Help! Turn Keys- Right for new Investors, Advice, Tips etc.?

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Help! Turn Keys- Right for new Investors, Advice, Tips etc.?

Tyisha G.
Long Island, NY · Member since 2015 · 138 posts · 20 votes

Greetings BP Community,

I am fairly new to real estate investing and I am trying my best to do my due diligence to make the most beneficial choices towards success. I am strongly considering turn-key properties outside of my home state mainly for more opportunities and immediate cash flow. I see there are a lot of mixed opinions on whether they are profitable or not.

I would love to receive feedback from the community.

Thank you for sharing!

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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
10y

Hey! Right now my favorite markets + providers are in Chicago and Indianapolis. I also have some good ones in Kansas City and Philly. I'm actually flying out to check in on all of them in the next month or so and can report back how they are doing, but most of the buyers I know going in those areas right now are all really happy. All of them have SFRs and if you want MFRs, Chicago and Philly are the ones for those.

Feel free to reach out anytime if I can help!

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  • Jonathan Makovsky
    Investor · Fairfield-New Haven-Hartford County, CT · Member since 2013 · 825 posts · 413 votes
    10y

    @Tyisha G. like so many businesses, there are some turn-key ("TK") opportunities that are excellent operators and hitting the returns they promise, and there are some awful, inexperienced and/or crooked TK operators.

    I think the best thing would do is to reach out to many TK operators and just start talking to them and learning and discussing their business model with them and what you're looking for. You should speak to as many TK operators as you can! This way you can understand how they operate their business and you should definitely ask for referrals. It would be great if you can find reputable BP members that invest with some of them.

    Bets of luck and please keep us posted!

    1Reply
  • Tyisha G.
    OP
    Long Island, NY · Member since 2015 · 138 posts · 20 votes
    10y

    Thank you for your response @Jonathan Makovsky. I hope this thread will attract more attention to receive more helpful points as yours and hopefully some may actually give referrals along the way. 

    I will definitely provide updates. Thank you.

    0Reply
  • Brie SchmidtBusiness Member
    Moderator
    Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
    10y
    Originally posted by @Tyisha G.:

    Greetings BP Community,

    I am fairly new to real estate investing and I am trying my best to do my due diligence to make the most beneficial choices towards success. I am strongly considering turn-key properties outside of my home state mainly for more opportunities and immediate cash flow. I see there are a lot of mixed opinions on whether they are profitable or not.

    I would love to receive feedback from the community.

    Thank you for sharing!

     I to, would talk to as many TK providers as possible.  Every one is different and you need to find what is comfortable for you.  I talk with a lot of TK buyers and the one thing that stands out to me is that if they have the right expectations going in they tend to be happy

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    1Reply
  • Ankith Chandra
    Houston, TX · Member since 2015 · 47 posts · 20 votes
    10y

    @Tyisha G.

    I am in the the same boat as you. 

    For me, some questions from Elizabeth cole's blog serves as a good reference before considering a TK company. 

    https://www.biggerpockets.com/renewsblog/2015/10/0...

    Hope this helps. 

    Ankith 

    0Reply
  • Account Closed
    Registered Nurse (ICU) · San Jose, CA · Member since 2014 · 496 posts · 332 votes
    10y
    Tyisha G. I started buying turnkey properties over a year ago. I have had both ups and downs in my experiences. Posting a thread like this will attract all the providers and they will try to steer you towards their market and product. My advice is for you is to get referrals from actual investors and not those that make a commission on the sale. This way you get a truely unbiased opinion. Finding the company that works for you can be tricky and it may take a little trial and error to end up with the perfect people to work with. But once you find these guys it's an amazing relationship. My guys are FS Houses in Indianapolis, Justin Harrison in Birmingham, and Century Revitalization Group/Decas in Birmingham.
    2Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    10y

    @Tyisha G. Not all turn key companies are the same so you can't generalize whether they are profitable or not. One of the biggest complaints about turn key companies is that you pay over market value. That's not the case with all. Most turn key companies can acquire properties and rehab them for far less than an individual so they are able to sell at market value and still make a profit. What you want to be careful of is turn key companies that only sell to cash buyers or won't allow for a finance contingency in their purchase agreement. This could be a good indication that they are selling above market value and they know it. In the interest in full disclosure, we sell turn key properties. The vast majority of our buyers use financing and it is very rare that the property doesn't appraise for the full sales price. The other complaint is poor rehabs that cost you money. Be sure to get a scope of work for what renovation was done, and of course, always get a property inspection. The final thing you want to look at is what areas and class of neighborhoods they are selling in. You can't always tell by pictures. Less reputable turn key companies overstate the neighborhood class and suddenly you find that property that you were told was in a good B class neighborhood is actually in a rough neighborhood in the hood. Get to know the rents in the areas you are interested in and you'll be better able to assess the quality of the neighborhood. I just recently did a podcast on how to work with a turn key company and what to look for. It's the 12-7-2015 episode which you can find on my website. I encourage you to check it out.

    0Reply
  • Bill Florence
    Investor · Boulder, CO · Member since 2015 · 137 posts · 36 votes
    10y

    I am not a new investor but evaluating a few TK's for remote investing. I quickly realized how important it is to scrutinize every property, the property management company, and the selling business. So far about 18 of 20 properties presented to me are class-D properties that were purchased for pennies, given a little lipstick rehab, a questionable tenant put in place and marked up 2-500% and priced way over fair market in some cases. Not to mention all the due diligence that goes into researching the TK business, the property management company, finding a licensed inspector, contracts, leases, etc, etc. For me it has been much more work than investing locally, but I see some potential.

    0Reply
  • Tyisha G.
    OP
    Long Island, NY · Member since 2015 · 138 posts · 20 votes
    10y

    @Brie SchmidtThank you for sharing.

    @Ankith Chandra I will be sure to check that link out tonight. If you don't mind, keep me updated on your status. Thank you for sharing.

    @Account Closed You bring up really good points. While I am open to all advice and "truly unbiased opinions" as you mentioned, would be so helpful. Definitely looking forward to the relationships with TKs that work! Thank you for sharing your referrals. I will be sure to check these out.

    0Reply
  • Tyisha G.
    OP
    Long Island, NY · Member since 2015 · 138 posts · 20 votes
    10y

    @Mike D'Arrigo Thank you for your input as well. You touched on some important points that I have been learning in my research. I will check out your podcast as well. 

    @Bill Florence Thank you for your input as you also raised good points to consider especially from your personal experience. I actually read some of the same trials from another BP member. I too, still see potential in TKs but it is most helpful to be covered in knowledge from both pros and cons. I wish you the best in your pursuits.

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y

    Hey Tyisha! Lol...I love your headline for the chain. 

    I live in LA, so same situation here for prices and returns as NY, and I've always bought turnkeys out-of-state. I'd say the #1 factor in how successful you'll be with them is who you buy through, i.e. the team. The #2 factor in my opinion is where you buy them. Market fundamentals play a huge role in long-term success, and oftentimes even with short-term success. 

    If you get a good team in a bomb market....call it a major win. I think turnkeys are fantastic for newbie investors because they give you time to learn the fundamentals and basics while other people do the hard work. If you work with the right team in the right market, the turnkey model decreases risk tremendously than if you were to go at it alone as well.

    0Reply
  • Kevin M. Rooney
    Turn Key Supplier · Indianapolis, IN · Member since 2015 · 111 posts · 21 votes
    10y

    feel free to contact us. We have several referrals of clients that have been buying over 15years with us along with several over the pat 3-6 months. 

    0Reply
  • Tyisha G.
    OP
    Long Island, NY · Member since 2015 · 138 posts · 20 votes
    10y

    @Ali BooneThank you for the advice. I am definitely wanting and working on building a team. What are some markets that you recommend for turnkeys?

    @Kevin M. RooneyThank you. We will be in touch.

    0Reply
  • Ali Boone
    Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
    10y

    Hey! Right now my favorite markets + providers are in Chicago and Indianapolis. I also have some good ones in Kansas City and Philly. I'm actually flying out to check in on all of them in the next month or so and can report back how they are doing, but most of the buyers I know going in those areas right now are all really happy. All of them have SFRs and if you want MFRs, Chicago and Philly are the ones for those.

    Feel free to reach out anytime if I can help!

    2Reply
  • Tyisha G.
    OP
    Long Island, NY · Member since 2015 · 138 posts · 20 votes
    10y

    @Ali BooneThank you for sharing. Yes please do let me know how they are doing if you don't mind. We definitely be in touch. I will pm you.

    0Reply
  • Bram Spiero
    Investor · Fair Lawn, NJ · Member since 2014 · 384 posts · 189 votes
    10y

    @Tyisha G.

    On top of what has already been said here, I think there are two essential ingredients for working with turnkey companies.

    1. know your criteria, if the property doesn't meet them, walk away. If you don't have defined criteria or your just starting out, look at lots of properties, that more than anything else besides buying them and screwing up will help you to refine yours.

    2. Learn how to analyze RE deals. Never take pro forma's at face value, verify everything. This will also force you to become educated in the markets you're farming.

    No different really from assessing other deals.

    0Reply
  • Tyisha G.
    OP
    Long Island, NY · Member since 2015 · 138 posts · 20 votes
    10y

    @Bram SpieroThank you for sharing. I will certainly keep this in mind. I have been looking at many properties and will continue to do so before buying. Thanks again and all the best.

    0Reply
  • Bram Spiero
    Investor · Fair Lawn, NJ · Member since 2014 · 384 posts · 189 votes
    10y

    you're welcome. Always happy to help.

    0Reply
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