Allen Bailey

Ok it happened again. Being a property manager along with REO buyer's agents we seem to get a call once a week from an out of state investor that just bought a foreclosure in Memphis. The problem is that they want me to go and take a look at what they bought. Just tonight I got this e-mail:

I bought a foreclosed house in Memphis. I like you to look at the house, send me rehab needed and estimate for rehab, estimate rent I can get in the area and then rent and manage my house in Memphis.

Without fail these types of calls and e-mails require me to be the bearer of bad news as I ask have you already closed on this house yet? Unfortunately they always have closed and the great deal they thought is not true. Just because you can buy a house for $3000.00 doesn't make it a good deal as it is possible to have negative value on a house.

How can you have negative value? It is simple. The house can be condemned and you are on the hook for the code violations plus the demolition. Several of the houses we have been asked to look at have homeless people living in them or have been stripped of everything. (including the proverbial kitchen sink)

Never buy a house without looking at it or having a buyer's agent represent you. Notice I said it is ok to buy sight unseen, but that is only if you have a good buyer's agent. I have sold multiple properties to people who have not seen the property, but they have seen the pictures we took of every problem. They have an estimate from a contractor and our approval of the property.

As buyer's agents for REO properties we look at a lot of properties that our clients never know about. There are a lot of gems in the Memphis area, but there is more junk than gems. We have been selling investors from across the country Memphis homes that are bought from $12,000 to $35,000 and need $2000 to $9000 in repairs and eventually will rent from $600 to $950 a month. A lot of our investors are cash flowing $350 a month on these rentals.

The key is that we do a ton of research on the front end for our buyers. They receive close to 50 pictures of the property and neighborhood. When we take pictures we focus on any problems. So most of the pictures show the damage in the property as opposed to hiding the problems. We send detailed comps and use true comps as opposed to cherry picking comps that are within a mile but in a total different market. Memphis is a street by street market as you can have $10,000 houses a few blocks from multi-million dollar houses. Most neighborhoods aren't as extreme, but anyone can make a house appear worth twice what it should in almost any area of Memphis.

The final and most important difference in working with us is that we manage close to 90% of the properties we sell after the sale. This means we are essentially selling the properties to ourselves. The last thing we want to do is give ourselves a headache as managing a bad property is never worth the tiny commission we would get. We become your partners in the property and we are the ones that have to deal with vandalism and problem streets.

So if you get offered a great steal in Memphis, please give me a call so I can at least give you a 5 minute discussion to see if it worth perusing. I have never had anyone call me with a Bulk REO deal in Memphis that I thought was a good deal. If it is a good house, then it is going to be listed and sold on the MLS. There are wonderful deals here right now that are actually cheaper than the junk people have bought without representation.

One of the best ways to get started in the Memphis REO market is to invest in a syndication group. You can get started for $5000 and learn the process before you jump into a whole house.

Stuck with a house you don't need or want? In some parts of Memphis, many homeowners are stuck in a predicament. Their home appraises for less than what they owe on their mortgage. Even worse, they may have just been transferred out of town or need to move up to a larger home due to a family change.

If you find yourself in this type of situation, then I encourage you to consider renting your home as an alternative to selling in a down market. In most areas of Memphis, you can cover your mortgage payments, insurance and taxes and maybe $100-$300 extra income. This is especially true in Cordova, Bartlett, Desoto County and East Memphis.

We charge homeowners a flat fee of $80.00 a month to manage their property and half the first month's rent to find and screen a tenant. Sometimes we may have to show the house 20 times to prospective tenants and the flat fee is a bargain in these situations. Screening tenants is important and you are better with no tenant as opposed to a bad tenant.

When you decide renting your house is the best option in your situation, then just give us a call and we can do a market valuation and determine a suitable monthly amount and inspect your property. Once the management agreement is signed, then we take over for you and you have no midnight repair calls as we handle them. We can do direct deposit of your rent proceeds. We also will counsel you on the best insurance and warranty options.

The Memphis Team of Re/Max at Mallard Creek is an experienced team of Realtors and Property Managers that manages homes in Memphis and DeSoto County Mississippi.