Looking for passive income is turnkey way to go ?

Question

Hello. I am currently on a waiting list with a turnkey provider located in Memphis, TN. Looking to purchase my first investment turnkey/passive real estate property. I'm both excited and nervous. Guess I"m looking for any feedback both positive and negative that you all think I should be aware of or consider. I am using my IRA to fund this so of course want to be sure of my decision. Thank you all in advance.

Seth Young · Answer

Do you have a contact that will help you use the IRA money properly to invest? Also, I would suggest working with a turnkey provider that is experienced and has a solid track record. When investing out of state, the most important aspect is the team you are working with. Best of luck with all your investments. @Steven Schreifels

Sunil Kurian · Answer

I've done business with a few turnkeys in general and Memphis specifically has some good ones. Search the forums and I'm sure that you'll find more than a few options. That said the market is still really hot right now so inventory does not last long regardless of which you choose.If this is your first rental, then turnkey could be a great way to go. If you choose to do that, you can't really compare the prices for turnkey to what you see on MLS because the acquisition, renovation, and tenant placement are all things that are baked into their price. Especially when you are new, turnkeys can take away the risk of performing those tasks yourself as a newbie. At some point, you may find it hard to scale past a certain point if turnkey is your only option but there can be alot of plus points going in that direction if you're just starting out.

Jay Hinrichs · Answer

That's why the Be The Bank Note business dominates the IRA investor funds..  it is cash flow that is predictable without the risk of TTT.  Although like any real estate there is risk

Jay Hinrichs · Answer

check with your CPA  buying rentals in your IRA does not ( I think and could be wrong) allow you to take the depreciation tax advantage.. you may want to just buy them in your LLC or other non IRA vehicle.

Thomas Ciesla · Answer

Any turnkey investment will give you diminished returns. How are your cash on cash returns looking? You will be trading ease for yield on capital.

Martin Carew · Answer

I looked at TK but starting out with 0 or very little equity wasn't for me. I bought houses pre-rehab and had my PM bring them to rent ready condition. Took a little time on my side but i got to keep the equity.

I used delayed financing on each one so was able to get me initial cash and rehab money back out within 2 months as there's no seasoning. Rinse and repeat. Now have 8 properties in Memphis in "TK condition" after 24 months, plus the equity.

TK providers are there to make a profit and that's cool but this way I kept most of it. If you're completely hands off then TK may be the way to go but I found the little hassle and time it took me to pay well.

James Wachob · Answer

@Steven Schreifels Turnkey investing can be very profitable. I'd be happy to help if you have any questions. My portfolio in Memphis is made up of 90%+ Turnkey and Class A properties that produce great results. See my profile page for examples of these properties.

Steve Vaughan · Answer

Exactly.  Tax-advantaged asset inside a tax-advantaged account.  No depreciation.

I'd lend or flip inside an IRA, not hold.

And to the original question, TK may be a long equity play but not a cf play.

I hired management after reaching preservation stage and my cf went to sh*t even though I bought them at a good value years ago.  Paying retail+ ?  LOL

Forrest Williams · Answer

You won't get as good returns if you go turnkey vs. self manage, but if your goal is to get money and not think about it turnkey is a good way to go. I assume you've vetted your Memphis provider and like how they do business. Memphis is a hot market right now too so you'll get some appreciation with your property.

Looking for passive income is turnkey way to go ?

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