Rental Property Investor · Member since 2023 · 21 posts · 20 votes
Being out of state and to minimize risk I don't want to do any major rehab, what do you think about buying turnkey property so that it casflows around 200 bucks a month with all costs associated? I know I won't be able to force appreciation and refinance like the BRRR method but at this moment being out of state I would like to build a steady cashflow stream of income and in future years maybe start applying the BRRR method because I will be able to take more risk.
Most of the rentals I bought are turnkey or only needed minimal work (painting and a few small things). There are many different ways to invest in real estate, find what works for you and do it. If the place you found cashflows $200 a month, then that is pretty good.
If you are investing out of state, make sure you take the time to tour the home before buying it. Make sure it is in a good area and will attract good tenants. Some places in less desirable areas look great on paper, but they have higher turnover and attract more problematic tenants that quickly use up any cash flow.
Your base bit of only $200/month will look like a home run in 5-7 years as market rent rises quite a bit and it appreciates. At that point you can do a cash out refi and pull some equity out and scale up. The biggest con I see with a turnkey property is if a tenant moves out in less than 3 or 4 years. Turnovers crush all your properties for obvious reasons. But if you get someone in there for 7-10 years, then it turns into a cash cow.
I disagree, a few bigger unforeseen repairs this 200 bux is gone. Also NEVER buy base on appreciation, too many factors, essentially now. The last 2 years have seen unrealistic unstainable gains,
So happy to see this. Great place to start building the portfolio. I bought turnkeys in 2012-2015 and it created the opportunity to accredited status and beyond.
Your base bit of only $200/month will look like a home run in 5-7 years as market rent rises quite a bit and it appreciates. At that point you can do a cash out refi and pull some equity out and scale up. The biggest con I see with a turnkey property is if a tenant moves out in less than 3 or 4 years. Turnovers crush all your properties for obvious reasons. But if you get someone in there for 7-10 years, then it turns into a cash cow.
I disagree, a few bigger unforeseen repairs this 200 bux is gone. Also NEVER buy base on appreciation, too many factors, essentially now. The last 2 years have seen unrealistic unstainable gains,
This advice is what I was told every year since I started buying SFR in 2015. Glad I didn’t listen and kept buying. I don’t buy for appreciation or assuming market rent will go up in 5-10 years, but historically speaking homes go up in value over time and rent goes up. My $200/month cash flow 5 or 6 years ago is now $800/month on several properties. And they’ve doubled in value. I bet over the next 10 years, almost all the properties we see for sale now will be worth 50-100% more than they’re worth now. And market rent will be much higher. I could be wrong, but I’m willing to take the risk and keep buying and holding looking long term.
@Duarte Marques I think buying turn key is a great way to invest if you're wanting to get out of your local market and don't have time to do all of the ins and outs yourself. Most companies will do all of the heavy lifting for you like renovations, placing residents and the property management. Let me know if you have any questions or need any additional information.
Being out of state and to minimize risk I don't want to do any major rehab, what do you think about buying turnkey property so that it casflows around 200 bucks a month with all costs associated? I know I won't be able to force appreciation and refinance like the BRRR method but at this moment being out of state I would like to build a steady cashflow stream of income and in future years maybe start applying the BRRR method because I will be able to take more risk.
Turnkey can be great, especially in certain markets where traditional properties may be too expensive to acquire and cashflow. One big benefit with turnkey is you shouldn't have any major maintenance expenses for 5-7 years, which allows you more freedom with the cashflow. Depending on the area, you may also see an immediate equity bonus at close which you can leverage in the near future. And while appreciation isn't a given, what is a given is properties appreciating long-term, on average, 3-5% annually, with some markets (Orlando) seeing 8-10%. And even if you look at the home values during the 2008 crash, when home values began recovering, they went from -20.9% in 2011, to -15.9% in 2012, to -4.1% in 2013, to +3.0% in 2014, +10.3% in 2015. BRRRR method requires a very good team or a deep knowledge of the market and how to find the deals.