Turnkey in Memphis TN

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Turnkey in Memphis TN

Shauna Gingras
Los Angeles, CA · Member since 2019 · 10 posts · 2 votes

Hello

I am looking to make my first property purchase and after trying to manage it alone I have started looking at turnkey options.  I live in California but am looking to invest in Memphis.

My thoughts are leveraging turnkey for my first few purchases will give me access to speed and resources that I don't have in an out of state market and I am also looking to see the practical pieces of the process so I can model those going forward.  I know that I will pay a premium for the convenience of turnkey but I'm thinking it may be worth it to start this way before taking one on myself/building my team to manage it.  

Has anyone gone this route?  Would love to hear your thoughts and experiences.

Thanks all!

Shauna

1Reply
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Jonathan Oh
Investor · Las Vegas, NV · Member since 2019 · 499 posts · 259 votes
7y

@Shauna Gingras I bought turnkeys myself and there is nothing wrong with it. Turnkeys served as a good starting point for me. I didn't get the experience of calculating and managing rehabs, but I did get experience of researching markets, analyzing deals, going through the purchase process, dealing with pms, and knowing what to expect from vacancies.

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  • Account Closed
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    7y
    Originally posted by @Shauna Gingras:

    Hello

    I am looking to make my first property purchase and after trying to manage it alone I have started looking at turnkey options.  I live in California but am looking to invest in Memphis.

    My thoughts are leveraging turnkey for my first few purchases will give me access to speed and resources that I don't have in an out of state market and I am also looking to see the practical pieces of the process so I can model those going forward.  I know that I will pay a premium for the convenience of turnkey but I'm thinking it may be worth it to start this way before taking one on myself/building my team to manage it.  

    Has anyone gone this route?  Would love to hear your thoughts and experiences.

    Thanks all!

    Shauna

     Sure, lots of people buy Turnkeys in Memphis and Phoenix as well as Columbus and other places. Our Turnkey buyers for Phoenix are generally from California because of the proximity, but some like the lower value products in the midwest. I'd suggest visiting the properties before you buy, tends to be a lot of misunderstanding when bought OOS and no visit. There is nothing like meeting the people you are doing business with. Questions always come up and you want to be sure the principal in the transaction will follow through. As an aside we just got back from Laguna Beach and had a nice relaxing visit. We stop and see fellow investors on the trips. Anyway, you can get an idea of how a great Turnkey can work by looking at the spreadsheet at:

    Average Turnkey Cash Flow Per Door In Phoenix Metro Area No Bank Needed

    https://www.biggerpockets.com/forums/600/topics/584916-average-cash-flow-per-door-in-phoenix-metro-area

    1Reply
  • Shauna Gingras
    OP
    Los Angeles, CA · Member since 2019 · 10 posts · 2 votes
    7y

    Thanks for sharing Mike, super informative! 

    I did look at AZ for the proximity but ended up choosing Memphis based on a lower barrier to entry, although after reading your post perhaps I am wrong about that. 

    I'm planning to visit before I purchase anything, I didn't realize how many people didn't make site visits until I read the horror stories posted from some of the Turnkey scams.  Longer term I may feel better about purchasing properties without visiting them once I am confident I have a good Turnkey partner in place.

    Are the majority of your deals Subject To? I learned more from your post than a week of googling ;) Thanks!

    0Reply
  • Wendy PattonBusiness Member
    Real Estate Consultant · Clarkston, MI · Member since 2009 · 864 posts · 350 votes
    7y

    I think the biggest concern for anyone looking to do a turnkey anywhere - especially out of state is the property manager.  They are the KEY!!!   And.....they are not easy to find (an honest good one).   I sold hundreds of turn keys during the down turn here in Michigan but I had the key behind that with the good property manager in place who is still managing those 10 years later.   

    Michigan Real Estate Investors540 Reviews
    WebsiteView Page
    0Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    7y
    Originally posted by @Shauna Gingras:

    Hello

    I am looking to make my first property purchase and after trying to manage it alone I have started looking at turnkey options.  I live in California but am looking to invest in Memphis.

    My thoughts are leveraging turnkey for my first few purchases will give me access to speed and resources that I don't have in an out of state market and I am also looking to see the practical pieces of the process so I can model those going forward.  I know that I will pay a premium for the convenience of turnkey but I'm thinking it may be worth it to start this way before taking one on myself/building my team to manage it.  

    Has anyone gone this route?  Would love to hear your thoughts and experiences.

    Thanks all!

    Shauna

     Hello and welcome! Best of luck to you. 

    0Reply
  • Sisai Birhanu
    Rental Property Investor · Ashburn, VA · Member since 2018 · 13 posts · 1 vote
    7y

    Hey Shauna,

    I did exactly what you are trying to do: here is a summary.

    (1) Used roofstock.com as it was convenient to see all the info in one place to make an informed decision.

    (2) The house was built in 2018 in Cordova TN, listed for $192k  got it for $189k.  I am hedging against future repair costs.  

    (3) It was rented for $1,575. I put down 25% and it would cash flow ~$200.  It has been five months and so far so good.

    (4) I retained the PM that was already there.

    (5) I didn't go to physically look at it. Probably will this summer. 

    The lesson: 

    That got me started and it is not as scary or difficult as it appears. My next two deals were BRRRR deals and I could see the light of financial freedom/wealth at the end of the tunnel.

    Please reach out if you need details on my experience and/or the numbers. 

    Good luck!

    0Reply
  • Mike Huerta
    East Bay Area, CA · Member since 2019 · 38 posts · 11 votes
    7y

    @Sisai, what PM did you move forward with? 

    0Reply
  • Nicholas Parish
    Rental Property Investor · Kansas City, MO · Member since 2019 · 40 posts · 19 votes
    7y

    @Shauna Gringas,

    Congratulations on beginning to take the first step! I would recommend Memphis Invest. Chris Clothier is active on BP and it might be worth taking a look at his profile to get a better idea on what he and his company represent as an investment option in your portfolio.

    I am biased but I would also recommend taking a look at the Kansas City market. If you have any questions in that regard I would be more than happy to share more information. 

    Regards,

    Nicholas Parish

    0Reply
  • Shauna Gingras
    OP
    Los Angeles, CA · Member since 2019 · 10 posts · 2 votes
    7y

    @Wendy Patton thanks!  One of the best things I have learned from the folks here on BP is how important a good PM is.  I'm so thankful I found that out!

    I'm going to meet with local PM companies hoping that I can find a good one.  Would appreciate any tips you may have for interviewing them to weed out the dishonest ones.

    Thanks Wendy!

    0Reply
  • Shauna Gingras
    OP
    Los Angeles, CA · Member since 2019 · 10 posts · 2 votes
    7y

    @Sisai Birhanu thanks for sharing.  I'm totally a process person :) and what you did is exactly where I am aiming to go.

    Congratulations on the momentum you've built, amazing!

    0Reply
  • Shauna Gingras
    OP
    Los Angeles, CA · Member since 2019 · 10 posts · 2 votes
    7y

    @Tom Ott thanks!

    0Reply
  • Shauna Gingras
    OP
    Los Angeles, CA · Member since 2019 · 10 posts · 2 votes
    7y

    @Nicholas Parish thanks! Yes, I've heard great things about Memphis Invest, I'm going to check in with Chris and also try to meet with them when I make a trip to Memphis in mid May.

    I'll check out the Kansas City market as well, and I'll take you up on your offer of more info on that market.  Thanks so much!

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    7y

    @Shauna Gingras You shouldn't assume that you'll be paying a premium for turn key. Most of the good turn key companies sell at market value which is what you would pay for something on the MLS. The turn key companies that are selling at big premiums over market value are the ones that sell only to cash buyers or don't allow for an appraisal value. You should be careful of those. Turn key companies don't have to sell above market value because they are buying further upstream at better prices, have significant economies of scale in rehab costs and are better able to control their labor costs.

    0Reply
  • Shauna Gingras
    OP
    Los Angeles, CA · Member since 2019 · 10 posts · 2 votes
    7y

    @Mike D'Arrigo Thanks! The more I've learned recently about Turnkey I was beginning to think that the "premium" I was expecting/trying to avoid might not even be real.  Like any business the good companies are just pro's and run their business really well. Thanks for the details on their process!

    0Reply
  • Jonathan Oh
    Investor · Las Vegas, NV · Member since 2019 · 499 posts · 259 votes
    7y

    @Shauna Gingras I bought turnkeys myself and there is nothing wrong with it. Turnkeys served as a good starting point for me. I didn't get the experience of calculating and managing rehabs, but I did get experience of researching markets, analyzing deals, going through the purchase process, dealing with pms, and knowing what to expect from vacancies.

    2Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Shauna Gingras memphis turnkey, memphis invest, buy memphis now, memphis investment properties. All are turnkey providers in memphis. I’d check them out and see which one fits your goals

    2Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    7y

    Shauna I would look at all excellent turnkey companies, there are not that many, and then find the best match for you. No reason to limit yourself to only Memphis based turnkey operators.

    0Reply
  • AJ Singh
    Rental Property Investor · Orange County, CA · Member since 2016 · 513 posts · 374 votes
    7y

    @Shauna Gingras

    Good luck in your search. @Caleb Heimsoth has mentioned some great providers.

    I would encourage you to do your own due diligence as well and make sure you are able to scale to five properties in a couple of years.

    buying one or two OOS is not going to result in a lot of cash flow.

    locally you can look at duplexes in riverside and san bernardino county and yields are not that bad locally as well.

    2Reply
  • Account Closed
    Investor · Member since 2019 · 24 posts · 22 votes
    7y
    Originally posted by @Account Closed:

    Shauna I would look at all excellent turnkey companies, there are not that many, and then find the best match for you. No reason to limit yourself to only Memphis based turnkey operators.

    I'm also interested in turnkey companies - Michael, do you mind sharing the other companies you're referring to?

    0Reply
  • Percy Joe Stanfield
    Member since 2019 · 2 posts · 0 votes
    7y

    Hello Shauna

    I live in Memphis area(Arlington) - I am looking at turnkey myself- the best I have come across is Midsouth homebuyers-Terry Kerr -great guy and very successful- If you choose to use them please give them my name -Joe Stanfield -they do pay a referral fee on each purchase!  Good Luck and if you need a RE friend with like interest let me know I'm happy to help!

    All the best!

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    7y
    Originally posted by @Shauna Gingras:

    Hello

    I am looking to make my first property purchase and after trying to manage it alone I have started looking at turnkey options.  I live in California but am looking to invest in Memphis.

    My thoughts are leveraging turnkey for my first few purchases will give me access to speed and resources that I don't have in an out of state market and I am also looking to see the practical pieces of the process so I can model those going forward.  I know that I will pay a premium for the convenience of turnkey but I'm thinking it may be worth it to start this way before taking one on myself/building my team to manage it.  

    Has anyone gone this route?  Would love to hear your thoughts and experiences.

    Thanks all!

    Shauna

     Welcome to the site Shauna. Tons of turnkey markets out there. Many are well represented by sellers & turnkey operators here on BiggerPockets. The most popular markets are

    • Cleveland
    • Toledo
    • Memphis
    • Birmingham
    • KC
    • Indy
    • Detroit

    Each of these markets is popular with turnkey investors because of the low barrier to entry, high rental demand & high rent to price ratio. I recommend setting up keyword alerts for each area as they are discussed in the forums daily with advertisements posted in the BiggerPockets marketplace hourly.

    One thing to note when looking at the individual markets, you can make or loose money in any market. Don't think that one particular out of state market will shoot you to success or abject failure. It's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

    • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
    • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
    • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
    • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
    • Make sure your property manager is a licensed real estate brokerage.
    • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.
    2Reply
  • Daniel MendezPro Member
    Investor · Dallas, TX · Member since 2018 · 254 posts · 48 votes
    7y

    @Sisai Birhanu

    Were your BRRRR properties out of state?

    0Reply
  • Santiago Mejia
    Lender · Memphis, TN · Member since 2017 · 14 posts · 6 votes
    7y

    Hey, I am not a turkey provider but I know many of them here in Memphis. It is a great market for investment in real estate. I would recommend you to talk with @Douglas Skipworth with CrestCore. They have a huge operation here in Memphis. 

    Good luck 

    1Reply
  • Sisai Birhanu
    Rental Property Investor · Ashburn, VA · Member since 2018 · 13 posts · 1 vote
    7y

    @Mike Huerta the PM I retained is CrestCore.

    @Daniel Mendez Yes

    0Reply
  • Bo Kim
    Rental Property Investor · Los Angeles, CA · Member since 2016 · 141 posts · 123 votes
    7y
    Originally posted by @Shauna Gingras:

    Hello

    I am looking to make my first property purchase and after trying to manage it alone I have started looking at turnkey options.  I live in California but am looking to invest in Memphis.

    My thoughts are leveraging turnkey for my first few purchases will give me access to speed and resources that I don't have in an out of state market and I am also looking to see the practical pieces of the process so I can model those going forward.  I know that I will pay a premium for the convenience of turnkey but I'm thinking it may be worth it to start this way before taking one on myself/building my team to manage it.  

    Has anyone gone this route?  Would love to hear your thoughts and experiences.

    Thanks all!

    Shauna

     I did the exact same thing. Im from LA and started w/ Turnkey in Kansas City, Indy, and Little Rock, then created my own team and started during BRRRRs.

    I highly recommend speaking with @Alex Craig , he has a sweet operation going on in Memphis and Little Rock.

    1Reply
  • Shauna Gingras
    OP
    Los Angeles, CA · Member since 2019 · 10 posts · 2 votes
    7y

    @Caleb Heimsoth

    Perfect, thanks Caleb!

    0Reply
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