Turnkey Rental Property a good idea for a first-timer?

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Turnkey Rental Property a good idea for a first-timer?

Cassandra Boyett
Homeowner · Palmdale, CA · Member since 2014 · 9 posts · 6 votes

We live and own in California where we can't afford to do much, so we'd like to invest in a rental property somewhere else and this will be our first purchase (aside from our home). 

Can anyone break down how Turn-key property companies work, what they charge and such? We have a lot of family in the Tennessee/Arkansas areas and Ive read Memphis is a good area to look. 

Any tips and info would be much appreciated!

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Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 995 posts · 1k+ votes
11y

Hello @Cassandra Boyett ,

Buying turnkey can be an excellent purchase method but remember that this is only a purchase method, it does not assure you that you are buying in a “long term good” location, getting a good property or that you are going to get good tenants.

You have heard the old adage that the three most important things to consider in real estate are location, location and location. This is still true. When you are considering a property in any “location” you need to think long term. Do your homework and make an informed guess whether the state/city/area is still likely to be a good place to own a property in 15 or 20 years? What is happening today or this year is almost irrelevant because real estate is a long term (multiyear) proposition. Some of the key indicators you should consider are:

• Population migration - are people moving in or out? If they are generally moving out of the state/county/area then the value of your investment in 5 or 10 years is going to be much less than today. Here is a page that provide population shifts by city.
• The value of a property is no better than the jobs around it. This does not mean just that there are jobs, the earning power of jobs needs to be stable or increasing. For example, if the state/county/area trend is from manufacturing jobs to lower paying service jobs, your rent is going to go down and the value of your property will fall.
• Property price trends - If property prices are trending down in an area, that is because there is less demand. If there is less demand to purchase, then there will likely be less demand for renting in that area too. And, if property prices are going down, rents will also go down and even if you decide to cut your losses and sell you probably can’t even sell the property at break even.

The following two points are not criteria but something to keep in mind. 1) As long as you buy in a good area (see all the above), all but the worst mistakes will be corrected over time through appreciation, inflation and rent increases. However, if you buy in a bad (or trending down) area, there is little or nothing you can do to make money over the long term. 2) To quote a former president, "Trust, but verify"; never take others claims at face value. With the internet, you can validate any claims made by others. The data is there and all you have to do is to spend sometime and the claims will be either validated or you will know that you need to find someone else to deal with.

Below is the process model I recommend. The property profile and profitability are explained in details in this thread - http://www.biggerpockets.com/forums/12/topics/1527...

Best Wishes,

Eric Fernwood

[email protected]702-358-8884
FERNWOOD Team, KW VIP Realty520 Reviews
WebsiteView Page
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  • Clayton Wolf
    Real Estate Investor · Indianapolis, IN · Member since 2014 · 5 posts · 0 votes
    11y

    Cassandra,

    I thing turn key for the first time buyer is a great idea.  Those like others on this thread, there are great companies and thieves out there in the industry.  I have been a turn key provider for investors through the US and locally for the past 5 years. We focus on quality rehabs and solid tenants to setup our investors with the best turn key their investment dollars can buy.  If you succeed we succeed. We love returning customers, so we have built a company around that attitude along. I have managed over 500 turn key rentals in the last few years. We have a smooth system that provides solid results. If you want more info you can check out this site midwestpropertysource .com .  We offer a free VIP day for investors who want to come tour the city and our properties for sale. This includes hours of education and showing you different areas of the city and properties available. 

    I hope this helps, good luck. 

    Clayton Wolf

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  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    11y

    Yes, turnkey properties can be an excellent investment.  Everything is already in place for you - the tenant, the landlord, the insurance, etc.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    11y

    @Brie Schmidt 

      and I have collaborated on a new go to web site for the Turn Key buyer.. It will show case 75% of all turn key providers in the US all in one web site.. Along with client reviews of the Turn key operator.. this is going to be huge we are not even 24 hours into its launch and we have gotten so much positive feedback, from our point of view this is something the industry was in dire need of.. a consolidated place to go TK shopping and real time feedback from exisiting and former clients of these companies.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
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  • Brian Huber
    Investor Agent · Burke, VA · Member since 2014 · 243 posts · 12 votes
    11y

    @Ali Boone do you mind sharing what company you've used for your turnkey investments? You're welcome to PM me if you don't want to broadcast it. Thanks!

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  • Nathan J.
    Saugerties, NY · Member since 2014 · 98 posts · 32 votes
    11y

    @Brian Huber do make sure to ask if anyone recommending you to a turn key company is getting a kick back. Some turn key companies pay folks to recommend them. That is not always made explicit by the person making the recommendation.

    1Reply
  • Chintan Parikh
    Investor · Charlotte, NC · Member since 2017 · 8 posts · 1 vote
    9y
    Cassandra Boyett Hi Cassandra, I came across your post from 2 years ago while doing some reading on BP. I am new to BP and am in the same situation as you were in 2 years ago. I am interested in learning about your experiences and if you were successful in scoring your first rental property investment. Please PM me if you would like to connect. I would really appreciate your help as I start my journey towards being a rental property owner. I look forward to hearing from you.
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