Newbie trying TurnKey Investment

Newbie trying TurnKey Investment

Rental Property Investor · Charlotte, NC · Member since 2015 · 128 posts · 29 votes

Good Morning Fellow Investors,

I am writing this post in hopes of getting some advice, recommendations, or prudent remarks from investors who have a lot more experience with real estate than I do. Since my time is limited (working FT as a finance analyst and PT as an adjunct), I decided my first real estate venture would be through a turnkey investment property company.

Therefore, I researched several companies and narrowed my selection to the following: JWB Real Estate Capital (Jacksonville, Fla), Norada Real Estate Investment Co. (Laguna Niguel, Ca). and HomeUnion Investment Services (Irvine, Ca).

There are many other turnkey investment companies depending on location and services to be provided, but these three to date, have answered all of my questions.Each company offers different services with different cost, which I am prepared to fund, if necessary.

However, before signing a contract, I was hoping my fellow Bigger Pockets investors would reply to this post. Please interject, if anyone has recommendations or cautious words that I should be aware of? Your feedback is appreciated and I thank you in advance for reading my post.

Nancy E.

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Alex CraigBusiness Member

Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes

10y

Here is the advice that I would give you.

Go to the market that you want to invest in and meet the team. This is a minimal cost to make sure you're spending your money wisely. See the thread on the Birmingham turnkey provider ripping a BP investor off
Be comfortable I am impressed with the property manager. To be impressed though, would mean talking to a few property managers within the market. That being said, I do advise sticking with the turnkey provider for management on the back end to create accountability
Leave the properties with abnormally high ROI with rents under $850 (maybe $795 depending on the market) to the local investors. These are very high maintenance, intense hands on management, that really should be done by the person that owns the property. These are commonly referred to as C class
Order a third-party property inspection
Make sure the property has been rehabbed to turnkey quality that will maximize your cash flow (roof and HVAC updated, ceramic tile it kitchen and bath, vinyl plank hardwood in high traffics areas, durable carpet installed in bedrooms, external fences and buildings addressed during the rehab, supply hoses replaced under the sinks, etc) otherwise your cash flow will go to maintenance
Be skeptical of the one-year tenant warranty, that just means the turnkey provider is making a abnormally large profit who uses gimmick marketing to secure investors
Verify rent range through other property managers, Craig's list and Zillow
Ask if permits were pulled during the rehab
If a tenant is in place, ask to see the tenant file
Remember, you can fix the house, you can fix the tenant, you can fix the property manager, but you can't fix the area. The very conscientious to the area that you invest. If it is a area in decline now imagine what it will be in 10 years

I could probably think of some more, but that is what I could come up with off the top of my head. Do research, take into consideration what I said and then take action! Don't let other BP members talk you out of turnkey because there are a lot of turnkey haters, just because it is not right for them, does not mean that is not right for you. There are plenty of success stories within my company and my competitors companies that disprove the turnkey haters.

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Nancy E.
OP
Rental Property Investor · Charlotte, NC · Member since 2015 · 128 posts · 29 votes
10y
Thanks @Drew Castleberry I am going to check out the two websites you suggested (crimereports.com and trulia.com) tonight for area stats.
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Drew Castleberry
Investor · Simpsonville, SC · Member since 2015 · 132 posts · 54 votes
10y
Originally posted by @Nancy E.:

Thanks @Drew Castleberry I am going to check out the two websites you suggested (crimereports.com and trulia.com) tonight for area stats.
There's a lot of others that are great tools, but they're good for starting out and giving you a decent idea of what you're looking at, without having to pay for anything.
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Account Closed
Redwood City, CA · Member since 2014 · 83 posts · 19 votes
10y
Originally posted by @Nancy E.:

Thanks @Drew Castleberry I am going to check out the two websites you suggested (crimereports.com and trulia.com) tonight for area stats.
Those are both great sites with a lot of great information. We, at HomeUnion, are working on providing all the market/neighborhood information in one spot to save investors some time. Our property profiles include neighborhood rent rage data, demographics, commute times, sales histories, rental trends, school info, etc. We don't yet have crime data, but we're working on it :-)
-S
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Jeff B.
Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
10y
"Turnkey Investment" can mean different things to different folks.
As an Investor, that would mean operating at arms length - - not being involved in the day-to-day operations. This reduces the investors activities to:
- Making the purchase
- someone else does the operations
- you collect monthly profits
For rentals, my experience has been that NO property management company will exercise the diligence that you would - - they get paid for rents collected and the maintenance and tenant selection process is usually not up to snuff, and thus drive up your expenses.
Active Management means you make the decisions, hire the work out to professionals, learn Fair Housing Regs and review+select the tenants for yourself. It's not at arms length but you'll have a better rental and EOY profits.
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