Thoughts on turnkey investments

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Thoughts on turnkey investments

Lucas Gonzalez
Member since 2020 · 1 post · 4 votes

Hey all,

I am interested in passively investing in real estate via turnkey properties and wanted to get the BP community’s thoughts and recommendations on what turnkey provider to use and what market is best for both appreciation and cash flow.

For background I am living in the NY metro area where it is too expensive to invest in real estate. Ideally I’d like to partner up with a turnkey provider that provides property management services as well.

Any insight is greatly appreciated.

Thank you!

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Patrick Bavaro
Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
4y

@Lucas Gonzalez turnkey is a great option! I have a high deman W2 and made the jump into investing last year through a turnkey provider I found here on BiggerPockets.. rent to retirement. Currently working on a new build in Cape Coral through them, but they also have turnkey properties all ready to go. Numbers have been good on my analysis. Feel free to reach out if your interested in connecting! Always enjoy networking with turnkey investors.

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  • Taylor L.
    Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes
    4y

    They get flak on BP but investors out there have used turnkeys successfully. The space does have a decent amount of investors not doing their homework and/or outright fraud by some unscrupulous turnkey providers. If you do move forward, be sure to do your own due diligence and don't just take the provider's word for granted. That seems to be the area where most people go wrong, from my observation.

    IMO most higher earning busy pros who live in expensive markets would be a better fit for syndications than turnkeys, but some do not want to hand control to an operator.

    3Reply
  • Joshua JanusBusiness Member
    Realtor · Cleveland, OH · Member since 2021 · 1k+ posts · 1k+ votes
    4y

    @Lucas Gonzalez If you are looking for a more passive investing experience and have a high income from your main job or w2, going the turnkey route is a good option. You are able to invest with less hassle, maintenance, updates and worries. Partnering up a truly turnkey asset with a great property management team, inspector and list of general contractors is an effective way to set up your investing for success. If you are an out of state investor and are investing in the best markets that suit your income, cash reserves, goals, and emphasis on cash flow versus appreciation, than getting into a turnkey asset is a relatively smoother way to get started versus trying to take on a BRRRR as your first investment.

    [email protected]614-502-5316Podcast Guest on Show From DoorDasher to $1.5 MILLION in Real Estate (All at 22 Years Old!)
    2Reply
  • Joe Norman
    Property Manager · Baltimore, MD · Member since 2014 · 1k+ posts · 1k+ votes
    4y

    We won't be able to recommend a turnkey provider without knowing what market you're looking in. That said, my best advice is to be sure to thoroughly vet whoever you work with. There are some legitimate full service turnkey providers, and there are definitely a few sharks out there as well. Good luck!

    0Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    4y

    https://www.biggerpockets.com/forums/88/topics/976647-turnkey-company-suggestion?highlight_post=5648876&page=1#p5648876

    [email protected]248-209-6824
    Logical Property Management4.9460 Reviews
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  • Jonathan Beaumont
    Investor · Manhattan · Member since 2018 · 55 posts · 35 votes
    4y

    My first investment was a turnkey property from Norada. Communication with the company was rough in the beginning, but it all worked out in the end. Based on my experience, I believe the company does a great job vetting properties and property managers. Overall my experience with the property and the property management has been positive. I will say though you need to do your own research on how much rent you can get in the market you are investing in. Do not solely rely on any turnkey providers numbers. I find it helpful to reach out to property managers and agents in the area to find out how much properties are renting for. 

    2Reply
  • Cade Edwards
    Memphis, TN · Member since 2021 · 82 posts · 37 votes
    4y

    @Lucas Gonzalez welcome to Bigger Pockets. This platform is full of great turn key providers. The biggest thing is finding a company that you can trust and that will have your best interest in place. 

    2Reply
  • Seth Young
    Specialist · Southlake, TX · Member since 2021 · 213 posts · 157 votes
    4y

    I would say that Memphis, LR, OKC, Tulsa, Huntsville, Birmingham and Tuscaloosa are all great markets for SFH's that will have a hybrid performance with appreciation and cashflow. Best of luck with all your investing! @Lucas Gonzalez

    2Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    4y

    @Lucas Gonzalez you also don't need to work with a turnkey provider just to get a property that's itself "turnkey." You can simply buy something that's listed on the MLS and doesn't need any work, put it under property management, and rent it out. This likely won't get you the best deal or the best return... but it's an option.

    You may know all of that already, but I didn't see in your post that you're too busy to put any time into real estate... just that the NY metro area is too expensive for you to invest there.

    Why not pick a market within 2 hours and build some relationships there?  I don't know where specifically you're located, but there should be good markets in PA and CT within 2 hours of you.

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    4y

    @Lucas Gonzalez the first thing I recommend is narrowing down your objectives and criteria. It's not enough to say "both appreciation and cash flow". Define what is more important to you and quantify it. What kind of COC return do you want? What rate of appreciation? Is appreciation your primarily objective or is it just icing on the cake. Often times, the best cash flow markets don't have high appreciation, however, markets are experiencing extremely high appreciation rates. Personally, I would recommend identifying a handful of markets and then identifying the turn key companies in those markets. When evaluating markets, don't look just for cash flow and appreciation. Also, look for markets that have the following:

    * Growing populations
    * Growing jobs
    * Modern/diverse economies and industries
    * Both pubic and private capital investment in development projects
    * Low/moderate property taxes
    * Favorable landlord/tenant laws

    Once you've identified some markets, you can start evaluating turn key companies. There are a lot of good and bad ones. Here are the things you should look for and avoid in a turn key company:

    • Don't allow financing or a finance contingency (it can be a good indication they are selling above market value)
    • Don't allow for your own independent property inspection
    • Are not realistic with their pro forma's (i.e. they don't include vacancy or maintenance projections or use unrealistically low vacancy factors)
    • Require you to pay for any renovation upfront
    • Sell only in cheap. low end neighborhoods
    • Don't accurately represent the neighborhood/property classification
    • Don't have consistent rehab standards for all properties
    • Don't provide a scope of work for the property
    • Can't provide references of repeat investors
    5Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 684 posts · 550 votes
    4y

    @Lucas Gonzalez Welcome to BP Lucas. As has been mentioned, the BP community is not a big fan of turnkey investing. I differentiate between Out-of-State TK and investing in real estate within about 1-hour drive from your residence. For OOS TK residential real estate investing I can say that my journey over the last 10 years has worked really well and been an example that people like to replicate. That's why I mentor folks who want to get to the Time Freedom Point, as I call it, where you don't have to exchange time for money anymore. 

    As prices have increased it has become more and more important to have great relationships with good turnkey providers. That's what has worked for me and my little tribe of mentees.

    If you like to chat about it, feel free to DM me.

    One final point for your research on the BP platform.: In my experience people have a tendency to voice their frustrations much more likely than their accomplishments and successes. That can give the impression that certain investment approaches or even certain companies are bad or create losing deals. It very rare to read detailed accounts of a series of successful deals. I am working on my 14th deal in TK investing. All have worked out fine so far - knock on wood. If one deal goes wrong for someone, BP often becomes the place to tell and "warn" everybody about it. That skews the picture a lot. Please keep that in mind.

    1Reply
  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    4y

    @Lucas Gonzalez are you defining turnkey as they buy, rehab, and manage for your?

    Or just a company that can provide full services from agency to property management?

    Irish Jones Realty4.947 Reviews
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    0Reply
  • John MorganPro Member
    Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
    4y

    @Lucas Gonzalez

    RoofStock and Norada seem legit. I’ve looked into them.

    0Reply
  • Chris Mignone
    Investor · Huntsville, AL · Member since 2015 · 149 posts · 80 votes
    4y

    @Lucas Gonzalez I’m in New York as well and currently investing in Huntsville alabama and the surrounding areas. Feel free to ask me anything. I may be able to help you find deals here as well. Good luck

    0Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    4y

    @Lucas Gonzalez turnkey is a great option! I have a high deman W2 and made the jump into investing last year through a turnkey provider I found here on BiggerPockets.. rent to retirement. Currently working on a new build in Cape Coral through them, but they also have turnkey properties all ready to go. Numbers have been good on my analysis. Feel free to reach out if your interested in connecting! Always enjoy networking with turnkey investors.

    6Reply
  • Mio Chee
    Investor · Honolulu, HI · Member since 2022 · 51 posts · 41 votes
    4y

    I am from Hawaii where a median single family home is now 1 million, making it very hard to find a cash flowing property. We bought 3 properties (TN, IN, OK) thru a turnkey company and are very pleased with the process and the support we received from them. We plan to buy 6 more with them. Feel free to reach out if you interested in learning about this company. I can tell you all the pros and cons (not many cons but they do exist) we experienced with them

    2Reply
  • Neil Henderson
    Specialist · Carolina Beach, NC · Member since 2016 · 390 posts · 496 votes
    4y

    REINation (formerly Memphis Invest) is a turnkey operator I have respect for. They are a full service outfit, meaning they also handle the property management.

    0Reply
  • Trevor Fleck
    Investor · Fort Collins, CO · Member since 2014 · 123 posts · 329 votes
    4y

    @Lucas Gonzalez I've had a great experience with Rent to Retirement personally. I've invested in eight different deals and counting. If you're looking for a good combination of likely appreciation and cash flow, they have really strong teams in Kansas City, Indianapolis, and a couple areas of Ohio. If you're looking into new construction (build to rent or build to sell), I've done very well in Cape Coral, FL with them. Happy to chat more if you'd like. Good luck!

    6Reply
  • Elizabeth Palma
    Realtor · Kansas City, MO · Member since 2022 · 27 posts · 19 votes
    4y

    Kansas City is definitely a great place to start investing! The prices are great and we have lots of options! If you need a help of a realtor I'm here to help! Or you could just join a new group on Facebook called ConnectWiseKC! Lots of other realtors and other contractors and investors! 

    0Reply
  • Melinda McDonald
    Property Manager · Kansas City · Member since 2021 · 59 posts · 42 votes
    4y

    Good a.m. - 

    I echo Elizabeth's comments.  KC is a great place to invest.  Both sides of the state line have good properties that are still priced to produce a strong cash flow. If you would like to discuss or if I can help, please reach out tome.

    Melinda

    0Reply
  • Nick GiulioniPro Member
    Rental Property Investor · Carmel, IN · Member since 2016 · 1k+ posts · 615 votes
    4y

    Hi Lucas, I'm from California but had my first turnkey in Indianapolis. Now, I have almost a hundred doors. I would love to help/share my experiences and chat with you more if you're interested.

    1Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    4y

    If you are a cash buyer ( loan buyers are not going to have much luck ) Cleveland is and has been one of if not the #1 market in America. There used to be 25- 30% net caps, to be had, now 9- 14% nets are still available. Its all about knowledge and your team 

    All the best 

    1Reply
  • Lexey Vezzoso
    Real Estate Agent · Boise, ID · Member since 2019 · 192 posts · 184 votes
    4y

    Hey Lucas!

    I'm with Boise Turnkey Properties here in Boise, ID.

    I'm not sure if you're familiar with the Boise area but we saw ~14% appreciation within the last 12 months and our clients who use our sister company Cohesion Property Management are getting great returns on their rentals as well.

    If you'd ever want to hop on a call to talk more details about our services I'd be happy to help!

    -Lexey 

    0Reply
  • Hunter TerrynPro Member
    Birmingham, AL · Member since 2021 · 79 posts · 68 votes
    4y

    Turnkey is a great strategy for remote investors and anyone who is trying to scale up faster. You pay a premium for the convenience, but can be well worth it in the right neighborhood, especially considering the time and headache saved. Very important to find the right partner! I can't make a recommendation to any turnkey providers (since I haven't used anyone personally), but I might recommend talking to some PMs who have rehab/renovation teams. Specifically, ones that don't advertise as a "turnkey provider". There's a lot of value in the (almost) turnkey properties, where you might need 3-5K, maybe even up to 10K in rehab to make it rent ready:

    -Potentially lower price up front due to work needing to be done

    -Potential negotiating power once under contract

    -Forced appreciation and built equity once the rehab is complete

    -More control on quality and scope of work

    A lot of the investors I talk to are looking exclusively for turnkey deals (at least initially), but once they go through a minor rehab process they realize it can be fairly easy with the right partners in place. Then it becomes part of their strategy long-term and they feel more comfortable replicating that process. Plus, they save some $$$ along the way!

    As for the location, I have to put a plug in for my current city of residence - Birmingham, AL. My wife and I moved here last year for her job at UAB. Was skeptical at first, but this place has it all! Really a cool place to live. I get tons of calls from investors in CA and NY (and plenty of other places where prices are too high) talking about how attractive Birmingham is as a rental investment market. Low property taxes, excellent unemployment rates, massive medical influence, and relatively low prices. Would encourage you to check it out!

    -Hunter

    [email protected]205-546-2231
    0Reply
  • James WachobBusiness Member
    Real Estate Broker · Memphis, TN · Member since 2015 · 1k+ posts · 890 votes
    4y

    A great Turnkey provider will offer everything under one roof that an investor needs to succeed. 1. Acquisitions 2. Renovations 3. In-house property management. However, not all turnkey providers are created equally. I'd suggest asking about their experience and their personal portfolio. If the provider does not have significant holdings of their own.... why would I trust them with my investments. 

    0Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    4y

    I am huge supporter of turnkey properties because it makes out of state investing easy and you can cash flow from day one. I worked with Martel Turnkey and purchased a SFH in Maple Heights, OH. Let me know if you want to connect and talk about it.

    0Reply
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