California-based Realtor & Investor on Investment Real Estate & Property Management in Memphis, TN

Todd Riccio, Realtor and longtime Investor from California, discusses how he became interested in the Memphis real estate market and offers his experiences over the years of real estate investing and management of rental properties here in Memphis, TN.

Find out more about this real estate investing podcast at:

https://epmrealestate.com/podcast/california-based-realtor--investor-on-investment-real-estate--property-management-in-memphis-tn

 

Aaron: Today on the podcast, we have Todd Riccio. He is a longtime investor with Enterprise Property Management and EPM Real Estate, and we're going to talk a little bit about how he has become interested in the Memphis real estate market and maybe even tips and bits of wisdom that Todd has had over the years investing here in Memphis. Todd, you have been an investor with Enterprise Property Management for six years. Is that right?

Todd: Yeah, six years. 

Aaron: It's been a fast six years, right? Like, you really got in at a great time.

Todd: I remember flying out to you, man. Well, I flew out to you and said, look, my goal is to get 40 to 50 properties. I want to get at least one to two a year, and you said right now, when we spoke, you said it's the equivalent of California's 2009, and six years later, you are pretty accurate, man. You know what I mean? 

Aaron: Yeah.

Todd: Because the prices have gone up and the properties that I first bought on Ross Road and stuff like that, that was like $105,000, probably like 250 right now. Just real estate agent out here in California. Obviously, prices make it extremely hard for me to build a portfolio out here. When the average house in Memphis, that would be 120,000, out there would probably be about 700,000 out here. So I knew that kind of branching outside of California would be the best option for me to accomplish my goals of having a portfolio that brings me $50,000, $60,000 a month when I get older. That's the goal right there. That's my 401K. That's my pension. That's my retirement, all these properties.

Aaron: Do you remember what brought your attention to Memphis originally? Like what caused you to look over in our direction?

Todd: I always did a bunch of research. I was going to seminars. I'm always looking for passive income, and Memphis was at that time one of the cities that would always pop up in different websites of best cities to buy rental properties, and Memphis popped up. Boise popped up, Indianapolis popped up, and Fort Lauderdale popped up. I think Scottsdale popped up, but Memphis was one that always consistently kind of popped up to me. Personally, I don't like the Panhandle States. I don't like Florida. Every time you turn on the news, Florida is getting a Hurricane. They're getting flooded. All this other stuff. There's Hurricanes. There's tornadoes. So Memphis was super stable. I remember when I spoke to you, you said, look, Memphis is pretty much an established metropolis. It's gone through its growth stage, and it's pulled backstage. You got Amazon headquarters there. You got Nike, it's growing. They're putting money back into the community. You got the Amazon fulfillment center. You got Shelby Farms. You got all this stuff. So it was kind of one of those cities that have already been established. It's not like an up-and-coming one, and I just felt comfortable. I felt comfortable with you guys. I felt comfortable because I actually flew out and me flying out and checking out the different neighborhoods is just one more piece of info gathering and due diligence, and ever since then, I'm comfortable with the knowledge, and I kind of think that that's kind of one of the things that I respect you on is there's times where I've said, hey, Aaron, what about this area, and you're like, look, I don't even think we could get a roofer out there because the neighborhood is not the best or anything like that, and you need that as an investor because it's not just about numbers, oh, this is a quadplex or a fourplex at this price, and the return is good. You need someone that's boots on the ground. That's, like, you probably want to like, from what you're looking for Todd, this isn't the neighborhood that you would express to me that you wanted or anything like that. I appreciate that info, and I think I'm comfortable after the first couple of them to get in my kind of system now, my numbers and my algorithms and everything, you know what I'm looking for and stuff like that. So it just seems to be working, and if it ain't broke, don't fix it.

Aaron: Yeah, well, one of the things about working with you that I wish that other investors and other clients of mine would adopt is you do have a very decisive approach to investment real estate. You understand exactly what it is that you're looking for. I think that you had a really good start to your run. We bought some single-level homes in established neighborhoods that were built in the 90s, I believe, and you and I discussed this. We discussed in Memphis, what generation or what age of construction is really good for investments in an ongoing manner here, and so you and I talked about how, like we here in Memphis, if you live in Memphis, if you've lived in Memphis for a long time, if you do real estate in Memphis, especially, we have a term out here that we use called new construction or newer construction, and so what does that mean to us? Well, new construction basically means anything to me, at least, anything that's the late 80s or newer, and why is that different? Well, it's different because the technologies that we're putting into houses as we were building them back then are more durable. We're not dealing with poisonous building materials such as asbestos or lead. We're not dealing with shoddy electrical lines, like aluminum wiring that you found a lot in the 80s or late 70s all the way up into the early 80s. You're not dealing with things like I don't know…

Todd: Asbestos.

Aaron: Right, as asbestos. There's a type of plumbing material that the Dow Oil company produced. I think it's called polybutyrol or something like that, which is known to burst. It's like early Pex, and so if anybody knows what PEX is, we improved. We improved code and zoning, and these areas of newer construction are also in neighborhoods that are still highly desired by owner-occupants. And so Memphis being a wonderful town for investment, you can still get in and buy just like you have an investment property, which is right next door to someone who was on their property for anywhere from ten to 30 years, and you want to live next door or an own investment property next door to that guy you don't want to buy in neighborhoods that are all investment properties. You might as well buy a condominium or an apartment if you want to do something like that. But you've been very smart. You're like, where is the value? Right. So I've really appreciated you for that, and then the other thing that I love working with you on is you and I will often get in and we'll talk about a property and it'll get down to $10,000 or $20,000 difference in the price of the negotiation, especially in the last two years. You'll tell me, you'll say, Aaron, I feel like this is overpriced by 20 grand. What do you think, and I'll be like, yeah, I think it is. Your ability to walk away from a contract that's being negotiated and just say, you know what? I didn't like, what I saw, that the deck or the roof looks weird or that skylight looks like it's going to need repair. It's always going to be a problem. I'm just going to walk away. But we know that buyers can use that inspection as an excuse to walk away from something where they don't feel like now that they know the house better, they don't feel like they're getting a good deal, and you're very fast to point that out and say, you know what? I'm just going to pull the plug and walk away, and I love that about you. It's really good.

Todd: Yeah, and the thing is, I'm on property number six and all other five of them that I've gone into contract. I've closed on because I'm also, like, a realist too of, like, look, at the end of the day, it's one-time fixes and stuff like that. But I think also having experience with the five other properties becoming more and more anticipatory of, like, I know that I'm going to get a letter from you guys saying, like, hey, the fence is shot or this that and the other thing and being in this industry, being in the real estate industry for so long, too, I'm all about preventative stuff and pro-activeness and stuff. So very rarely do I ever cancel. But this one I think I was like, look, it's probably like 15K, 16K, 17K to get it even rent ready, and after talking to a couple of agents, they think that it might slow down in November. I don't know if that's true or not, but around Thanksgiving time because I'm always hungry, too to get a minimum of one to two a year. So I'm still on the prowl of getting it. But it has to make sense as well, and the thing is, I've narrowed it down to a single story because me and water after being in this industry, water does not do well with houses and having a second floor. I just get nervous about water leaks through the ceiling and stuff. So single-story brick house for the maintenance, two-car garage, because I just value storage and stuff like that a usable yard, all that stuff where I'm sure other properties would do just as good. But this is just what I feel comfortable with, because you and I always have that conversation I'm like, look, Aaron, I know the rental market is very active right now, and properties are renting pretty quick, but I want the properties that no matter what the rental market is, if it's slow, if it's fast, if it's quick, what properties are going to be in the top 10% to rent out? I don't want the black sheep. I don't want the white elephant. I don't want the ones where in the time where the rental market is good, it gets rented out. But then when it's not good, we're sitting there and stuff like that. So I'm going to pay a little bit extra to be like, look, it's cool to have the two-car garage and storage when it's snowing and stuff like that. It's cool to have the brick and single-story because that's desirable and stuff like that. It's cool to have a yard because they barbecue and have their kids play outside and stuff. So that's also something that I value, as well as your opinion of this is going to be a very active one, no matter what the rental market is as opposed to on the lower end of it when the rental market does slow down.

Aaron: Which it's funny that you should bring that up. So earlier, Todd, you had briefly touched on the fact that there will eventually be a slowdown in the rental market, and I know that your philosophy is obviously to make sure that you have just operable properties that aren't going to require. They don't require a lot from the renter. For instance, in order to move into their relatively simple, relatively basic layouts. There are all kinds of very specific preferences that you have that I think really head off these larger maintenance costs. That's really smart, and I agree with you. I want to go back and talk about storage for a second, at least a one-car garage man. For years you and I have talked about we'll look at a property. You'll say this one came up, the money looks good, and every single property that you send me has at least a one-car garage, which is very, very smart. In Memphis, Memphis is a very typical city of a million people more or less, and so in an urban setting or even a suburban setting that has urban tendencies or an urban demographic, you're going to have foot traffic, you're going to have petty crime, and so having an open carport in a city like Memphis is not a good idea. You know, like in Memphis, you need a garage for the door that shuts, and so you can keep your outside stuff outside, but also in an enclosed area that's secured. So another point that I would make to any investor that's looking to purchase property in Memphis is this if the house that you're looking for or if the house that you find that doesn't have a garage is $10,000, $15,000, or $20,000 cheaper than the house with a garage by the house with a garage. From a rental standpoint, it will always stand out to the renter. We have a great house on the market right now. It's a three-bedroom, two-bath. It's less than ten years old. It has a beautiful brick and French country facade. It was one of the last French country houses that were built here, and it has no covered parking and that it has no garage, obviously, and that poor house is just sitting out there and nobody wants it because they can't like, where are you going to store your stuff?

Todd: Yeah, I kind of base it, even though California and Memphis are different markets, price point-wise. Human psychology, I think, is the same, and I think that after hearing clients out here, garages are huge because even if you're not going to park your car in there, people always have more stuff than they have room and stuff. So it's just having the options. I remember when I first started looking six years ago. There were some properties in central Memphis that have the laundry area outside in the carport area, and I'm like, Look, I don't want that either, because I relate that to the equivalent of houses out here having laundry in the garage, and sometimes when I hear people going when I'm showing buyers around like, oh, I don't want to go to the garage for laundry. I want it in the house. I just associate that with the same thing with Memphis, like, who wants to go out when it's snowing to get clean underwear from your dryer when it's 20 degrees out and stuff like that. So I just basically take my knowledge here and say what's the most desirable and the most desirable is going to be a two-car garage. Its single story is going to cater to not only the younger people that want to, but it's also going to cater to older people that don't want to climb stairs or anything like that. So single story. It's cool because it caters to more people having a yard to just stretch your legs out and stuff and not feel crammed to have kids play around and stuff and then again, the brick facade where there's not wood rot and damage and termites and all that stuff. So I just basically take whatever my knowledge is here and just transferred over to the Memphis properties, because again, at the end of the day, people want the same stuff just as people don't want to go in the garage in California. I'm sure people don't want to go out in the cold in Memphis and stuff, and so we can have an indoor laundry and they could park their car in the garage and walk-in their house with direct access and stuff like that. All that stuff is going to be desirable in my mind for the long term.

Aaron: So there was a time when you and I were looking at these possible purchases, and we found several you would find, especially back in 2015 or so, and you would find four or five comparable in a certain area, and you would say, I'm looking at all of these. Which one of these do you think would be the most reliable? You know, which one of these do you feel like is going to bring the highest rent and obviously be the most attractive on the market, and we used to thumb through a Rolodex of houses that were possible purchases. I know that those purchases have probably become limited as you look in the Memphis marketplace right now. Can you kind of compare markets? Let's even say from 2019 to now, like, what is the difference to an investor when you're looking at the marketplace now versus two years ago?

Todd: Well, I mean, the one thing that two years ago, I think that the good properties and stuff like that from what I saw two years ago, something would go like maybe 5000 over the asking. So if it's listed at like, 149, because up till last year, it seemed like $150,000 was like the ceiling of what these properties could yield that would fit what I'm looking for. But over the past couple of years, it seemed like 150 now is kind of the minimum, and it's kind of surpassed that. So I saw the prices increase. But another thing I've seen is whereas two years ago where if a property was like 149, it would sell for 156 or 155 and go 50. 00, 60. 00 over, and stuff like that where I just wrote an offer on another property and the highest offer with multiple offers was $30,000 over the asking price, and that just blew my mind because I was like, Are you kidding me? That's 20% over the asking price and stuff like that. So that's something that is new to me that I've seen is buyers in the Memphis market are aggressively going over asking, whereas a couple of years ago, they might go over asking, but it would be five, six grand, seven grand, maybe eight, nine grand, but not 30 grand. That was just unheard of or anything. So that's the one thing I've seen. But given that my background is real estate, I also have strategies that I could separate myself to where I can call the shots. For instance, when I wrote the offer, I was like, look, remove the appraisal contingency. I get it. I understand the terms, and I was like, put an escalation clause in which says I'll pay 33,000 over the highest verifiable offer and stuff like that, and that's where the listing agent came back and said, hey, we haven't offered 30,000 over the asking price, and I said, I'm out, you know what I mean? But it gave me the opportunity to know what I needed to be at as opposed to the listing agent. Just saying, oh, you didn't get it. We chose someone else. So there's different strategies that I use here that I use there that really stand out to the seller. And that escalation clause is great, because why not have a seller get 3000 more dollars with no appraisal contingency and stuff like that? So, again, if I could separate myself and write a more aggressive offer, I'm in the know of the risk and rewards and stuff like that. But it's all little strategies here and there that at least put you in the running to see if you want it at that price. 

Aaron: Well, do you put a cap on your escalation clause?

Todd: I don't because I could just walk away, like when the person said we had 30,000 over the asking price. I'm like, I'm out. But the thing is, I've seen when you put a cap, they know exactly where you're at, and so they know exactly where your cap is, and you could tell it. Say, I put offer 150 with a 3000 escalation up to 160 if someone comes in at 162, I'll never hear about it. So it's like, I'd rather not put a cap, and if an offer comes in at 161, they might say, hey, we had an offer of 161. You want to come in at 164. So I don't want to lose the house over two or three grand or anything like that. But when you put a cap in, you're kind of putting a ceiling on your place. So I would rather have no ceiling, and that also makes it difficult for the listing agent to know exactly where you're at because if you put a cap on it, the listing agent knows exactly what you're willing to come up to. If you put no cap, he's kind of flying blind to what he's advising the other buyer's agents of where my offers are.

Aaron: So how are you financing your deals right now?

Todd: I'm financing it with my own cash, 25% down. So $150,000 property probably takes about 30 GS, probably 35 with closing costs and stuff like that. So 35 grand gets another property.

Aaron: So you got, I assume, a line of credit, or are you doing individual mortgages on each property, individual mortgages. So having said that and I know you're probably going conventional and not FHA, and so you don't have to deal with all of the federal requirements for houses to close. And then you've got repair addendums, and you've got all these other things that you have to deal with an FHA loan that you don't have to deal with conventional. So now we know you're fantasy game does appraisal matter to you?

Todd: It does to a certain point. I think that I'm experienced enough to look at a property, look at what's sold around it, and kind of have a pretty good idea of where this thing is going to appraise that. So like the one that I was just talking about earlier, the one that came in 30,000 over. I'm out of that one. But if they came in 5000 over 6000 over and stuff like that, I'm not too concerned about it. I mean, even if it doesn't appraise by a couple of $1,000, I understand you have to pay to play and stuff like that, and at the end of the day, if it costs me a couple of thousand extra Bucks out of pocket, it's not a scarcity mindset. It's an abundance mindset, and I already know that I'm going to make the money back tenfold with just having another property because my main thing is keeping my momentum going and keep growing the portfolio and pushing myself to keep adding to and keep adding to it. I think I'm a good mix between looking at the numbers and being number conscious and stuff, but then also understanding that this is a good property. It's a good property. It's in a good area. If I have to pay an extra two, three, $4,000 to get it. It's the name of the game. I already know that I'll make it back and stuff like that in the next month with all the other incomes I have coming in and stuff, and it gets me one property closer to my goal of financial freedom and stuff. So it's just taking the abundance mindset and not the scarcity mindset because if you're dealing with the scarcity mindset and anything in life, you're always going to be hesitant and pulling the trigger and stuff, and it's just one of those things were being in this industry has really helped me out making these decisions and stuff, because again, I deal with a bunch of buyers out here where they find the property of their dreams, and they're scared to do a couple of thousand bucks, but they're paying 3,000 bucks a month in rent and it's like, look, just bite the bullet and just take a leap of faith and stuff like that. So if it matches everything and it's single-story with a two-car garage and it's upgraded because then I also look at okay, say, I don't get a house as upgraded. Is this what's the cost of the rent-ready one and that's like the other one I canceled on earlier this year. It's like by the time the fence around the whole perimeter was done cutting back the bushes, getting the wood trim of the deck repair, and stuff like that, as opposed to getting a property that's completely upgraded and spending an extra three or four or $5,000 because it didn't appraise but not really putting any money into because it's completely upgraded. I can quickly do the pros and cons and the risk and reward of that.

Aaron: And the one that we were talking about may have only been a month ago. I'm not sure.

Todd: Yeah, it was in September.

Aaron: Yes, it was Southeast Memphis is where we were looking, and that house had zero updates. It was really disappointing, and you were really smart to pull out of that one. I mean, just updating a home in $2019. You're looking at $10,000-$15,000. We've got delays now we've got supply chain interruptions. I don't think we've necessarily seen the effects of the Hurricanes in the New Orleans area affect us as badly as we thought was going to happen. But we had a Hurricane come through about a month ago and it hit the Glidden paint factory. Hopefully, I can say that on-air and not have any issues. But the Glidden paint factory basically had stockpiled paint, as they always do, and the base paint and primer and things like that. But basically, the Hurricane flooded the entire factory, and they said, look, we can ship out what we've got and we can ship the base solution out to other refineries and paint makers so that they can finish the base product and move that out. But they were talking about a 30 to 45-day retrofit, and so we were going to have paint shortages and all of the lows and all the Home Depot and all these stores, my painters, a lot of my painters. They just stockpiled paint. They just said we’re a Glidden company. We're going to buy up this paint and we're going to make sure that we have some in case there's a shortage so that they could continue to work through the winter. So anyway, that's just a random thing that's happening here in the south. We know what you like and we know what you've purchased. How do you foresee the changes in the marketplace if we take the whole foreclosure opportunity out of there, and I think that's something that you and I really need to investigate at a different time. But what are you looking at now? Because we know what was on the market. That was really great. That was rehabbed before. We know what's currently on the market, which really is not upgraded without a huge premium, and to ask and we know that you're not going to overpay and I respect that. I'm not going to overpay either. I'm not going to do it. I'll pay above a little bit for the joy of owning it and operating it and say, okay, I've got my one or my two for this year, but I'm not going to waste 50 grand just for the opportunity cost. That's not a good opportunity cost. Did you buy one this year already? Do we have one under your belt?

Todd: Not this year. I'm going to be aggressively looking around November. November and the last two years. I've closed in December of that year. So like last year I closed December 31, and then I think the year before that I closed right around Thanksgiving and stuff like that. So I'm going to be aggressively looking in the next two or three weeks to be looking again, picking up my one for the year and then continuing to just push and push and push and even exploring the multi-units with you and stuff like that. So just always be open to pulling the trigger if the right property comes along.

Aaron: That's cool. Just so that, you know, Glenn has got a couple in the bag right now. That just came across today, like in the last 2 hours, and they're both Cordova.

Todd: Yeah, for sure, man.

Aaron: Yeah, and that's exciting because we don't get Cordova a lot anymore. But these two, they're slightly distressed, just marginally. I would say 2% distressed, and that two to 4%, and of the value of the house itself, I would say, is cosmetic. So that's cool, and that's just proof right there to anybody listening. There's always an opportunity out there. If you're willing to have a conversation, right, you've got to be open to having conversations with people. You cannot do this on your own. When you listen to Todd and me talk right now, you're listening to two Realtors, and so earlier in our conversation, Todd was talking about how not trusting your realtor can get you into a lot of trouble. Realtors go through a lot of education. We go through a lot of continuing education. Being the principal broker of enterprise, property management, and EPM real estate, I have to take so much more education than even my agents. I have to constantly be paying attention to the news that comes down from our local state real estate Association and from the National Association of Realtors, and really know what's going on. Your realtor is being paid a Commission for their performance. Todd is a performer. There's no question, and he looks for a similar performance with us. Even though our markets are completely different. He asks me very high-end questions, high-level questions that he is asked as a realtor every day. He wants to know as the buyer, what am I getting myself into? What's my risk here? What do you think about this? What's your opinion? What would your experience suggest would be the proper course of action at this time? And then he relies on the information, my feedback, and my insight in order to make his decision, and I love the fact that he faces a lot of his decisions based on what I convey to him, not just his gut. So that's just so, so important. Listen to your realtor. There's a reason why you've hired them. So anyway, just to sort of ask you a couple of questions just to kind of wrap up where we are, and it's been a great conversation with you. Your fingers are on the pulse of what's happening in California, and I think California is kind of a leader in what happens in real estate. Really in the rest of the United States. You guys are sort of on the top end of fluctuations in the national real estate market. What happens in California often informs, the rest of the country as to where the real estate market is headed. You got some weird stuff going on over there like you were talking about earlier, very inventive insightful, imaginative solutions to real estate transactions, lots of technology, the rest of the country, though, like, if you stay away from the coasts, we still deal with hands-on. Right. Like, we want to go to the property, Glenn that we were talking about before. A lot of my agents will meet the neighbors. My wife, who just became an agent, by the way, four months ago, was at a property two days ago, and she was with the buyer who had flown in from New Jersey, and they were looking through the property and who would come out except for the neighbor. Right. So they met the neighbor and they got to ask those questions, right? Like, really important questions. What's your experience here? What would you do differently? What do you think about this property that you're next door to, or do you think they're asking too much? What would you do with this as a rental if you were to own it? Is it going to bother you to have a rental next door? What are your expectations of the community and of the tenant that leases here, and so a lot of that's going on? So back to my question again, when you consider your own business next year, and you also consider your investment business, what are the changes that you see happening in 2022 that you are aware of that you're going to be maybe shifting gears a little bit in order to respond to, and then how does that affect your investment outlook for 2022?

Todd: I just think that there are so many moving parts right now that's all the statistical previous historical data. I think it goes out the window. We have a pandemic going on. You have inflation talk. You have the stock market talk, interest rate talk, Treasury bond talk, jobless talk. You got the borders that are going crazy around the country. You got other countries that are going crazy. So it's one of those things where I just put my head down. I just put my head down and do everything I can and just do better than the year before that and not really sway. I always think of Warren Buffett, where he said, when everyone scared, you go head first and stuff like that and that's kind of what I've been doing even in the stock market right now, like, all the stock of inflation and this that and the other thing I've just been continuing to buy and just continuing to buy and continuing to buy stock and properties I feel like are going to be in the future very productive and stuff like that. I'm getting into electric vehicle materials, raw materials. I'm getting into cannabis stocks. I'm getting into Carnival Cruise Line and United Airlines and Royal Caribbean and cell phone towers because of the 5G with electric cars and stuff. So it's just basically doing you and not really letting outside factors get in the way because there's times where I've seen time and time again people that I spoke to in my career five years ago, six years ago, two years ago, like, oh, the market is still going to dip. So I'm waiting here and they're trying to time the market, and they said that four years ago, I remember I spoke to a tenant four years ago and I was like, look, man, get in, and he was so Gung-Ho that he was getting a good deal on his rental, whereas just say the market value is like $2,000. He was getting charged, like, 1600, and he felt like he was winning the Lotto because he wasn't paying market rent, and that hindered him to buy a property because he was looking at the perfect property and this and the other thing and that didn't come along, and then all of a sudden, another year goes on and that and then nothing came, and then another year. Before you know it, if you would have bought four years ago, he would have had, like, 200 grand equity in this property and stuff like that, and you fast forward, and he's still been renting, no tax write-offs. So a lot of people look at outside factors of the market is going to dip in this, and the other thing. I just go with my plan, and my plan is at the end of the day, I want to have 50 properties by the time I retire, and if you really look at real estate, it might go down. You know what I mean? Look at 2009 when everyone thought the world was going to end in California, and then you fast forward to 2020 and they're above water again, and all the people that held onto their house and was okay with the 30 years the fixed rate at that number, paid and paid and paid and now have equity and now are above water, and the world didn't end, and all the people that short sell their house and gave up on it and thought that it didn't make sense to pay a mortgage on an $800,000 house when it's only 600 and they ruined their credit and they paid for rentals and this and the other thing and they're letting outside factors screw them up. It impacts you so much. So I have a big ideology of, like, make a goal and just whatever the factors are just making an educated decision and stuff like that. But I'm not slowing down whatsoever, because I already know that even if I buy a property that's 180 or 190 in Memphis and it goes down a little bit by the time I retire and stuff, I'm not looking at it to sell it. I'm looking at it as investment, passive income. I want to have about 50,000 a month when I retire, coming into me from all my rental incomes and stuff like that. If rent is going to go up over the next 20 years and I'm cool with this payment, and it makes sense now, then I do it. I don't try to time stuff. It's just it's one of those things where there's so many factors with Covid numbers, China defaults of Evergreen, you got the chip shortage, you got inflation, you got interest rates. There's so many factors that you could pick one and be like, this is really going to happen. But if I just do me, I've done that all the time and I lead with what my goals are, and it seems to work out because, at the end of the day, I don't let fear get in the way. I just say, you know, what if I pay this and it goes down because I also have that talk with my buyers and they're like, well, what if the market goes down 30K? I'm like, well, let me ask you this. If you buy a house and it goes up 30K, you're going to sell it and they're like, no, don't sell it. If it goes down 30K, I'm like, you understand that if you're cool with the monthly payment, you're fine. Right? It's like a stock. You could buy Tesla stock or go Bitcoin. Even Bitcoin was 40K, 45k. It went down to, I think last week 30K, and now this week, it's at 65K. So did the people really lose 10K or did they really gain 20K or are they still cool with what they got and only makers or lose money when they sell it and stuff like that? And when I'm buying these properties, I'm not looking to flip these things. I'm looking at my future 50-year-old self, and when I'm 50 and it's 2040 or 2041. I really going to care that I spent 170 on a property that the next year was 160, or am I going to be happy that I got 50 properties and stuff like that and they're all paying for each other and stuff. So it's always coming from a place of abundance and not scarcity, and the people that I've seen live their life on scarcity are the people that don't live a good life. I'll tell you that.

Aaron: I think you're right. I think that there are a lot of people that make decisions out of fear, and I was reading an article about whether or not we have a balanced economy or an imbalanced economy, and this article that I read gave a lot of different ideas as to whether or not it was an economy that was based on greed or fear, which are the animal spirits which drive the stock market. Basically, it stated that there was more greed than there was fear, which is a good thing. It's a market that's a little out of balance. It's a little look to the positively expecting that things will be even better, and there's a lot of risks that people are taking out there. But at the same time, there's a lot of cash that people have right now, and we've seen that in California real estate, for sure. As I've said previously, that rip effect has gone all the way down to places like Memphis, Tennessee, Indianapolis, Cedar Rapids, other cities that are very popular for real estate investment. I definitely agree with you. Real estate, to me, is a buy-and-hold venture. I think a lot of people watch HDTV and they think I could flip this house. They watch Chip and Joanna Gaines or The Property Brothers or several new shows out there. I obviously don't watch IGTV because I don't know the name of the new shows, but they've got these new shows out there that are like people that are out there flipping houses and they're making money. My favorite shows are the shows where they do show people that lose money, and then they ask them at the end of the episode, they say, does this change your faith in the market or because you lost money on this deal? Some people get their shirts handed to them and they lose that $30,000 or that $40,000 on a venture that was supposed to make them $100,000, whatever because they tried for the fast money, right? I really appreciate your perspective on real estate, and I will say this one last thing. We have had so many houses sell out of the enterprise property management portfolio over the last two years. I would say it's at least 200 houses that have left in my management portfolio. That is a lot for a property manager to lose in two years. Simultaneously, we have had at least 300 houses come on over the last two years. So there are more people getting in similar to you, Todd, than there are people getting out. That's a big deal. I hope our listeners are hearing that I really appreciate you and your perspective on investment, real estate, and your partnership with all of this, and I am looking forward to working with you as the leaves change color and as they fall, things get cold around here. People do not want to buy so much. I think there's going to be an opportunity here this winter, this fall and winter, and then into next year. It's going to be great. So I really appreciate you coming on with us and sort of sharing some of your energy about investment real estate and how you've applied that here in Memphis. We're grateful to you as an investor and as a friend.

Todd: Yeah, man, I appreciate all the insight that you give and it's invaluable, too, because again, the big picture is to have this for my retirement and stuff like that, and you really are the last line of pulling the trigger and stuff like that. Even down to a potential tenant where one of your staff was like, hey, Todd, we got these people and I said, hey, if Aaron's cool with it, I am and you came back and you're like, I'm not really comfortable with this. I value all that because again, what your ideal client is completely different than what California ideal client is, and so I could go and kind of base it on what the ideal California landlord is looking for, and it's going to be different than the Memphis landlord, and so I really value your guys ‘opinion and just the raw truth of it and stuff like that. So, that's all stuff that I appreciate you doing, and I think that we got a good system going on. I'm looking forward to many more purchases.

Aaron: I'm grateful for that. Thank you for that. Interestingly. We're seeing the quality of the local Memphis and Southern tenant coming up, which is unbelievable. It's a really good sign of the local economy and the local demographics doing better. They're more successful in their own business ventures and with their education. You had mentioned major corporations which have relocated to Memphis and are now employing more people. That, of course, is going to continue. You and I didn't even have a chance to talk about the Ford F-150 Lightning plant that's coming into the Memphis area. It's a really cool concept. We could talk about it later. Basically, Ford had a plant here in Memphis that built Model T’s and Model A's and all kinds of Ford vehicles here in the Memphis area all the way up until 1951. I think they sold at that time, and then now here we are, 70 years later, 75 years later, they're breaking ground. I believe next year on the Ford F-150 Lightning platform, which is all-electric. 

Todd: Nice. 

Aaron: This is just outside of Memphis, and so it's going to mean lots of great jobs and new housing, housing developments, and stuff like that. So anyway, we're going to walk through that together and see what kind of opportunities are out there. But thanks again for coming on, and I appreciate your insight as well. It's always very informative and helps me to even educate other investors as to how to do things based on your knowledge and your experience. So thanks for coming on. 

Todd: Thank you for having me.