Is Memphis safe for real estate investment?

[00:00:00 – 00:00:19] Brett: It's five o' Clock Somewhere in Real Estate podcast. Today we were in a conversation that just kind of took a life of its own. So today we're just going to kind of roll through that conversation for you where we discuss Memphis and the myths and lies about Memphis and what we think about Memphis and why. Memphis is a great market to invest the neighborhoods. So just stick around and listen and hopefully you'll get some good insight.
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[00:00:50 – 00:00:56] Jeff: Let me talk about Memphis for a couple of seconds. Look, let me say something about Memphis. Memphis gets a bad rap. Okay?
[00:00:56 – 00:00:57] Brett: Sure.
[00:00:57 – 00:01:12] Jeff: It gets a bad rap. You know, highest crime and you know, biggest murder capital of the world. I mean, you know, every major city is a murder capital of the world. But. But they're not shooting us, they're not shooting our tenants. All these criminals are shooting each other.
[00:01:12 – 00:01:13] Brett: Yeah.
[00:01:13 – 00:01:27] Jeff: I've been here for 58 years. I've been in every corner of the city, good, the bad and the ugly. And I've met nothing but wonderful people. These people that are living and renting these houses, they're just God fearing, good, hard working people that just want a safe roof over their families.
[00:01:27 – 00:01:27] Brett: That's it.
[00:01:27 – 00:01:36] Jeff: And if you listen to all that garbage about how Memphis is bad, don't go to Memphis, don't visit Memphis, you'll die in Memphis. Don't buy a house in Memphis.
[00:01:36 – 00:01:38] Brett: You've made it 58 years here.
[00:01:38 – 00:01:58] Jeff: Yeah. If you listen to all that garbage, as I often tell you, I tell my mother, quit watching. My mother watched the local news and she's afraid to leave the house, go to the grocery store. And I remind her that's 1/10 of 1% of the population perpetrating these crimes. And mom, they're not looking to shoot little old ladies. They're shooting each other.
[00:01:58 – 00:02:03] Nick: And I'll tell you this too, because I have some insider information. It's fixing to get better around here with crime.
[00:02:03 – 00:02:04] Brett: Oh, yeah?
[00:02:04 – 00:02:06] Jeff: Oh, yeah, Yeah. I mean, they're doing the best they can.
[00:02:06 – 00:02:10] Brett: No cash. Patel's about to. He's about to. He's about to roll through here and.
[00:02:10 – 00:02:36] Jeff: Start cleaning My point is the people that rent these houses, the people that live in Memphis, Tennessee, they're good hard working people. They make good money. They're not making six figure incomes or they're working the service jobs at FedEx, AutoZone, distribution jobs, warehouse jobs. But you know, they're putting in their overtime. They're, they're, they're making 60, $70,000 a year and they're, they don't want to buy, they want to rent.
[00:02:36 – 00:02:50] Brett: And there's 48% according to Richard's last prediction, or last, when you looked it up,
[00:02:42 - 00:02:52] Richard: I think it was 43.
[00:02:42 - 00:02:52] Brett: 43% of the people that live inside of settlements are renters. I mean the neat thing about that is, is that they, most of these people will rent their entire lives.
[00:02:50 – 00:03:02] Jeff: What I want to tell our investors, we put a renter in a house, they're in there five years, they don't want to leave because we set them up with the right people. We take care of these houses, we take care of our investors.
[00:03:03 – 00:03:39] Nick: You know, Jeff, kind of to your point of, there's a lot of great people out there and it's the few criminals out there that make it really bad for, you know, the name in Memphis. But as much maintenance and work that we do for these property management companies, we're in houses and what would typically be considered bad parts of town every single day. And I can count on one hand the number of times over the last six years that I've had an unpleasant experience. Yeah, but once these people realize you're there to help them and to help take care of their home, that's putting a roof over their family, they are as welcoming as anybody neighborhood that I've.
[00:03:39 – 00:04:01] Jeff: Ever been in before. Real estate investment. All my life I've just met nothing but great people, wonderful people. But you're right, they, they encourage us to come into these neighborhoods. You know, they're not looking to knock us over the head and take our debit card. A lot of them are just curious, what are you doing? Well, we're trying to buy all these houses and clean this neighborhood up a little bit. Oh my God, what can, you know, what can I do to help?
[00:04:01 – 00:04:13] Nick: And first thing I'll do when I pull up to a house to go look at it or work on it, and I see the neighbors out on the front porch, I'm going to go over there, introduce myself, tell them what I'm doing. And like you said, they're curious, but they're happy to see us.
[00:04:13 – 00:04:49] Jeff: I kid you not, it was one of Tom Durham's houses. When we were doing those several or maybe last year, and we had one of them listed out in Frazier. And the next door neighbor came over. She was curious, and I told her what we were doing, and I gave her my little Memphis spill and how I will fight for the citizens of this city till the day I die and all that. And she said, oh, that's great. Y' all go through neighborhoods and do that. That's really great. Lowering crime and, you know, providing housing for lower income people, raising the tax base, man, that's great. She says, what can I do to help? I says, well, I'm trying to sell this.
[00:04:49 – 00:04:51] Brett: Get your gun and shoot anybody breaking this house?
[00:04:51 – 00:05:06] Jeff: Well, no, I told her, I said, well, be honest with you, since you asked, I'm trying to sell this house. Could you get the refrigerator, washer and dryer and the rest of that clutter off of your front porch on the house next door? I'll talk to my husband about it. I came back through there about a week later. She had the damn front porch cleaned off.
[00:05:07 – 00:05:09] Nick: Hey, I'll tell you a funny story like that.
[00:05:09 – 00:05:11] Jeff: I thought she was going to get pissed off at me and tell me.
[00:05:11 – 00:05:13] Nick: To f off the last house that I sold for Emily.
[00:05:13 – 00:05:18] Jeff: She understood what I was to my point. She understood what we were doing. Yeah, she's benefiting from this.
[00:05:18 – 00:05:19] Brett: The whole neighborhood benefits.
[00:05:19 – 00:05:22] Nick: I rehabbed the house for Emily on Millington Street. You know the house well?
[00:05:22 – 00:05:23] Brett: Yep, yep.
[00:05:23 – 00:06:08] Nick: When we got it under contract. And the day the buyers did their final walk through, the neighbor had a car in the driveway. Their kids had painted all over the concrete, and there was trash all over the yard that had blown over from the neighbors. Well, they wouldn't sign and close on the house until all that was cleaned up. So I'm over there by myself at three o' clock in the afternoon, picking up trash out of the yard, scraping the concrete with a wire brush, trying to get the paint off of it. And the neighbor saw me over there doing it, walked over there and said, hey, man, I'm sorry. That's my stuff from my kids. He spent the next hour over there with me on the ground scrubbing paint off. He said, I'm sorry, I didn't know. I didn't know what was going on. I park my car there so that people think it's an occupied house.
[00:06:08 – 00:06:09] Brett: Those kids asses were burning that night.
[00:06:09 – 00:06:24] Jeff: But see, if you don't know this, if you don't live here, most people would have said, well, you're an Idiot. For doing that. You're lucky the guy didn't come over and blow your head off with a shotgun. But that's just not the case. Memphis is not like that.
[00:06:24 – 00:06:29] Nick: I sat there and conversated with the guy for an hour while we were picking up trash and cleaning the driveway.
[00:06:29 – 00:06:31] Brett: We're in bad neighborhoods every day, and we don't have those problems.
[00:06:31 – 00:06:43] Jeff: You hear it. You don't hear it in the local news as much as you do the media, but, you know, we're a systemically racist city. No, we are not. The only people that are racist are the politicians and local politicians.
[00:06:43 – 00:06:44] Nick: They have an agenda to push.
[00:06:44 – 00:06:44] Brett: They do.
[00:06:44 – 00:06:47] Jeff: The only ones that are racist are the politicians and the media.
[00:06:47 – 00:06:51] Brett: All right, so if y' all two flowers are done with your Kumbaya moment, can we move on?
[00:06:51 – 00:06:51] Nick: Yeah, I think I moved.
[00:06:51 – 00:06:53] Jeff: You know, we don't mention this enough.
[00:06:53 – 00:06:55] Brett: I know. You know, you're making a good point.
[00:06:55 – 00:07:08] Jeff: We can sit here and preach the gospel about how advantageous it is in investing Memphis, and the gal listening to us right now could pick up the newspaper in the morning. Four murders Thursday evening in Memphis.
[00:07:08 – 00:07:09] Brett: I mean, think about it.
[00:07:09 – 00:07:13] Jeff: And she's never going to come to invest in Memphis. So we need to be more proactive.
[00:07:13 – 00:07:17] Brett: Well, here's what I would tell these investors to do, because my investors.
[00:07:18 – 00:07:19] Jeff: A.
[00:07:19 – 00:08:19] Brett: Lot of them in the last couple years have come to Memphis. They plan a couple days, they come into Memphis. Jeff's ridden with me with a couple of them. We drive them around Memphis, show them the good, the bad, the ugly, talk to them about the neighborhoods, show them what this neighborhood used to be, where it's at now, where it's going. And once they put their feet on the ground in Memphis. Sounds like a song, doesn't it? Oh, there's a song.
[00:07:46 – 00:07:46] Richard: Mark Cohen.
[00:07:46 – 00:08:19] Brett: There you go. Thank you. Once they do that and they get to see Memphis, they realize it's not just. It's not like you land your plane and bullets start flying through the plane. That is really a nice city. There's a lot of great areas. Yes, there are a lot of C neighborhoods in Memphis. But most of those people are just like us. As Jeff and Nick have said, they're just like us. They just want to live a normal life, raise their kids lives, live in a decent home. And the more that we do on those streets to improve homes and build new construction, the better their lives get. And they willing to work with us on that as well. And a lot of these people actually look out for the neighborhoods now. Like Terry and Mario have put air conditioner units on their vacant new constructions. Not a one of them has disappeared.
[00:08:19 – 00:08:19] Jeff: You remember when we were.
[00:08:19 – 00:08:21] Brett: Not one has been taken.
[00:08:21 – 00:08:41] Jeff: You remember when we were doing those video tours up and Frazier and that nice lady came over and again, I'm not. I'm not going to get political on you, but she was a staunch Kamala Harris supporter. But you know what? We didn't care because she just thought it was. I mean, she didn't care.
[00:08:41 – 00:08:42] Brett: She didn't care.
[00:08:42 – 00:08:43] Jeff: She walked through the neighborhood.
[00:08:43 – 00:08:49] Brett: She found out we were the guys doing the new construction, and she was so happy to meet us. She was just doing so much for this neighborhood. Thank you.
[00:08:49 – 00:08:52] Jeff: I think she walked on the video tour with us for a few minutes.
[00:08:52 – 00:08:55] Brett: Sure. Did you? She was very happy because she'd been living there for 30 years.
[00:08:55 – 00:09:11] Jeff: She gave us her phone number and said, if there's anything I can do to help you guys improve this neighborhood. So it's not about politics, you know, it's. It's Republican, Democrat, whatever. Memphis is a good place to invest in, and it's not the freaking murder capital of the world. It's not dangerous to come here.
[00:09:11 – 00:09:16] Brett: No, but she was happy. She said what we were doing in those neighborhoods have transformed that neighborhood.
[00:09:16 – 00:09:35] Jeff: I mean, she was hugging us and praising us and just the most wonderful thing in the world, she says, I've been trying to get the politicians to do this for 30 years, and here you guys just pop in out of nowhere, and you're doing what they can't do in 30 years. So it's all good in Memphis. Except for Cordova, where Richard lives.
[00:09:35 – 00:10:41] Brett: It was a great place till he moved there. I mean, as soon as the Brits move in, everybody starts moving out.
[00:09:41 – 00:09:46] Richard: Well, I was going to ask you if a sea neighborhood, does the C refer to the people that live there? 
[00:09:46 – 00:09:56] Brett: No. It's the same grade as you got in high school. C C minus.
Richard: Oh, yeah. All A's.
[00:09:55 – 00:10:48] Brett: I mean, listen, you're not supposed to grade neighborhoods, but let's face it, there's really no way to. The easiest way to describe to somebody a neighborhood, and you look at the neighborhood and what you're looking for is condition of properties. Right. If you're going through a neighborhood and nine out of 10 homes have new roofs on them and the yards are taken care of, I'd put that as a C plus, B minus. If you go through a neighborhood and every four houses are boarded up, grass is 10ft tall, and then boom, there's a house that's in okay, shape and then another board. That's a D, right? That's how you grade. It has nothing to do with the tenants because quite frankly, a lot of these areas are heavily Hispanic now. But it's just where the neighborhood is and its current level as far as growth, as far as rehabilitation, investments that are going in there. That's how I grade that neighborhood. I'm not really grading anything other than the properties itself, the actual street itself and the construction. Thanks for trying to get me in trouble there. British prick.
[00:10:48 – 00:10:49] Jeff: I know, right?
[00:10:49 – 00:10:55] Brett: Well, you know, you need. That came from a British guy, so, you know, you can't believe a word that comes out of his mouth. Just saying!
[00:10:55 – 00:11:03] Richard: When you're investing in property, you need to know whether the neighborhood has seen us, C-nous or A-nous.
[00:11:03 – 00:11:05] Jeff: Yeah, we can't all live in an A-nous.
[00:11:05 – 00:11:06] Brett: I told you, British people have no sense of humor.
[00:11:06 – 00:11:07] Richard: And that's why he laughed.
[00:11:07 – 00:11:16] Jeff: Hey, I just upgraded to it. That's why you upgraded to a B plus neighborhood. And it took me 40 years to do that. We can't all live in an anus neighborhood like you.
[00:11:17 – 00:11:40] Brett: Well, at the end of the day, Memphis is a great place to invest. Number one, stop getting emotional about the cash flow, Stop getting emotional about all of this, and just look at an investment for its investment. If you can buy a home for 100,000 that rents for $1,200 a month, and your note and expenses is $900 a month, and you make $100 a month off of it, or let's say it's 950, you make 50 bucks a month off of it. Fantastic.
[00:11:40 – 00:11:40] Jeff: Doesn't matter.
[00:11:41 – 00:11:52] Brett: Why does it matter? Because there's a tenant paying off your bank loan, paying your taxes, paying your insurance, and a little bit of money you. You're putting aside for maintenance. So they're also paying for their own maintenance of the property.
[00:11:52 – 00:12:00] Jeff: So your stock portfolio doesn't gain 7%, doesn't gain 7% in a year, and you go draw against it and go do stuff with it. You just let it sit.
[00:12:00 – 00:12:05] Brett: Nor is anybody else putting money into your stock account that comes out of your check every month.
[00:12:05 – 00:12:15] Jeff: When you can get into a property at 12, 14% return on investment, are you going to get over the lifetime of your 401k, at best is 5 to 7%.
[00:12:16 – 00:12:43] Brett: I've said this before, and I'll say it again right now. If someone came to me and said, brett, I'm going to give you $1,000 a month and I want you and I'm going to put it into your stock account, you pick the stock and I'll put $1,000 a month in there for as long as you hold that stock, no strings attached. Would you do it? Of course. You would do that, right? Well, that's all a tenant's doing. You put a tenant in a property, they're paying money every month into your asset.
[00:12:44 – 00:12:44] Jeff: Let me end it.
[00:12:44 – 00:12:48] Brett: They're covering your expenses. You're not paying that out of your pocket. They are paying it for.
[00:12:48 – 00:13:23] Jeff: Let me end it on this note right here. When I first got into this real estate investment business, I was overthinking it. And in the famous words of Glenn Green, our founding member of this team, he told me, he says, jeff, let me simplify it for you. All you're doing is putting a tenant in the house. The risk of your investor is minimal because the tenant is paying the mortgage, paying the taxes, paying insurance, paying for all the maintenance and repairs. But you, the investor, are the one that's gaining the long term equity from this. And then he just looked at me and says, it's genius.
[00:13:24 – 00:13:25] Brett: Yeah. What is your risk?
[00:13:25 – 00:13:27] Jeff: Tenant doesn't pay anything.
[00:13:27 – 00:13:28] Brett: You have to kick them out.
[00:13:28 – 00:13:37] Jeff: You're hiring a total stranger to pay all of your expenses for you. And then you cash this thing in, 5, 10, 15, 20 years later, times 10 or 15 houses, you're a multimillionaire.
[00:13:37 – 00:13:40] Brett: Bingo. Bingo. Simplest form of investing.
[00:13:40 – 00:13:41] Jeff: Paying for everything.
[00:13:41 – 00:14:22] Brett: Yep. Simplest form of investing. Now, there are pitfalls and there are risks. Nick's got an investor that dealt with some risk that she dealt with by picking the wrong contractor. Right. We have some investors that decide they want to do their own thing with the rental side and they don't qualify people. And then all of a sudden, they're kicking people out in six months. I mean, you can't just. And if you're going to do this, you can minimize your risk by doing the right thing, by hiring the right contractor, making sure you got the right management company, making sure you're buying in the right neighborhood, that's got future growth coming, that's going the right direction, making sure you're qualifying the tenants in that property. If you do the thing, you do that when you put your money in stock account, you just don't go and say, oh, well, just pick whatever 10 stocks you want to put my money in. No, you sit down. Your research.
[00:14:22 – 00:14:34] Jeff: And the good thing, the good thing about what you just said is the three of us, we do all of that for you. We do all the legwork for you. Where your eyes and your ears, where your Boots on the ground, that's it.
[00:14:34 – 00:14:50] Nick: I'm amazed every day. I become more and more amazed dealing with other real estate agents and other investor teams that don't actually go to properties. Nope, they sit in an office and how can you properly advise somebody on a property if they don't go?
[00:14:50 – 00:14:54] Brett: You can always tell from the listening. There's some obscure long shot from the street and that's it.
[00:14:54 – 00:15:05] Nick: Well, every single day I'm like, what do you mean you've never seen the house? You've got it listed. Like, well, they pay somebody to go take pictures. They pay, you know, somebody to do this, do that, but they've never seen it.
[00:15:05 – 00:15:15] Brett: That I actually go to my list. If you look at one of my lists, it tells you in the instructions to contact me for showing. I don't use, I don't use showing time and I don't use broker bay. I don't use none of that stuff.
[00:15:15 – 00:15:59] Jeff: I looked at a house a couple of weeks ago. The realtor remarks, you know, beautiful, 110% rehab, brand new, everything central heat and air. I go out to this house, that was that one that was, was all out of code enforcement and dilapidated addition falling off. There was no air conditioning in that house. They had two big ass box fans and it was blowing around 110 degree air. There was a dog out back. I called the Humane Society. When I left, there was a dog out back on the patio in the bleeding sun, locked up in a cage. I go inside, there's a mother and three kids in there. And the kids were just screaming. It was so hot. I won't tell you who I called, but I called somebody for that too.
[00:16:00 – 00:16:03] Brett: Good. And the point is, this agent never seen the house.
[00:16:03 – 00:16:11] Jeff: I reported this and she says, oh my God, Jeff, I had no idea there's no air conditioner. I said, well, have you ever been out there? Well, no, I've never been out there. I never go out to these houses.
[00:16:11 – 00:16:13] Brett: That's the problem when you become an agent and get a license.
[00:16:14 – 00:16:39] Jeff: Now that was the only time that I didn't feel sorry for her seller. Most of the time that agent would be doing her seller a disservice because she's not. Boots on the ground, eyes and ears, they don't get out there and change light fixtures and faucets and fix shit like the three of us do. But someone that, that slum lord that she was listing for, as big of a crook as her, they all both be in jail.
[00:16:39 – 00:16:41] Brett: Yep, I know who he is.
[00:16:41 – 00:16:43] Jeff: So anyway, there's that we digress.
[00:16:44 – 00:16:46] Brett: Yep. Okay, so are you done bitching, Jeff?
[00:16:47 – 00:17:03] Jeff: I'm just saying, the next point where are your eyes and your ears? Property managers send our investors bills for fifteen hundred dollars. We go out there and look at it and solve the problem for 100 bucks and don't even charge it back. Investor. But that's why they buy 10, 20 houses a year from us.
[00:17:03 – 00:17:50] Brett: I was going to say, if you're listening to our podcast, go back and listen to all of our podcasts. And if you want to be an investor, I would encourage you to call every agent in town that you can think of. Look them up. But your last call, make it to us. Our team is designed for out of town investors. We handle everything from A to Z. We're damn good at what we do, and we've got every tool available. All right, we appreciate y' all listening to us. And sorry we rambled on about Memphis a whole lot, but we love Memphis. We like Memphis as an investment market. We love the city of Memphis, and we like for people outside the state who's never been here to understand and hear from people that actually live here and work here every day. So hopefully it was some good information. Give us a call at 901-692-7401 or go to our website at mymemphasinvestmentproperties.com for more common sense real estate tips.