Jeremy Veldman – Memphis Investors Group

Mike: Welcome to the FlipNerd.com podcast. This is your host, Mike Hambright, and on this show I will introduce you to VIP’s in the real estate investing industry as well as other interesting entrepreneurs whose stories and experiences can help you take your business to the next level. We have three new shows each week which are available in the iTunes store or by visiting FlipNerd.com. So, without further ado, let’s get started.
Hey, it’s Mike Hambright back for another FlipNerd VIP interview show. Today I have with me Jeremy Veldman who’s the president of the Memphis Investors Group which is, obviously, a REIA club in the Memphis, Tennessee area. Jeremy is an active investor and involved in a whole lot of other things.
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Hey, Jeremy, welcome to the show.
Jeremy: Thanks, Mike. It’s a pleasure being here.
Mike: Good, good. How’s the weather? I’m in Dallas right now, and most years it doesn’t even snow here, but it’s been snowing all day. It’s unusual. What’s it like in Memphis?
Jeremy: It’s a pretty rough day. It’s cloudy. It’s cold. We’re in the twenties today. We’ve actually had some flurries here. We’ve been blessed not to have a lot of precipitation, but it’s been a pretty rough winter for us just like it has been for a lot of people.
Mike: Yeah, yeah, great. Well, tell us a little bit about your background and your experience. I know, kind of like myself, you were a corporate guy that found their way into real estate investing and wanted to take advantage of kind of some financial freedoms, or some lifestyle freedoms, or things like that. But, tell us a little bit about your background and how you got into real estate.
Jeremy: Yeah, absolutely. I actually started about seven years ago. I worked a full time corporate job in Silicon Valley designing computer chips. I did everything that you’re supposed to do – went to school, got good grades, studied, earned multiple Master’s degrees in electronics engineering and business administration, got a great paying job, and experienced the highs and lows of the corporate lifestyle.
One day I basically wanted to take control of my financial future and pursue something entrepreneurial. I stumbled across a real estate investment education program, signed up for it – it was through Robert Allen. That ultimately led me to Memphis Investors Group. One of the things they teach you in these coaching programs is you join your local REIA.
Mike: Right.
Jeremy: It’s kind of funny. Because at that time I was living in Starkville, Mississippi, two and a half hours south. Once a month I would commute one way on a Thursday night, attend MIG, network with investors, work on deals, then drive back and get back at 2:00 in the morning and go to work the next day. It was a commitment. I did that for about two years and finally made the jump to being a full time investor five years ago.
Mike: Okay, okay. You’re still actively investing now?
Jeremy: Absolutely.
Mike: Yeah.
Jeremy: I’m based in Memphis, Tennessee. I’m affiliated with Memphis Turnkey Properties. I’m one of the principal partners of the company. We are a full service real estate investment and property management company. Basically, we handle everything from buying the properties, fixing them up, renting them out, and then managing them on the back end so that we provide a complete turnkey service to anyone in the world who wants to buy properties in Memphis.
Mike: Yeah, yeah, great. Tell us a little bit about the investor group. You originally started by just attending, then somewhere along the line you became an active investor, and now you’re the president of the group. Is that right?
Jeremy: That’s correct.
Mike: Yeah.
Jeremy: I’m in my first year as president of the Memphis Investors Group. It’s a great challenge but also a tremendous opportunity.
Mike: Yeah.
Jeremy: Basically, it’s a nonprofit organization that was founded in 2001. So, we’re about 13 years old. We consist of the best and brightest of real estate investors and really vendors within the Memphis market affiliated with real estate.
Mike: Okay.
Jeremy: We’re about 250 members strong right now. Any meeting will have anywhere from 75 to 100 people attending…
Mike: That’s great.
Jeremy: …and investors across the board – wholesalers, landlords, rehabbers, even guys in commercial real estate, and of course all the vendors you’d want from attorneys to title companies to accountants. Anything you need, basically, to staff your business.
Mike: Yeah. I want to pick your brain on what makes a good REIA club. I know REIA clubs are… The reason that I have folks like you on the show and will continue to is I know that REIA real estate investing clubs are really the backbone of the investor community across the country.
In all honesty, I started the same way as you. I was a corporate guy, and started attending my local REIA, and meeting vendors, and learning more that way. I think that that’s obviously a very common story.
I know that a lot of REIA clubs are, in many ways, a thankless journey, right. They don’t tend to make a lot of money. There are folks that are sometimes, with newer clubs especially, footing the bill to try to pull people together to try to string together events. It’s kind of a constant battle to get butts in seats and get good content and things like that.
Most folks that are running REIA clubs are not making money on the REIA club. They’re doing it for the love of it or to help fuel part of their business. Maybe they’re an attorney or other things like that. Talk a little bit about what you think makes a good real estate investing club.
Jeremy: Yeah. First of all, it all comes down to the people. I mean a REIA club, just to simplify it down to its basic component, is a group of individuals that get together once a month and talk about their passion…
Mike: Right.
Jeremy: …which in this case is investing and real estate investing. It’s the quality of the people in the group that ultimately make or break the REIA group. We are privileged to have some really bright individuals as part of the Memphis Investors Group.
I mean we have guys like Richard Scarborough who’ve been in the business for 40 years and have a very strategic approach to building a landlording business. Steve Parker, one of the best deal makers in the country. Sarah Shepard, a very bright young lady. Holly Swogger, a former president who’s also very intelligent. Kevin Perk, who’s a blogger on smarterlandlording.com, very active on bigger pockets. He owns several properties.
I could just go down the list, but…
Mike: Sure, sure.
Jeremy: The bottom line, what I’m really trying to say is we’ve got some gray beards, no offense to anyone.
Mike: Right.
Jeremy: But, we’ve got some veteran real estate investors who have a lot of knowledge, and they’re willing to share that knowledge with the investment community. That really helps people grow, especially people who are new to the business and looking to break in.
Mike: Yeah.
Jeremy: So, the synergy that you create by having all these individuals in a room at any one given period of time is just very powerful.
Mike: Yeah, yeah. Can you talk a little bit about what’s the right balance with… I know content is a big part of the challenge with bringing good speakers in, having good content to keep bringing people back. It sounds like you have an unusual percentage of your membership that comes to meetings, which is fantastic. That says a lot about the quality of your content and the people involved.
Can you talk a little bit about… You know, I think a lot of clubs have a tendency to… There’s a real fine line between being overly salesy and having people come in that are selling product or services and alienating your kind of membership. What do you think is the right balance? Or, just talk a little bit about that issue.
Jeremy: Yeah, that’s a great question. We’re always struggling to find that balance. We’re a nonprofit organization. We’re focused primarily on education and empowerment. It’s not a sell-a-thon. We’re not bringing in people just to sell products and courses and trying to generate revenue.
Mike: Right.
Jeremy: The revenue is ultimately generated through our individual real estate investing businesses.
Mike: Right.
Jeremy: We’re not getting paid a dime. I’m not getting paid any money to be president of the group. In fact, I’m spending money to be a member and then also to develop content…
Mike: Right.
Jeremy: …to expose our group, which I enjoy doing because it’s an outlet for my passion and my creative energy. But, you still have to generate enough revenue in a REIA group to keep it going. So, there’s a balance there.
We bring in two or three national speakers a year who are out on the circuit speaking, selling courses, and really providing good content for investors…
Mike: Right.
Jeremy: …both locally in their markets and throughout the country. I think what really distinguishes MIG from other REIA’s, perhaps, and other groups throughout the country is we put a lot of care and a lot of thought into screening the speakers, especially the national speakers, before they come in.
We have one member of our group in particular who’s been an investor for a long time. He’ll get on the phone and really drill these people and ask them some important questions and even, perhaps, some difficult questions to make sure that they’re legitimate, that they’re in the business, that they’re actively doing deals, and that the content they provide is relevant and beneficial to the membership.
I think we really try to put energy and thought into who we bring in.
Mike: Yeah.
Jeremy: That handles national speakers. As far as local speakers, one of my mandates as president of the group is I want to bring more of the local expertise out. I want more local speakers to step up and either do seminars or workshops in some capacity to highlight what we’ve got going on in Memphis right now, that we have some really intelligent people who’ve been in the business a long time who are actively in this business and can provide a lot of knowledge not only for local investors in Memphis but for anyone throughout the county who wants to get involved.
Mike: Right, right. And Memphis has been kind of a hotbed for real estate investing activity for a long time. What’s the population of Memphis greater area?
Jeremy: Yeah, metro’s about 1.6 million.
Mike: Okay.
Jeremy: It’s a city that’s spread out. I mean…
Mike: Yeah.
Jeremy: …look at it on a map. It’s in the lower southwest corner of Tennessee. Can’t really grow west because of the Mississippi river, and then south you’ve got the state of Mississippi. But, it’s pretty widespread.
What makes Memphis unique is its location throughout the country. It’s the distribution hub of the United States. We’ve got FedEx here.
Mike: Yeah.
Jeremy: We’ve got what we call the four R’s, the four major modes of transportation – railroads, river, road, and runway. A lot of cargo comes in and out of Memphis. In fact, Memphis has been classified as America’s aerotropolis, which is basically an economic hub linked to the airport and a lot of distribution warehousing and economic development sectors.
Mike: Wow.
Jeremy: Memphis is not going anywhere. That makes it real attractive as far as a stable linear market to invest in that doesn’t see the rapid upswings in good times but also doesn’t see the major drops in down times. It’s just kind of slow, steady investment that just continues to cash flow.
Mike: Right, right. Talk a little bit about your role. I know you’re involved in a few other things, like with Memphis Turnkey Properties. Maybe talk a little bit about what you do there and kind of how you guys operate.
Jeremy: Yeah. Memphis Turnkey Properties is, as the name applies, a turnkey provider. Basically, our goal is to provide a complete passive investment solution to investors throughout the country and throughout the world who want to buy properties in Memphis and don’t want to hassle with the property management issues, chasing the tenants for rent, dealing with contractors.
Mike: Right.
Jeremy: What makes Memphis Turnkey unique is our investment philosophy. We take a strategic approach, and we want to focus on better properties in better areas because they make better investments. We invest in areas like East Memphis, Bartlett, Cordova, Lakeland, areas where people want to live. Homes, they’re a little bit more expensive there, but you can leverage and get conventional financing. You’re going to attract a better quality of tenant.
We do a fantastic job on the renovations and just really provide what we consider to be a better long term investment experience for investors.
Mike: Okay.
Jeremy: My role with the company is primarily marketing and business development. I was brought onboard. Alex and I formed this a few years ago. Alex Craig is my business partner. He’s really the original founder along with his wife Benolyn Craig. They’re an exceptional property management husband wife team. I can’t recommend them more highly. That’s why I joined forces with them.
Really, my goal is to be kind of the John the Baptist – go out and spread the good news about why Memphis Turnkey is such a great company.
Mike: Okay. You’re finding that you only hear comparisons like that in the Bible Belt.
Jeremy: Yeah, I had to make that reference.
Mike: Your job is really to find investors that want to purchase turnkey properties. Essentially, you guys locate, renovate, sell houses, and then put tenants in them and manage them on an ongoing basis.
Jeremy: Exactly.
Mike: Yeah.
Jeremy: It’s a long term investment solution.
Mike: Yeah.
Jeremy: Really, the backbone of this entire process is the property management.
Mike: Yeah, yeah.
Jeremy: We have in-house property management which means we’re not outsourcing it to another company and being a transaction oriented one off company that just looks to sell a property, make a buck, and move on.
Mike: Right.
Jeremy: We want to set our clients up to win, because if they have a good experience and they win they’re going to come back to us and bring referrals – and that’s just how you grow a business.
Mike: Sure, sure. You’re an active investor yourself?
Jeremy: I am. I own several properties throughout the Memphis area. I self manage them. I go through the process every month of interacting with tenants…
Mike: Yeah.
Jeremy: …chasing rent, fielding phone calls when things break, and hiring contractors, and just doing all aspects of the investment process.
There are two sides to this business. You hear a lot of the nightmare stories of getting calls at 2:00 in the morning when a toilet’s clogged. I certainly have had experiences like that.
Mike: Yeah.
Jeremy: But, there’s the other side, too, when your tenants are paying, the rent’s coming in, they’re caring for the property, and you’ve got good rapport and good relationships with great tenants. It can be a wonderful experience.
Mike: Yeah.
Jeremy: Knock on wood, that’s kind of where I am right now.
Mike: That’s great, that’s great. Yeah, that’s one of the reasons why it’s important to have a portfolio.
Jeremy: Yeah.
Mike: Because if you just have one it could be either really good or really bad.
Jeremy: That’s exactly right. You’ve got to keep building.
Mike: Are you primarily a buy and hold guy, are you keeping everything? Or, do you rehab and renovate and resell houses, or wholesale, anything else?
Jeremy: I do a mix. I’m primarily a buy and hold guy in the fact that when I identify a property for myself I like to keep it. But, you could really classify me primarily as a flipper. I know that kind of contradicts what I just said, but through the turnkey business we’re constantly turning properties over…
Mike: Right.
Jeremy: …buying and fixing and selling. That’s how I generate my revenue. I do something a little unique from a lot of investors. I flip real estate through the turnkey business to build cash, and then I invest that cash in RTO contracts. This is kind of a parallel business to Memphis Turnkey.
I met a guy at MIG a couple of years ago. I didn’t know him from Adam. He turned out to be my best friend. He and I just had a lot in common both personally and professionally.
He has a unique business selling portable sheds among other things and selling them to customers on rent to own, or RTO. Those contracts become available to investors like myself, so I pick those up and hold onto them. That’s really where I’m putting the bulk of my energy right now to buying and holding, really building up my RTO portfolio.
Mike: Did you say something about… I heard you say something about sheds. These are not single family homes, they’re other properties, other investments?
Jeremy: Right. These are not single family homes. It’s not real estate. It’s like a portable shed, a barn, a cabin, a gazebo, something that you would put in your backyard to store things.
Some of these buildings are really nice. You’ve got people who convert them into mother in law suites. I’m working on a deal right now with a horse barn. A lady’s got four or five horses that she’s looking to build a stall for on her property. These are some really high end, quality portable buildings.
Mike: Okay.
Jeremy: They cost anywhere from a few thousand dollars to as much as $20,000. What happens is a customer puts a small down payment on them. The balance is financed. We call it financing. It’s really rent to own. Then, that contract can be available to an investor. That’s a powerful way to really explode your returns.
Mike: Okay. That’s interesting. What never ceases to amaze me is the kind of innovation in the real estate investing space, just creative ways to be an investor.
Jeremy: Yeah.
Mike: Tell me a little bit about… I’m interested in this business. Tell me a little bit about… I guess you get around a lot of issues with the fact that it’s not somebody’s homestead, the fact that they’re not living in there. You probably get around a whole lot of issues that kind of plague investors in single family homes, for example.
Jeremy: Right. Yeah, this is another what I call illustration of why a group like MIG, Memphis Investors Group, is so powerful. Because you never know who you’re going to meet there. I mean the next hand you shake at a networking event could belong to the person that makes you a multimillionaire…
Mike: Yeah.
Jeremy: …or gives you a creative strategy that could transform your life financially. Yeah, portable shed’s not real estate, so don’t think houses. Think small buildings that are set up on people’s properties, and think yeah financing but it’s really monthly rent to own.
The pure rent to own, the philosophy behind it is as long as you’re paying monthly you keep the building. When you stop paying you can return the building and then you’re basically out. Then, the building turns around and is cleaned up and sold again.
Most people pay. Most people want to get it paid off and acquire ownership.
You can think of it as being parallel to the self storage niche where as opposed to renting space and not having any ownership when it’s done, you are renting a building for a period of time and then acquiring ownership after three to five years, let’s say. You’re having to pay a premium, which is like the monthly rental fee for that building, but at least the customer is moving toward ownership. And, the investor gets a high premium on their dollars by being essentially the bank to these people by allowing them to rent to own it.
Mike: Okay. The investor, the person that’s essentially buying the note, do they… Who services the note?
Jeremy: It’s not a note.
Mike: [Inaudible 0:20:34] Jeremy: It’s a contract. Yeah, in some cases a promissory note is written up. But, really it’s purely a rent to own…
Mike: [Inaudible 0:20:44] Jeremy: …contract which basically states as long as you make this monthly payment you can keep the building on your premises. If you stop making the rental payment then you need to return the building to the customer. So, it’s almost like it’s on an ongoing monthly basis.
Mike: Yeah.
Jeremy: But, the short answer to your question is it would be a contract drawn up between the investor, myself, and the owner.
Mike: I see. And I guess the buildings are built in a way to where you’re able to remove them if you need to.
Jeremy: Yes.
Mike: Yeah.
Jeremy: You need the company that you’re working with who’s providing the RTO contracts to provide that capability if and when there’s a repossession. The key to making this rent to own business work effectively is having a good relationship with the portable shed manufacturer and the company that’s selling these buildings.
Mike: Right, right. Okay. Back to Memphis Investors Group. Tell us a little bit about how you provide a good experience and attract and not alienate vendors in your club. I know some clubs have exclusives on certain categories. They’re not going to bring in four property management companies, for example.
Talk a little bit about that balance there to have representation, maybe not exclusives – or maybe you do have exclusives, and how you kind of expect them to add value to the membership.
Jeremy: Absolutely. We don’t have exclusives. We’re pretty loose on who can join. The caveat to that is we do a background check at every board meeting and we ask the questions about who is considering being a vendor and what their background is, what their qualifications are, and are they legitimate, are there any formal complaints or anything filed that could…
Mike: Right.
Jeremy: …potentially taint the club, anything controversial or anything illegal going on.
We have a sponsorship program that we provide to vendors. Basically, it’s at two levels. We have a gold sponsorship program, and then we have a silver sponsorship program. This is also a major source of revenue for our club.
Gold sponsors, it’s not that much. It’s a few hundred dollars a year. You get something like four memberships to the group, and you have the opportunity at every meeting to give a 60 second sales pitch on your business. Then, there’s also a running presentation where you basically have kind of a billboard at the beginning of each meeting which promotes your business.
Mike: Okay.
Jeremy: It’s a great benefit to a sponsor or a vendor, and then also to the club. That’s the major way that we attract vendors.
But, really it’s a work in progress, Mike. We’re constantly looking for ways that MIG can add value to vendors like attorneys, property managers, accountants, so that they see the benefit of being a part of this group and it ultimately affects their business and their bottom line.
Mike: Right, right. Now, with your club, you have a monthly general meeting. Do you have some other meetings throughout the month, or is it primarily one general meeting a month?
Jeremy: We have a few things going on. We’ve got a monthly meeting that is held the second Thursday of every month. The meeting starts at 6:00 with early bird sessions for an hour. Then, the main meeting starts at 7:00. We meet over at the Hilton on I-240 and Ridgeway. I know that means nothing to anybody throughout the country. But, if you’re driving 240…
Mike: Stop in, stop in.
Jeremy: …around Memphis you’ll see a big, tall building, round building. That’s the only one that’s kind of in that vicinity. Our address is 939 Ridge Lake Boulevard, I believe.
That’s our main meeting. It’s on Thursday nights. Then, we do Saturday workshops throughout the year. Typically, the Saturday after the main Thursday night meeting we’ll do a workshop. We’ll either have a featured speaker or a local expert…
Mike: Okay.
Jeremy: …come in and talk about the topic that’s relevant to that month’s meeting. Then, in addition to that, we have another experienced investors group meeting that meets on Tuesday nights once a month.
That’s actually being renamed to MIG’s Meet and Eat. We meet at a local restaurant here from 6:00 p.m. to 9:00 p.m. We have a local expert come in, present, and have dinner. It’s informal, but it’s also a great networking opportunity and a great opportunity to learn. Sarah Shepard, my good friend, spearheads that effort. She’s doing a tremendous job.
Then, the last thing we’ve got going on is we’ve got a getting started right program. It’s basically a four month path to success program that’s running. It’s going to start up here again next month in March. We take beginning investors, people who want to get started and get their sea legs in real estate investing, put them through a very specific program for four weeks, and basically kick them off with a goal of getting them going on their first deal…
Mike: Yeah.
Jeremy: …and recycling that throughout the year. My good friend Kirk Davis is spearheading that effort.
Mike: Okay. So, it’s like a short term mentoring program.
Jeremy: Basically, yeah.
Mike: Okay, awesome, awesome. Well, that sounds like a great opportunity for folks looking to get started. I mean in my experience a lot of folks… This is not a difficult business. It’s not rocket science. But, it takes some hand holding and building up some confidence, especially early on, to kind of get started.
Jeremy: Yeah.
Mike: Awesome.
Jeremy: It’s kind of an interesting comment. It’s not difficult. It’s not rocket science. But, at the same time there’s a lot of details.
Mike: Oh yeah.
Jeremy: And, when you’re beginning it’s easy to get overwhelmed by those details and kind of, you know, find yourself…
Mike: Not pulling the trigger.
Jeremy: Yeah, exactly.
Mike: Yeah, no doubt about it.
Jeremy: The goal is to eliminate confusion so people have a clear path to take action.
Mike: Yeah, yeah. Awesome. Well, hey man, I really appreciate you joining us today.
Jeremy: Mike, it was a pleasure. It’s great talking to other likeminded investors.
Mike: Yeah, yeah. So, everybody, this is Jeremy Veldman, who’s the president of Memphis Investors Group and also involved with Memphis Turnkey Properties, and RTO Goldmine, a couple of different programs he has available. We’re going to add links to those below the video. So, Jeremy, send them over my way. I’ll make sure we get them on the page.
Anybody that’s in the Memphis area or travelling through on 240, stop by. It sounds like you’ve got a great club. I know that, again, it’s a thankless business in a lot of ways, but it’s definitely a great thing you’re doing there. So, appreciate that.
Jeremy: Thank you very much, Mike. It was a pleasure.
Mike: Awesome. I’m sure I’ll be talking to you again soon.
Jeremy: I hope so.
Mike: Thanks for joining. Bye, bye.
Jeremy: All right, bye, bye.
Mike: Thanks for joining us on today’s FlipNerd.com podcast. To listen to more of our shows and to hear from incredible guests, please access all of our podcasts in the iTunes store. You can also watch the video versions of our shows by visiting us at FlipNerd…