Hello and welcome to Passive Real Estate Investing. I’m your host, Marco Santarelli. Well, we are doing yet another market spotlight today. I think I have four in total on the agenda here for the two month period that we’re covering. And Memphis has been, I’ve said this so many times on the show, Memphis has been kind of a perennial market for us. We’ve been in the Memphis market for practically 18 years, almost nonstop. So we’ve always had opportunity, an inventory there. It’s a market that I actually really like. The numbers just pencil out and there’s always opportunity. So I thought, wait, you know, we haven’t done a, a market spotlight on Memphis for quite a while and we’re due for one. So today I brought one of our great, fantastic property providers in the Memphis, Tennessee metro area. Robert, welcome to the show.
FREE copy of The Ultimate Guide to Passive Real Estate Investing.
If you missed our last episode, be sure to listen to Investing Today! Housing Trends, The Economy, Recession, and Interest Rates
Thank you, Marco. It’s such a, an honor, a pleasure to be here. And of course I have to give it back to you. It’s a thrill to be on the show as somebody who has not only partnered with Norada for many years now, but been a follower of your thought leadership when it comes to entrepreneurialship real estate investing, asset protection. It’s a real thrill to get to sit down with you and spend some one-on-one time with your extraordinary leadership. And it’s it’s just, it’s a dream of mine come true. So thank you for having me.
Oh, geez. Stop it. Come on, <laugh>. You’re, you’re far too kind, Robert. I appreciate that. Well, let’s have some fun today. This is unscripted casual conversation about, you know, what you’re doing in the Memphis Metro about the Memphis Metro. Why should people invest there? What are the opportunities? I mean, we know there’s opportunities. So let’s kind of just start top down. I always like to start with the big picture, the market. So from a high level, why should I or anyone else be investing in the Memphis, Tennessee market?
That’s a fantastic question. And you know, what I’ll do is I’ll tell you about my journey to Memphis briefly. Cuz I’m originally from Rochester, New York in the upstate area. You know, I did my undergraduate work at Syracuse. I taught for a while in the New York State system and got my master’s degree also in New York. So when I came back here in 2000 I actually came in the educational space on a doctoral scholarship. It was amazing to me how inexpensive property prices were, how low the property taxes were, how low the cost of living was, and also the fact that the state of Tennessee has no income tax. And for me, as a young broke graduate student 23 years ago, you know, those were great factors. And I was like, wow, I can’t believe that I ended up here. And over the years, as I got into the real estate space, of course, I, I, I bought my first house back in 98.
But as I got into the real estate space in Memphis in 2003, something that I found out, which you wouldn’t know until you got into it, is that the rents here are extraordinarily high per square foot relative to the rest of the national average. And also over 50% of the population of Memphis are renters compared with about 27 and a half percent average kind of per capita major municipalities. So those things that impressed me as a young broke college student all speak to the current Memphis market today. We have seen a little bit of appreciation over the year. I think that that is a function of a strong Memphis market. I do think that has to do with some of the federal reserve’s, quantitative easing policies, which, you know, we don’t need to get into, but is driving all prices upward. But when you take that and you factor in some of the tremendous investment opportunities here, the cash flow that you can get when you leverage into conventional loans and the lenders help shoulder the burden of your financing, you can get phenomenal investment houses here under 150,000 US sometimes turnkey under a hundred thousand US with rents that frequently meet or exceed the 1% rule.
So it’s a very robust market for investors. Just from a 10,000 mile overview.
Those are all very strong points. I mean, low, relatively speaking, low property prices, high rents, high rent to values, strong rental market, a high percentage of the market renting. So, you know, big tenant pool, the available inventory no to low taxes like low, no state tax, low property taxes. I mean, you’ve just checked all the boxes. I mean, we could stop the interview right now. <Laugh>, <laugh>
Just just moved to Memphis and your, all your investment dreams will come true. Right,
<Laugh>, that’s hilarious. But no, those are all very good reasons and compelling reasons to look at Memphis as, as you know, an investment market. And it’s got stability. I mean, it’s one of those markets I refer to as a linear market. It’s very stable. Doesn’t, it doesn’t cycle up and down very strongly like some of the coastal markets, right. And the high appreciating markets that have very strong high gains, but then correct pretty aggressively and then, you know, repeat the cycle over again years down the road. You know, it kind of leads me to think what makes up the local economy, you know, in general terms, what makes up the majority of Memphis economy.
I’m, I’m glad you asked because I love talking about it. It’s actually really thrilling as a, as a Memphian to discuss it. And the first thing that we really need to talk about is the fact that federal expresses headquartered here in Memphis metropolitan area, which makes the Memphis International Airport, the second largest air cargo tonnage airport in the world. Those FedEx planes fly every night. Every airstrip is being used 24 hours a day, but especially at night. And we frequently will flip flop with Hong Kong being the number one air cargo tonnage port in the world. Wow. So the airport is a huge employer, but it also has other ancillary benefits such as attracting biotech and technology companies to Memphis companies that, for example, ship frozen eye corneas or transplant organs because the geographic central location here on the Mississippi River is such that you can be anywhere in the world by plane within 24 hours.
So you have a tremendous infrastructure of logistics, trucking, shipping. We have a Valero refinery here. I was driving to look at a, we had an appraisal on a duplex. We sold to a neuro customer, believe it or not. We did their house, turnkey appraiser met me there and I was driving to where their house was yesterday and I had to drive by the refinery and there was 80 tanker trucks backed up to receive a load of fuel and take it through the interstate system to wherever it’s going. It’s placement on the Mississippi River. There’s a lot of river traffic that goes south to New Orleans and a lot of transport that goes both north and south. You also have Nike that’s built a tremendous plant here, huge multimillion foot production facility. Ford is about to place a facility allegedly for electric trucks here, just outside of the Memphis City limits.
And it’s just a burgeoning growing city. Tremendous opportunities. And we see a lot of people that are locating here because there’s no state income tax. So you can retire in Tennessee which is beautiful. The state of Tennessee also has a benefit, which I have to share with all of your customers, which is if you own a Tennessee llc and within that LLC is real estate held for income purposes, you are not subject to what’s called a commercial franchise and excise tax, which is a commercial tax on property. So there’s a lot of very, very friendly benefits to investors. And Tennessee’s a very landlord friendly state. Also, it’s very easy to get tenants out should you run into some bumps in the road, which inevitably, if you own enough property, Marco, you know this, you may.
Yeah. Those are all big benefits. What has the Memphis market been doing? I’d say over the last, on and on how far I want to go back to, to five years in terms of price appreciation and rent growth. I mean, it’s easy enough to look this up. I could even go to housing trends.com or you know, other websites and check it out. But from your experience living there, what have you seen appreciation and rent growth look like over the last two to five years?
We, we’ve seen both. We have seen some mild appreciation. I’m happy to say that the numbers here still work. So investors that might be thinking about Memphis as an opportunity through the neuro system which is proven and very, very successful don’t feel like you’ve somehow missed an opportunity. You know, we have had a mild and gradual appreciation that still makes the numbers cash flow. Now, one thing that is really, really nice that I have seen, because I’ve been investing here for, well, 2003, is when I bought my first, I guess, multi-family and now it’s 2023. So 20 consecutive years of, of accumulation is that there’s, you probably heard of the, the rule that rents double every 14 years. And I, I had found that hard to believe after the credit crisis of 2008. I thought, well, I’m five years into this, you know, is it really gonna double?
And then there was a little bit of stagnation, but as the market kind of recapitulated and continued to grow rents started to rise. And then we had more investment, more investors coming, more quality housing, getting back on the tax roles. And the rents have doubled since I was investing, you know, within a 14 year frame. So, you know, we meet that 1% rule. We frequently exceed it in the multi-family space. We do occasionally exceed it in the single family space. And I guess I say all that to say that it’s a very, very robust economy right now. Mm-Hmm. <Affirmative>, the numbers are good. We’re not really having any issues as far as you know, when people are getting appraisals on homes they’re almost a hundred percent of the time we’re able to get the numbers or they’re finding equity positions in these homes where we deliver them, you know, slightly below market as a turnkey mm-hmm. <Affirmative> investment. You know, so it, it’s really worked out nicely for the, for the Nora investors who have chosen to come to the Memphis marketplace.
Is it fair to say, this is kind of a loaded question, but is it fair to say that you’re still very optimistic or bullish about the Memphis market for the next five plus years?
I am. I absolutely am. And I’ll tell you, Marco, and you know, we can talk about this maybe a little later in the interview, but I write about it in my bestselling book. Yeah. My wife and I made a decision years ago that we were gonna quote unquote put our money where our mouth is start buying Memphis real estate. And we started to put our investments on very aggressive mortgages, 15 year mortgages, 12 year, 10 year, some even seven year mortgages. And we serviced those notes and paid those off such that, you know, our goal’s always been to get to a hundred paid off Memphis houses. We have dabbled in investment property in other areas. We did some Gulf Coast rentals in Alabama, and I’ve got some property in the Adirondack Mountains in New York. But hands down, our accumulation continues to be in the mid-south area. And let me define the mid-south area that is Memphis Metropolitan, which is the southwest corner of the state of Tennessee, but just south of the state line is north Mississippi, which is a tremendous series of small towns where most of these families are commuting into Memphis, but they live south of the state line, which gives you a whole other marketplace in which you can invest in the mid-south. And we’ve had some clients have some outstanding returns, really some great stuff. And we’ve started to accumulate down there also.
Wow. I’d had no idea. I knew you were in various areas outside of Memphis. I didn’t know it was across the state line.
Yeah, we call it kind of the mid-south, mid-south metropolitan area. And I’ll give you an example. My son is on the autism spectrum. So we were trying to figure out where we were going to send him what school had some services. And the Memphis City schools are, are great. I’m a former tenured Memphis City school teacher there. I left my job back in 2006 to be an investor full-time, but we were able to find a public school down just south of the Mississippi line where again, you’re seeing the same low taxes, but tremendous services, you know, being offered. He’s picked up by a private bus every day taken to his school, which is a mainstream public school. And the property taxes where we live are so, they’re so inexpensive. It’s, it’s funny cuz I come from New York and in New York, whatever your mortgage payment is double that.
And that’s the minimum tax, you know, cost that you’re gonna be experiencing. So it’s, it’s been great. And we have had something that we’ve experienced with Neuro Ratta, and I have to credit your investment counselors. You know, I’m fortunate to work with three of your brilliant investment counselors, Oliver, Nate, and Melissa. They’ve all become close friends. You know, when they send customers our way that want to explore the mid-south, a phenomenon that we’ve experienced is once a customer acquires a property in our turnkey system with our in-house management, they tend to wanna acquire more. We’ve had many, many customers acquire 10, 12 units here consecutively using the neuro system. And I think that, I mean, I’d love to say that speaks to our incredible system, but I think it speaks to the fact that the Memphis and mid-south market is, it’s very attractive for clients globally, especially coastal investors that, you know, if you’re out on the West coast and you’re just experiencing, you know, your only option is negative cash flow and forced appreciation, there’s a lot of opportunities here in the mid-south that are certainly worth exploring through Norada.
Yeah, no, I mean, you’ve got a lot of opportunity there and credit to you and your company and your operations. It makes it very smooth for the investor, the, you know, our clients. And that makes you look good. It makes us look good. I mean, everything’s just working very, very well. So don’t change anything. Don’t break anything.
<Laugh>. We, we try. We’re not, we’re not perfect, you know, I tell yeah, I tell my staff, you know, in our weekly meeting, real estate is not a property business. It’s a people business. Yes. And once you understand that, you know, people have lives, they hit speed bumps in the road, you know, families, they get married, they get divorced, relatives fall ill. And you know, as long as you’re willing to work with the tenants, try to accommodate and develop relationships with the tenants and treat them fairly, it makes your life a lot easier. And that’s something that’s helped us maintain an a plus rating with the Better Business Bureau for almost 15 years now.
Yeah. No, that’s fantastic. So let’s, let’s talk about neighborhoods just a little bit. What kind of neighborhoods are you focused on? I mean, to me, neighborhoods are incredibly important. In fact, I argue that the neighborhood you choose within a metro area is more important than the metro area itself. Yes. So yeah, I’d agree with that. You do. You do. Okay. Interesting. So, yeah, I mean, neighborhoods can range from low income areas, c class neighborhoods, all the way up to higher income areas, like eight class neighborhoods. You know, these are just somewhat subjective, but, you know, it’s, it, it works as a grading system, what are you focused on in terms of neighborhoods and, and maybe why?
Yeah, that’s a great question. And let me phrase that question and not in terms of what do I think is a good investment for a neurotic client, but our rule is we don’t buy houses and present them to clients that I personally would not own and keep for long-term holds. And that, that rule has served us very well. Now, years ago when I was starting out and I was, you know, I’m beyond broke and I mean, I’m talking, just trying to do my first deal with like a $10,000 line of credit. This is many, many years ago, back in oh oh four, I got myself into trouble going into like an f area of Memphis. And it, you know, I tell the story in my book, but it all worked out in the end. Mm-Hmm. <Affirmative>, but there was a lot of tears. There was a lot of high blood pressure involved.
Right. And that lesson taught me that it is no, no amount of money is worth working in subpar areas that are dangerous. Now something that I think about daily is that my projects director is a 63 year old woman who’s a tremendous, tremendous contracting professional. And then her assistant who also works full-time for us, and my also my assistant, they’re, they’re all women. And you know, I’m not going to send any of our contractors or any of our staff men or women into an area, nor am I gonna go myself where I feel that I’m at risk. So we have found in the Memphis area we don’t wanna work in neighborhoods that are less than what I would call C plus slash B minus really kind of minimum investment, turnkey pricing of, I mean, I think the least expensive property we’ve sold as is recently not doing a complete rehab, but where a house was completely serviceable, maybe $75,000.
And really if we did that house turnkey for a costa, which we do 95% of the time, that would be in the 100 to one 10 range with a rent of about 9 95. So, you know, c plus slash B minus, one thing I have found is that Memphis is divided into, obviously there’s very zip codes mm-hmm. <Affirmative>, but those zip codes have their own little independent, what I’ll call burrows mm-hmm. <Affirmative>. And we’ve gotten to know those boroughs and I got to know those two ways. One, as an investor, but before I was an investor, when I worked for Memphis City Schools, I was a music teacher. And because my teaching instrument was the guitar, I was able to travel to schools that did not have a music room. So they would send me to three or four different schools every year and I would get to know the neighborhoods.
And there were some where it was, I felt very safe and it was great. And there were some where I did not feel safe. And, you know, after that I ended up when I left my teaching position, I became a full-time rental agent for a local investor here who was very prominent. And that my two years as a rental agent taught me volumes about what areas rent fast and are in demand, what houses sit. And, you know, that lesson became invaluable because I didn’t want to own in areas where it was stagnant. And, you know, if we were to ever put customers in those areas, you know, they would have a bad experience. And then, you know, we’re very much a people pleasing business. So we work in these tiny boroughs spread around the mid-south area. There’s a lot of Memphis, little bit of North Mississippi.
We’ve done even a few houses right across the bridge in Arkansas what they call West Memphis, Marion area. And we’ve had a tremendous experience over there, which I think all comes back to the, to the location. You know, of course the old adage, location, location, location, it really is very true. But, you know, if you’re a customer, say you were a customer and you decided that you wanted to work with us through neuro system, we encourage everybody when we bring them a house, we say, listen, take this address now. Go look at the Google Street view, look around and notice there’s no houses for sale. There’s no no for rent signs. You know, and everything’s kind of well maintained, generally speaking. Now the house that we’re offering might need a full rehab. So it’s a little rundown, but houses that have multiple board ups, you know, multiple burnouts, things like that, graffiti a lot of the, just these factors as investors that we’ve found, can you make money in this neighborhood? Sure. Can you provide quality housing to families who want it? Absolutely. Is there a, a higher risk factor that you may or may not be able to mitigate? And if you are inclined to kind of consider probability and statistics? For us, we wanna set people up for success. So we kind, kind of will avoid a lot of those areas. And that’s come from just the experience of living here for almost 25 years and being a full-time investor for almost 20 of those.
Yeah. Those are all good points. Some good tips in there too. I jokingly, half jokingly used to say that when I go to Google Streetview, one of the things I would look out for is cars sitting on top of blocks.
<Laugh>. Oh, absolutely. Cars blocked on Jacks engine blocks and chains. <Laugh>. I mean, if it looks like, you know, you can pull your car up and get your radiator changed, maybe avoid that neighborhood. And that’s nothing against all those DIY guys out there, cuz I love ’em. I can’t, I, I can barely change a tire myself, so That’s hilarious. You know, I appreciate the skillset,
<Laugh>. Yeah. Really, it sounds like you’re involved in neighborhoods that I would call middle income bread and butter communities, which are typically your B class neighborhoods.
Yeah, yeah, exactly. And I hate this, I hate this term, but I’ll use this term Sure. Because I feel like it describes it as kind of like a blue collar working class neighborhood, you know, which is exactly where I lived for, you know, until we moved onto a little bit of farmland in north Mississippi because of my son’s, we needed to move him to a school district and we happened to buy some land. But, you know, we lived in these exact areas and you know, what you’re gonna find is the families that rent there are salt of the earth, super hardworking people. They are carrying one, two jobs trying to make ends meet, you know, in this inflationary economy. Yeah. And they wanna pay their rent, you know, mow their lawn, take care of their house, and pretty much be left alone. And that’s what you want as an investor.
Yeah. A lot of new clients will come and a lot of times, and we, we should be thankful for this, they get inspired by hgtv, flip this house, flip or flop, and you know, in their mind it’s nothing but sledgehammers, angry tenants and hard hats and drama. And I’ll say, you understand, this will be very, very boring. Right? Like, we’re gonna renovate the house, we’ll send you progress pictures, the management company will rent the house, you’ll get a check once a month. And barring your tenants, losing their job or having a hardship, that’s about as exciting as it’s gonna get. Yeah. And that’s what you want, as in if you wanna scale, right? Yeah. You know, you don’t wanna have all the dramatics and the, you know, excitement.
Yeah. No, there’s, there’s a lot of truth in that. I, I actually had a conversation with two different TV producers years ago, back in the day when, you know, all the fix and flip shows were super popular. And it was, they were interested in doing something, but it was very hard to convince them that a show about, you know, buy and hold rental property and turnkey rental investing is good for TV because it’s exactly what you just said. It’s boring. It’s like you, you buy it, you rent it, you collect a check every month, you do your counting once a year and, and that’s it. I mean, there’s not much to it. Yeah. So it, it didn’t fly.
I mean, you can, you can listen, you can make great reality TV by accenting the dramatics of, you know, like my friend James Wise who I’ve worked with, who’s up in Ohio, has all kinds of YouTube channels about terrible tenants and, you know, tenants that really, I mean, I’m talking about extreme, 1% of 1% cases where they’ll trash a house and, you know, he makes these great YouTube videos about it. But that, that happens so rarely. Yeah. You know, and I, you know, I frequently have to talk to, you know, a lot of our investors about, you don’t have to, when a tenant leaves a house, for example, say, say you’re my customer and you know, you renovate a house, I renovate the house for you, and the tenants are there for let’s say two years, and they pay every month and then they leave.
Well, you know, the, the property management company might bring you a list of repairs that’s six or $7,000 and you can pay that bill and that’s fine, but there’s gonna be a lot of markup in there, you know, whereas what, what I would say is a lot of times when we work with customers, we’ll just give them the resources that we use. Like, Hey, just call this carpet guy, you don’t need new carpet. Let’s just shampoo it, clean it, re-stretch it, and that might be a $200 charge versus 2,500 and replacing carpet. Mm-Hmm. <affirmative>. So if investors are inclined to be involved with the management just a little bit, especially in the transitional periods, you can just have such excess profitability mm-hmm. <Affirmative>. And so we really work with all of our neurotic customers that way and try to preserve capital, you know, if they have transitions and so forth.
So we do a lot of mini project management on the side. You know, we do a lot of pro bono consulting and, you know, it speaks to what neuro has put together, which is a team, you know? Yeah. You can’t be a solo investor by yourself if you think about the number of people that are involved in just closing a house, your attorney, for example. Cause Tennessee’s a judicial state, your insurance guy, your appraiser, your home inspector, your project manager, the, your realtor, all of these people that are just integral to making sure that you safely take title to a property and don’t make any wrong turns. Mm-Hmm. <affirmative>, it’s truly a team sport. And when you work with a company like Norada that’s assembled these effective teams and teams within teams, it’s hard to go wrong. Yeah.
Yeah. Appreciate that. Let’s talk about the deals that people can get today. You know, with your help in, in Memphis. Describe a typical property in the neighborhoods that you operate in. You know, what does a typical renovation look like? Paint the picture.
Yeah. Yeah, that sounds, that sounds great. You know, in fact, I Melissa has, has worked with me for a long time and she and I were talking the other day about how she’s really come to be kind of fond of our system. So, you know, let’s just talk about the average house. Our average house, you know, somebody might buy a house, let’s call it for $135,000. And that is what we call our all-in price. It has a no cost overrun guarantee, meaning that that price includes the house itself plus everything on the scope of work. And we tend to over renovate the houses. So we’ll put on a new architectural roof, total tear off, replace rotten decking, replace the cornus and faia, not always, but very frequently, we replace all the windows with a vinyl replacement window, double pane low e argon glass with a lifetime breakage warranty, a 10-year central heat and air forest air system with new insulated ducting, brand new kitchens, brand new bathrooms all updated electrical with new panel AC disconnects and so forth.
So just kind of the whole system, it’s all inclusive. Now that $135,000 house will generally rent for somewhere from 1350 to 1495. 1550. That’s good. We tend to give rent ranges in $200 when we get over a thousand dollars rent. But, you know, at the 1% rule all day, we tend to be very conservative. Now, one thing that we do a lot, and we don’t guarantee it, but it happens about 85 to 90% of the time, is when the appraisal comes in, frequently the home will appraise higher than the purchase price. And that happens as a function of the renovation quality has forced the appreciation to what we call the top of the market. The appraisers feel obligated to compare that house with other listings that are premium on the market. Mm-Hmm. <affirmative>. And so many times our investors walk away with an equity position.
Sometimes it’s $10,000. We’ve had a few, this is not typical, but we have had a few walk away with equity positions of over a hundred thousand dollars. Wow. At that point, I realized I might have sold a house a little too cheap <laugh>. But with that, with that being said you know, the investor was a, a tremendous had become a tremendous friend and had bought many houses. And, you know, we’re gonna clap for every client all the way to the bank. And then of course, we guarantee everything for 60 days from when the tenant moves in accepting acts of God. And many of the heavy duty systems such as the HVAC a 10 year parts warranty, the water tank has a seven year warranty. And then, you know, if we run into issues like an electrical breaker burns out, you know, post 60 day warranty, we’ll send our license electrician back. We’re, we’re always trying to advocate for the customer relative to the contractor, if we feel that the contractor carries an obligation to do right by the customer. And we save people a lot of money in maintenance that way. But with that being said, once you do a house completely turnkey, there’s very little maintenance for several years. Yeah. That’s very true.
Yeah. I wanted everybody to hear it from you. I mean, we know you have good inventory. I wanna say never, but I’m not gonna say never. I, I’m gonna say rarely have any issues with any of the product that, you know, that comes from your team. Are you finding enough inventory today, you know, with, I mean, market conditions are constantly changing and a couple years ago was a different story than what it is today, but how are you finding inventory right now?
Well, I’m, you know, I, I’m very, very fortunate. I’m a spiritual guy and I feel like we’re a very, very blessed company. We have been able to successfully find inventory without really an interruption in our ability to acquire it specifically for customers of neuro. Now with that being said we, I think we did like 10 rehabs a year last year which was a lot. That was really a lot for my team. And I mean, you know how it is when you’re working with contractors trying to run 10 rehabs at a time. It’s almost like herding cats in a way. Yeah. You know, and then we had some supply chain disruption that started early on last year and price increases. So, you know, what we’re trying to do this year, and we’ve, we’ve talked with all the neuro providers about it, is we are continuing to kind of scale to NI’s needs.
And without trying to overdo it, you know, we find and have found that many of your customers, once they work with us, they wanna buy in multiples. So, you know, we just had one of your customers, for example, he came and he said, I wanna buy eight. And he successfully bought eight in the span of about 45 days. And he’s most of those projects are finishing and he’s refinancing out. And then he said, I wanna buy another 10 in 2023. So we work a lot kind of based on, you know, we’re like a short order cook. We, we take some orders and we know that there’s a lot of customers that are in the queue, but we have new customers that are referred to us from you. And right now we haven’t had to turn anyone away, which we’re very thankful for.
That’s great. Cool. Well let’s stay blessed. <Laugh>. It’s good.
We’re trying <laugh> we’re trying. That’s awesome. You know, we’re saying a lot of prayers and, and trying to do the right things. So,
So I, I wanna leave a little bit of time just to touch on some things from your book, but just real quick, property management, can you just highlight, I mean, property management more or less as property management there, you know, some changes and nuances between companies, but you have a, a sister company, if I, if I remember correctly, you do the property management. So it’s kind of like being in-house, quote unquote. We do anything you wanna highlight about your property management services or what’s going on related to that in, in Memphis?
Yeah, no, that’s a great, great question. And the most important thing I can tell you is the office that I’m talking to you from right now, which is our global headquarters, this wall that’s next to me, the, in the next room is the head property manager. And he rents space from us here. And the reason is because we have always felt that we wanna be close, physically in proximity with the management company, so that when we’re handing over houses, Hey, this came outta construction, it’s ready to go in your rental queue, and then it gets rented quickly, we’re able to help the tenants move in, get their new central heat, air installed, water tanks, whatever. And then if there’s any maintenance issues that come up in the 60 days, we’re able to address it without a cost to the customer. And being headquartered together has really given us an edge to stay on top of every customer’s rental, for lack of a better word.
Now it keeps the communication good. Of course, the management company’s great on its own. You know, it screens everybody. So all applicants have to go through a criminal screening background check, obviously credit check. And we don’t just look for, well, is your credit score great? Cuz not every tenant has a great credit score, but we look for certain factors like, do you have evictions? Do you have convictions, do you have judgments? And on top of that, we look for little things like our local utility provider here is a, a, it’s an all in one company called Memphis Light Gas and Water. And we have a rule that is, if you don’t pay your M L G W bill, meaning you have a balance on your credit report, we will not rent to you because if you’re not gonna pay your utility bill, you’re not gonna pay your rent.
And we found that to be true over and over again. So little kind of smaller insights that we have, as you know, we’re, we’re property owners first. The head of the property manager company is a very prolific investor himself. So we’ve been doing this a long time. I hate to say it, but I have a lot of gray hair. Some of it’s from age and a lot of it’s from real estate, but <laugh> it’s all good, you know, so it’s, it’s a system that’s designed to allow families that plan on paying their rent timely and have a means to support themselves to qualify for the housing that they wanna live in. And if there’s people that are professional tenants and wanna play games we gate keep them and get them out immediately. Yeah. Meaning out of the building, not out of the house where we put them accidentally. If that makes sense. Yeah.
Interesting. Well, before I talk about the book for a little bit, I’m actually starting to think that maybe it’s even worth just having a separate episode to talk about your book, if that’s something you want to do.
I’d love to. The book has been, I mean, I’m very thankful that it became a best seller. And you know, what I did is I kind of wrote it for a guy like me 20 years ago that wasn’t sure what to do. You know, when I started out, and you’ve probably heard the story, this is a very Robert Kiosaki ish story, but I did everything that people told me to do, I wanted to do. Right. I went to, I got good grades in high school, worked full-time, took a hundred thousand dollars in student loans, triple majored at Syracuse, went on a scholarship for my master’s degree in well, secondary education, but it was an all deaf school, one of two all deaf schools in the nation where my class were all taught in American Sign Language. So I became fluent American Sign Language. I got a doctoral scholarship at the University of Memphis, and by the time I got down here, I was teaching for the Memphis City schools, thinking 50,000 a year.
And I was like, I’m broke. I did everything. Everybody had told me Job, I’ve, I’ve got no money. And, you know, I wrote that book to send kind of back to myself in time, so to speak, about the principles of financial freedom, the stuff that we’re, you know, we’re, we’re we’re told by our parents, go get a safe, secure job, et cetera, et cetera. That’s really bad advice. And we probably can’t cover that in five minutes, but I think as an entrepreneur, you understand that, you know? Yeah. I mean, we talk, we talk about 401ks and IRAs and you know, I say to myself now, obviously in retrospect, is, is it, does it strike anyone as unusual that 90% of Americans will take their nest egg, call it ira 401k, they’ll take it outta their paycheck and have it sent to a company or a series of individuals who they’re never gonna meet?
Yeah. They’ll have zero input in and they’ll just wait for their quarterly statement and hope it goes up and it’s like, it goes up. Woohoo. It goes down, you know, and, and I, I tell everybody this story in seminars, and it illustrates the simple math, which is if you have a hundred thousand dollars in your bank account and it goes down 50% one day, how much do you have? And everybody raises their hand and they’re like, 50,000. And I’m like, okay, great. Say it goes back up 50% the next day. How much do you have? And everybody’s like, a hundred thousand. And I’m like, no, you don’t have a hundred thousand, you have 75,000 because you had such a severe capital loss, a commensurate return. Can’t make up for that. Right. And the book kind of covers a lot of subjects, but it’s very real estate focused and it’s focused on the idea.
And it’s a simple idea. We buy cars, Marco, you’ve had a car payment before, have you not? Mm-Hmm. <affirmative>. Yeah. And I’ve had many car payments and people will go to the car lot and they’ll spend and finance 60, 70, $80,000, and they will pay that car off, make the payments in five years. It happens all the time. Mm-Hmm. <Affirmative> and I started to think to myself back in 2008, why don’t we just take loans on houses like we do cars and pay them off in five years or seven years, or eight or 10 years when you’re actually receiving income. Whereas somebody who goes and buys a Jaguar gets zero income each month. And we started to, we, we, I, I coined that and trademarked it. It’s called the Short-Term Retirement Program. And we had clients all through the mid-teens that had started back in oh 8, 0 9 with me paying off houses and building retirement portfolios that were paying them 10, $15,000 a month in passive income. And it really made me realize that we just spent so much time thinking about money the wrong way, tuning into C N B C and Kramer, and Right. It’s like the treasure chest is out there. It’s right in front of your face, you just have to go find it.
Yeah. That sounds like a great tee up and teaser for another episode to talk about your book and how to break out of financial prison. What do you think?
I’d love to, I mean, just chatting with you about real estate has been such a fun and tremendous honor for me. You can tell I’m very passionate about it. I know you are. Yeah. And this has just been a tremendous way to spend my afternoon, if only for a short time. And I wanna thank you again for having me. To your listeners, I have to tell you, you know, I’ve listened to Marco’s podcast, I’ve worked with his investment counselors. They are very, very knowledgeable at what they do. They will steer you in the right direction. And you work in many, many markets. I mean, Memphis is a great market, but I’ve seen people who have bought in Memphis, and they’ve already bought in many other markets in Ohio and Texas and wherever, and those are fantastic markets too, Birmingham. And you cover all those.
So that’s a blessing to every potential customer that comes to you. And I would encourage, if you’re listening, you’re thinking about working with Norada, you’re not gonna find a better company. You’re not gonna find a company with more integrity. We’ve done Marco, I don’t know, I think we’ve done almost 200 houses in the past couple years together, and we’ve had very few bumps in the road. It’s been a real honor. And part of that process is your educational system through your investment counselors, with the clients, you set them up for success. And that just deserves a tremendous amount of applause and accolade.
Well, thank you. I don’t know what to say. I mean, it, I, I want the audience to know that I didn’t, I didn’t ask for any of this. I didn’t tee you up. I did not pay you <laugh> for any of this.
No, I have, I have not been paid. Yeah,
No, this was all unexpected. I didn’t, I didn’t know what you were gonna say all voluntary. But I appreciate all that. Thank you very much. And, and you know, Robert, like I said at the very beginning, Memphis has been, I mean, we, we just had our 19 year anniversary last month in January. Memphis was either the first or the second, probably the first market that we entered into and have been in ever since for the last 19 years. That’s why I call it a perennial market. It is the, the tortoise <laugh> in the real estate space. You know, it’s, yeah. Tried and true. And it’s always there, and it works. I’m very happy with Memphis and I’m, I’m very happy with our relationship with you and the work that we’re doing. So thank you.
We’re very blessed to be working with Nora. And I would love to talk about my book sometime. Yeah, if you wanna do that on another podcast. Yeah. For now, I just wanna tell you that it’s been years since I’ve been on the radio and this brings me back to my radio days just sitting and chatting about real estate and financial freedom. That’s cool. Stuff that I’m very passionate about. It’s really been a great use of time, and I wanna thank you again for having me.
Well, you’re welcome. And let’s do it again. So I’ll get you scheduled. So thanks again for coming on. And with that, I’m gonna wrap things up here.
So for everybody else, thanks for listening. Remember to subscribe to the show. It only takes you three whopping seconds to click that button and subscribe. So do that. So you can catch every week’s episode. Leave us a rating and review on iTunes or wherever else. We greatly appreciate it. I do read every single one of them, so thank you in advance. Get your free strategy session with our investment counselors. That is at no cost, no obligation. You have everything to gain, nothing to lose. So please take advantage of that. That is it for today. Thank you for listening, and we will see you all on our next episode.
Download your FREE copy of: The Ultimate Guide to Passive Real Estate Investing.
Get your FREE coffee mug by leaving us a Rating and Review on iTunes. Here’s how.
See our available Turnkey Cash-Flow Rental Properties.
Please give us a RATING & REVIEW (Thank you!)