FAQ
Are the properties insured?
Prior to closing, a homeowner’s insurance policy must be obtained by the buyer. Meridian Pacific has extensive experience with insurance companies in the Memphis area. Meridian will provide you with contact numbers for our preferred vendors in order to receive quotes. Alternately, you can purchase insurance via your own preferred provider.
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What about Property Management?
Meridian Pacific Properties has worked with a number of local property managers in Memphis. We recommend a select group of property management companies in the area. These property managers manage our personal portfolio as well all of our current Meridian Pacific Property clients.
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What happens when the renters move out?
Vacancy is part of the investment property process. Meridian Pacific Properties models the vacancy at 5% per year as an average based on our property managers’ history of performance.
Some tenants leave after the first year, some stay several years. Once a tenant leaves, the property management company will assess the state of the property, ensure the proper cleaning and maintenance has been done, re-evaluate the market rent, advertise the home, and put the next tenant(s) in place.
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When can I sell the property? Do I have to sell it back to Meridian?
Meridian has modeled the investment over a five-year hold period. As the free and clear owner, you may sell as your investment portfolio dictates. At that point, Meridian is happy to make recommendation on realtors, market conditions, contractors, or answer any questions you may have.
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What is IRR?
Defined, Internal Rate of Return (IRR) is a measure of the total return on investment that considers the timing and amount of annual cash flows, pay-down of the mortgage and net capital gains over the life of the investment. Expressed as a percentage, IRR is stated as an average per-year rate of return.
For example, a Meridian property could have a 20% 5 year IRR, meaning that the investment averaged a return of 20%, every year for 5 years.
IRR is an important calculation used in real estate to compare investments to each other. When investing in real estate, we are typically dealing with properties that provide cash flow streams. The IRR takes into account the benefit and timing of these cash flows and provides us with a measure of our investments performance. This is the best single metric for comparing the total return on an investment, real estate or otherwise.
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How many homes have you sold? How long have you been in business?
At of the close of 2011, Meridian has successfully completed over 300 transactions since our inception in 2006. Meridian’s sales rate for 2011 averaged 6 unit sales per month, resulting in an annual sales volume of approximately 70+ sales.
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Who are your typical investors?
A typical Meridian client fits either one of two profiles depending on their financial and career positions.
One client is a beginner investor looking to start a real estate portfolio with the purchase of their first property. This client has realized the value in real estate investing but has found that their local market does not provide the needed returns and stability and they also do not yet have the expertise to invest alone.
The other client is an experienced professional looking for a passive investment. These clients have an average net worth of $500K - $1 million+. They purchase on average 3-4 homes from Meridian and are looking to supplement their investment portfolio with a high returning, stable assets.
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Do I have to pay a commission?
No, there is not a commission involved in a sale of a Meridian property. The homes sold by Meridian are “For Sale by Owner” and as such, there is no real estate agent that is representing either party, and, thus no commissions.
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The simple answer - because the numbers work. When we studied over 366 metropolitan statistical areas for the best investment property criteria, Memphis came out as a top performer in a variety of key areas.