Real Estate Investing | 4 Key Ingredients for Long-Term Buy & Hold

Posted by Chris Clothier on Thu, Feb 3, 2011

Today, I am going to share a little wisdom I heard from a group of the best real estate investing minds I have ever met.  When we met Fortune Builders a couple of years ago, they had already made a name for themselves as a premier property flipping company and had gained national notoriety as one of the hit companies on A&E T.V.'s "Flip This House".  We were interested in having them speak to our investors about real estate in general and they were interested in seeing our operation up close.  What resulted from that first meeting has been two of the absolute BEST companies in their respective fields teaming up to help investors around the world take advantage of this crazy real estate market.

Memphis investment propertyAfter coming to Memphis to get a first had look at Memphis Invest, Fortune Builders knew they had found the exact mix they had been looking for in a great long-term buy & hold market.  When they shared the 4 key ingredients, it didn't take long to realize that they had been looking for a while and like many other investors has been burned int he past.  The 4 key ingredients, or pillars as they like to call them, are:

1.  Great Market

2.  Great Company to Partner With

3.  Great Property Management

4.  Positive Monthly Cash Flow

I know that this seems so elementary, but believe me, when you look behind the hoopla and the marketing slogans, you begin to get a sense of why these 4 ingredients don't come together more often.We'll take a look at all 4 individually and show why Memphis simply makes sense.

Great Market

There are many excellent markets around the country to buy real estate.  Not all are Great Long-Term Buy & Hold Markets though.  What makes Memphis unique is it's history of affordable pricing, accessible work force, tradition as America's distribution hub and a laid back populace with a history of being pro rent.  Memphis is one of those big cities that you never really hear about, but some big companies have taken notice over the years including FedEx, Hilton Hotels, International Paper and Autozone who all chose Memphis for their International headquarters.  Recently, Mitsubishi and Electrolux both announced plans to build over 1 Million square feet of new manufacturing plants in Memphis bringing in over 3,000 permanent new jobs.  All of this combined is what makes Memphis very unique among other mid-west cities.

Great Company

We are very proud of what we have been able to build through the hiring of fantastic people at MemphisInvest.com.  We made a conscious decision that we were building a company that would last for generations and seek to build long-term relationships with our clients.  Today we have over 260 investors who have chosen to build their portfolios with our company and that stat speaks volumes about the type of company we are.

Great Property Management

MemphisInvest.com has tried to set ourselves apart from every one else in the industry by building a unique property management company from the ground up.  What makes it unique is the focus that is placed on investor and tenet satisfaction.  Simple implementations of highly effective communication has led to a decrease in maintenance calls, late rents and tenet complaints as well as a decrease in questions from clients.  BY making sure that the lines of communication were open and that we truly valued the contact, Premier Property Management has really vaulted over all other competition in Memphis property management.

Positive Monthly Cash Flow

I think the title speaks for itself!  Cash Flow is king in today's investment real estate market and anyone who is looking to invest in Memphis real estate has found one of the best markets in the country.  Like anywhere else, how cash flow is calculated is very important.  The only number I am interested in when reviewing a property is the number of dollars left over after servicing debt, management, taxes and insurance. And when looking at cash flow, I like to see a minimum 20% of the monthly collected rent left after all costs.

When Fortune Builders visited Memphis in 2009, this is the situation they found on the ground.  A great market in Memphis and a definite industry leader in MemphisInvest.com.  They also saw a commitment to Property Management from the standpoint of offering outstanding customer service.  Finally, the whole market came together to make positive cash flow with great properties a reality and thus the 4 ingredients had come together to make a damn good recipe!

Topics: invest in Memphis real estate, Memphis investment properties, Memphis cash flow, Discount investment property, Fortune Builders