How to Use Property Management to Save a Bad Turnkey Investment

How to Use Property Management to Save a Bad Turnkey Investment

2 min read
Drew Sygit

Drew is a classic overachiever, bringing intensity and passion to everything he does. While in the mortgage business, he rose to a VP position at the first broker he worked for and then started his own company.

In the pursuit of excellence, Drew obtained several mortgage designations and joined mortgage and several affiliate association boards. He also did WebX presentations and public speaking engagements. It was during this time, he started personally investing in single family rentals, leading him to start Royal Rose Property Management with two partners. He also joined the board of a local real estate investors association, eventually becoming its president.

The real estate crash led to an offer from the banking industry to manage a Michigan bank’s failed bank assets they acquired from the FDIC. The bank went on to eventually acquire four failed banks from the FDIC, increasing from $100MM in assets to over $2B while he was there. After that he took over as president of Royal Rose Property Management and speaks at national property management conventions.

Former board member of Michigan Mortgage Brokers Association, Financial Planners Association of Michigan & Mariners Inn (nonprofit)

Former taskforce Member of Michigan Association of CPAs (though not a CPA)

Involved in mortgage business for over 18 years, obtained mortgage designations: Certified Mortgage Planner, Certified Mortgage Consultant, & Certified Residential Mortgage Specialist

Board member of Real Estate Investors Association of Oakland; President since 2012

2009-2012 Shared-Loss Manager for Talmer Bank (now Chemical Bank) handling FDIC failed bank loan loss strategy, reporting, REO management, collections, & gap analysis

Started investing in real estate in 1996

President of Royal Rose Property Management since 2001

Drew received an MBA from Wayne State University, concentration in Finance & Marketing.


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Your turnkey property was supposed to be an easy, passive stream of income. Instead, you got the worst-case scenario: the company that “turn-keyed” it paid for renovations that looked nice, but were structurally flimsy and cheap. The building is in a neighborhood that has decent-looking crime statistics online, but the recent closure of the only high school in the area means teenage boys with nothing to do and homeless people squatting in the empty school buildings, so property crime is spiking. And your “established” tenant blew up their kitchen trying to make drugs and poured a bag of concrete down the toilet before they moved out.

Time to sell it, suck up your losses, and move on, right? Not necessarily.

Should You Try to Turn This One Around?

Any property can be profitable—the only question is how much time and money you’ll have to sink into it before it gets there. Before you decide to take the hit and learn the lesson from this one, do a little math. Figure out how much you would have to spend to fix, clean, re-beautify, get a better property manager, and otherwise take care of everything that needs to be done to the house before it can be rented.

Exact numbers aren’t necessary—just come up with a solid rough estimate of your potential costs (in both time and money). Then calculate what you could reasonably do over that timeframe with that amount of money plus (or minus) whatever you get when you (have to pay to) get rid of the bad investment. If there’s a wiser way to achieve your goals, by all means, drop the property. If you think that the old advice about not switching ponies mid-stream is good in this case, here’s what you need to do next.

Related: 4 Essential Strategies for Taking on a Negative Cash Flow Property

Owner Up

The first step is to take ownership of the situation. You didn’t do this, but you bought it, and that means it’s your mess to clean up, so own it. Literally. Cut every tie with the previous owners. Fire their contractors, fire their property managers, fire everyone and start over with the absolute basics: You have a crap house in a crap neighborhood and no tenants. Let’s get from there to “winning.”

Finding the Right Property Manager Is Half the Battle

The first step—even before you do any rehabilitation on the structure—is to put in the time and effort you need to find a property manager (PM) that can handle the job at hand. Unfortunately, it’s not something that most management companies make a habit of advertising because they generally don’t want to take on a project like that. But with a bit of research, asking around for referrals, looking up references, and being persistent and thorough, you can find a PM in almost any city that can handle a distressed property. Just take into account that you get what you pay for, so be prepared to pay for their expertise and time until a tenant is procured and they’re earning management fees.

Related: 3 Key Traits to Look For in Any Reputable Real Estate Turnkey Company

Once you think you’ve found a PM, introduce them to your property, and ask them what they think of it. Ask them if you should sell it or keep it. Talk to them about ideas for correcting the previous flawed renovation work and costs, as well as a plan to attract the best tenant possible for the area.

If you find property manager that can put all this together intelligently and professionally, then you have most of what you need to turn your property around. You’ll still have to manage the manager—but that’s something you should expect from any property, turnkey or not.

Have you ever successfully turned around a poorly performing investment property?

Let me know about it with a comment!

Your turnkey property was supposed to be an easy, passive stream of income. Instead, you got the worst-case scenario: the company that “turn-keyed” it paid for renovations that looked nice, […]