pandemic which is great to be able to employ more memphians here during this pandemic we have now grown to having over 600 investors who we appreciate very very much over half of our sales of new turnkey properties are the current investors that are happy and just adding to their portfolio so that just warms our heart and that's what we want to accomplish then everything is going to be under one roof in our 22 000 square foot campus everything from jim reedy's office to the 5 000 square foot warehouse in the back and in total we managed just under 3 000 units and growing and we want to get that number to double or triple so we're going to be here for the long run our property management company is set up on a departmentalized basis which means that each department operates independently from one another and that just means that each department is going to focus on one individual task so the leasing department they simply focus on renting properties they don't have to worry about maintenance or collections so that allows them to become masters of their craft and exceptionally good at their day-to-day roles and responsibilities our leasing department has six in-house leasing agents whose full-time responsibilities to get these properties rented for all of our owners we put folks on a 24 month lease for our single family homes with a four percent rental increase between year one and year two so that's baked into the lease as well uh assuming it is a multi-family lease well then that will be a 13-month lease this is really important because this is where a lot of people uh make mistakes is that they just don't know how to screen and approve tenants so we have an in-house screening and we do the final approval so because of our size and economy of scale we see thousands of applicants so we see the good the bad and the ugly and we know how to weed out the bad a lot of times not a lot of times but sometimes we'll have forged documents and we're able to figure out that that's actually incorrect that's actually wrong and we can catch that on the front end you can only do that by experience so our criteria is a little bit different some things about it some things we do differently is that we make sure that the tenants make three times the monthly rent as income net so that means they're true after tax take home money most of our competitors will just do three times the monthly rent as income gross so pre-tax so it's a little bit harder to qualify for our properties but we figure if we set the bar a little bit higher on the front end then our tenants will have more of a buffer every month which just increases our collections rates and decreases our overall evictions rate giving our tenants in a better chance to pay rent if something goes wrong during the month we'll also look at their expenses as opposed to just looking at their income because what if the individual's cash flow negative every single month so we'll go and set a line by line budget for all of their expenses and if it's negative well then we'll say maybe instead of renting something for fifteen hundred dollars a month let's move you down to a thousand dollars a month so you have a little bit of buffer there so by spending the extra time and going the extra mile it just increases the chance of success for your investment then finally this is new we just got an artificial intelligence system which will take all the data you know we'll look and we'll pull their credit score we'll do the income check employment verification check we'll do we'll make sure to talk to multiple references reach out to them make sure we'll check with memphis like gas and water the utility company will look at their rental history and after looking at everything and all their payment histories will give that to the computer and they'll give a score and sometimes we would have approved them but the score says yeah they have a low likelihood of paying rent and so that's how we know we either need to adjust something or just flat out decline them then some other things we do to increase uh the rentability of the homes is the more people we can get into the property to show off our renovation uh the better the likelihood that these properties rent quickly so normally a tenant has to come to the office get a key go to the rental property check it out and come back to the office to drop off the key and that's time consuming and everyone's time is valuable so we spend a little bit of extra money to pay for a third party program called tenant turner which puts which puts smart lock boxes on the front door of every single one of our houses so if an individual is looking up reading company.net and sees our available properties or if they see the for rent sign in the front yard they can just walk to the front door gain access and safely and securely view the property leave the property and best of all it forces them to leave feedback so when you ask us hey what's the rentability how's my property doing we're not just going to say oh it's good it's going well we can actually use hard data we can say oh we've had 10 showings and three applications and two people have gotten approved as opposed to just hey it's going well so the more data and the more showings we can do the better so now because of all of that our average tenant stay is over three years uh which is just great to see and it's our goal as a company to improve that that's also the statistic on one year leases we just changed at the start of 2020 to two-year leases so that's going to increase the average tenant stay as well now the next really important department is going to be our in-house collections team and the overall thought process here is well if we can do a really great job on the in-house screening and the leasing side then the collection should come in really smoothly but we also want to make sure that our collections team is proactive as opposed to reactive making sure that the tenants understand their obligations making sure that they understand and make it easy for them to pay rent so they've got multiple ways to pay rent uh and that's why we have such a high collections rate so on average we have a 97 percent collections rate uh we're this is september during the pandemic and we just had a 96 collections rate last month so doing very very well but we don't just stop there if they don't pay rent by the end of the month we're going to continue to follow up with them and we always make sure that we send them being proactive even before the rent is due that we're sending them emails we also want to make sure that they're getting text messages uh if they're not paying rent then we're going to send them actual letters in the mail we'll visit them in person and we'll put the big sticky note on their front door that's bright orange so anything we can do to collect this rent we're going to do and then by the 15th of the next month we have over a 99 collections rate so we don't just stop we want to continue uh and because of that we have a very low elixir eviction rate it's less than one percent so rent is due the first of the month it's late by the fifth of the month and we understand life happens sometimes and so that's why we give folks until the 15th of the month to start the eviction process when we do start the eviction process the we tell the tenants you can stop this process at any time if you pay all the court fees the late fees and all the rent that's owed and statistically speaking you have a better chance of that tenant coming in and paying their entire balance than following through to the courts and actually getting evicted on the house so it's one of those things that it is one of the worst case scenarios this is something that happened in that example that we had on the actual investors overall uh portfolio but even with the eviction he was able to beat our pro forma and that's why we just want to be conservative on those so this is where you're going to have a huge competitive advantage to working with reading company and mip as our in-house maintenance department so since we are the ones that perform the renovations on the home well we're of course also the ones that will be performing the maintenance and we buy all the materials in bulk so we get a discounted price and we will pass along that discount to you you know one example is that we charge 9.95 for a water heater when our competitors charge 1300 it's a 305 dollar savings with our company because we don't slap a markup on someone else's work so you're paying over market value that just doesn't make any sense because of our size and economy of scale you can get market value or below market value on your repairs because we're using in-house guys in-house crews and in-house materials and we store all of our materials in our 5 000 square foot warehouse below so our guys aren't going to home depot to purchase goods they're getting the items that they need from our warehouse and we will pass along those savings to you because it's our overall uh thought process if we can keep your maintenance costs low on the back end well that'll increase your cash flow then you'll be more likely to become a raving fan and give us referrals and come back to our on the turnkey side mip and add to your portfolio just like over 50 percent of our investors do so that's a big difference than other companies to where they're only a management company so they need to squeak squeeze out every single dollar from you from all of these fees and maintenance sides so it's just a different way of doing business and that's what's great about being vertically integrated so we take on new management all the time and the number one complaint that we hear is hey guys i bought a property a thousand miles away and i can't get a hold of my property manager i just don't know what to do so we value and we understand the concerns of an investor so that's why we make sure that you're gonna have a individual portfolio manager one individual one person one number one email to reach out to we actually have three portfolio managers in total and someone that manages the department so they're absolutely the best uh they're the best portfolio management department in all of memphis and we want to make sure that we can give you uh we are the ones to go out into the different departments to give you the update so we'll go out to the leasing department the maintenance department the collections department to give you the update so you don't have to have five different phone numbers and email addresses because we just want to make this as passive as possible so of course there's fees involved and we want to be very transparent about our fees so normally if you bring us management it's going to be 10 of gross collected rents but if you buy a newly renovated turnkey property from mip we'll give you a discount to eight percent of gross collected rents we also say collected rents because if that tenant doesn't pay rent we're not going to charge you the eight percent because we want to make sure that if you're doing better then we're doing better by making sure our goals are aligned it's a more of a mutual beneficial relationship we also have a two hundred and fifty dollar annual once a year management renewal fee because we don't charge a lease renewal fee and also once a year will for seventy five dollars will do an occupied safety inspection to make sure that the tenant is taking good care of the property there's no lease violations they haven't brought in a bunch of pets they didn't tell us about and also to check hvac filters very important then that's it for the ongoing fees now if you need any services like if the tenant leaves and you need a new tenant so if the tenant stays towards the end of year three that's going to be at the start of year four you're going to need to hire our leasing department and we charge just 50 percent of the first month's rent to lease the property on a two-year lease then that's it for the fees all right next is going to be our accounting department this is where we're going to send you a monthly deposit of your cash flow of course after expenses to your checking account of choice every single month so we recommend that you take some of that cash flow around 10 of the gross collected rents and put into one account for future vacancy reserves and maintenance reserves and you take everything that's left over and that's your net positive cash flow so the goal is to build that up with other properties so you can create a snowball effect and have more money for down payments every month we'll also send you a profit and loss statement so you can be the asset manager so you can spend five minutes a month look at the income look at the expenses look at how much money hit your checking account and say yep my investment's doing well or oh no something's going on here i'm confused what does this mean and reach out to your portfolio manager best of all the government looks as real estate investing as a business so even though the property is increasing in value it is actually depreciating in value on paper so we're going to give you an annualized schedule e so you can give that to your accountant and get the tax benefits uh that will actually affect you finally if you wake up in the middle of the night and you are scared about how's my portfolio performing well we're going to give you your own custom login to your owner's portal it's through the software property where they're massive and you're gonna have the ability to check on your portfolio at any time just to make sure that everything is running smoothly all right so that's it that's what we do for you so you don't have to this is what we've been doing for over four decades to become experts at so now this is what you do this is how if you're interested you're ready and you say i want to diversify from the stock market i want to put 20 percent down and build up a portfolio of some rental properties this is how you take action first is you pick a lender you can pay cash but because interest rates are so low right now historically they're the lowest ever it makes perfect sense to get a mortgage so first pick a lender you can view our list of preferred lenders at our website at memphisinvestmentproperties.net our preferred lenders they're true experts because this is what they focus on on a daily basis they work in the memphis market and they mainly focus on turnkey providers so we just have a great relationship with them and they have some of the lowest interest rates and fees in the entire country once you're pre-approved then you get to pick a house and you pick a house by going to our website again at memphisinvestmentproperties.net and we release our properties every single thursday with all the due diligence and marketing material that you need to make an educated decision so we're going to put on photos the line item pro forma the scope of work comparative market analysis the tax information the insurance information so you can see your all in cost and what is your true net take home after all expenses and all reserves on a monthly and annualized basis and then that's really it now we'll hold your hand through the process help you buy the house and then you get to cash flow like a king and build that passive income portfolio so you can accomplish your financial freedom so if you're not ready to just jump in and you want to do more due diligence that's fantastic we want to do as much education as possible and increase your knowledge on the front end because that just makes the relationship that much stronger so there's two main places we recommend you go that's the turnkey starter pack in our youtube channel so our turnkey starter pack if you can't sleep at night this is the pack to read it's over 30 pages long it has all the details about the memphis market our company our property management department and all the faqs you could ever ask for it has the preferred lenders testimonials pro formas how do you read the pro forma that's all in the turnkey starter pack here then best of all the way we choose to communicate with our community is through our youtube channel so we want to help increase your knowledge through this vehicle and we're posting the we're posting videos on a daily basis so please hit the subscribe button uh ring the little bell so you'll get an email notification every time we post a new video you know we really appreciate it all right so before we wrap everything up i'd like to finish this off with one other review that we just received and this is actually from an appraiser is it over the last few years i have appraised more than a few properties being sold by mip in the reedy group in my opinion they are stellar the properties are generally priced conservatively for the market renovations appear to be top notch and the staff is professional and on top of every detail needed to make the transaction go smoothly in a business where people tend to come and go frequently the fact that my primary contacts at the company from three to four years ago jennifer and judd are still my primary contacts speaks volume to me it speaks volume to me about the integrity and the character of the company and its internal culture we love that love the culture that the readies have created as you can see i'm very young so plan on being with the reedys for my entire career and if you if you're ready to cash flow if you have questions comments concerns please reach out to me the best way to get in contact with me is my personal cell phone that's my number right there the phone lives in my pocket you can text me call me anytime you can also send an email or visit our website at memphisinvestmentproperties.net so that's it hope you guys enjoyed it found some value and we look forward to helping you grow your portfolio here in town thanks guys