Any one owns a turn-key real estate (kris krohn)?

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Any one owns a turn-key real estate (kris krohn)?

Andrew Bailey
Member since 2019 · 17 posts · 2 votes

hi, Recently, I found about a turn-key company owned by Kris Krohn and I talked to them on phone. Anyways, I want to know if this a good deal or not. Worse case, I lose thousands of dollars 

Their main selling part was that they can take my $60k investment and turn it into 20 houses in next 15 years which will generate $400 cash-flow per house. These houses are single family houses and location is Tennessee, Floridia and Texas. Also they don't keep houses for long terms, which means they sell and re-buy houses every 5 years to lower the high cost of maintenance, such as the roof.

Draw back of this turn-key company is that all of the houses will be 50/50 partnership. So on each house, they will receive $400 cash-flow and I will receive $400 cash-flow. House ownership also will be 50/50.

Total investment they are asking is for $60k

  • $10k will go into up front fee
  • $25k will go into down payment for house# 1
  • $25k will go into down payment for house # 2


both houses will have the following:

  • Houses purchase price is around $140k
  • 25% equity position
  • 23% ROI (might be gross roi)
  • 7% to 10% cash-on-cash ROI
  • $400 per month cash-flow (after all expenses such as mortgage, insurance, property management etc...)
  • closing cost will be in mortgage




Their 15 year plan will follow: (rough idea)
Year#1

  • Pay $10k up front fee
  • buy 2 houses with $50k down payment
  • cash flow $800

Year#3

  • buy 2 more houses with refinancing
  • cash flow $1,600

Year#5

  • Sell 4 houses and buy 5 more houses
  • Cash flow $2,000

Year#7

  • 7 houses
  • cash flow $2,800

Year#9

  • 11 houses
  • Cash flow $4,400

Year#10

  • sell 11 old houses and buy 12 new houses
  • cash-flow $4,800

Year#12

  • 15 houses
  • cash flow $6,000

Year#14

  • 18 houses
  • cash flow $7,200

Year#15

  • sell all houses and buy 20 houses
  • cash flow $8,000
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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
7y
Originally posted by @Andrew Bailey:

@Wayne Brooks @David Janosik

Thank you for ur advise. I agree, giving up 50% of the equity on house is bad deal so I talked to them on phone. They said that first 2 houses will be owned by me 100%. anything after will be 50/50.

for basically for $60k they will buy 2 houses and put it under my name 100%.

I am thinking to just get 2 houses with them. after 3 years, I can sell those houses and buy more houses locally. It's hard to find deals for me update NY bc of high taxes and its my first time. I guess it mainly comes downs to if I want to pay $10k up front fee

They said cash-flow is pretty good rough idea and some times its even more. I just ran some numbers using zillow cal... lets say 

Houses purchase value = $140k

Down payment = $28,000

  • Mortgage = $788 (P&I = $601, Taxes = $136, Insurance = $50)
  • Repairs $100, Vacancy = $100, PM = $200
  • Total expenses = $1,188

Rent $1,600

Cash-flow = $412

RE-read the sentence where you wrote that you give them $60k and they will buy two houses and put them in your name 100%.

Then read it again and understand that this is not the way you buy real estate....EVER!  

I have no idea who this person or company is, but I can tell you from 16 years of experience in the Turnkey space and seeing all the scammers come and go, there is a 0% chance that the program you laid out in your original post will work.  Zero chance.  

You cannot build a 20 house portfolio in the next 15 years for a one time charge today of $60k.  You are guaranteed to lose your money. 

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42 Replies

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  • Andrew Bailey
    OP
    Member since 2019 · 17 posts · 2 votes
    7y

    This sound like a Pyramid Scheme to me. I could be wrong

    0Reply
  • Kevin Martin
    Jacksonville, FL · Member since 2013 · 226 posts · 116 votes
    7y

    Here fishy fishy! 

    0Reply
  • Andrew Bailey
    OP
    Member since 2019 · 17 posts · 2 votes
    7y
    Originally posted by @Kevin Martin:

    Here fishy fishy! 

    I am new to real estate and I can really use your advise on this. I know alot of people are partnering with him so that makes me think its not fraud. Kris does have good track record

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Sounds like total crap. 

    Looks like you are putting up all the money, and giving up 50% equity?

    The projection numbers are pipe dream crap. 

    As far as I know Kris Kron  is/was a wholesaler mentor/coach out of Martin county Fl. This seems like a new venture. 

    Clayton Morris investments had thousands of buyers buying “turn key”.....that didn’t end so well. 

    1Reply
  • David Janosik
    Orlando, FL · Member since 2019 · 4 posts · 1 vote
    7y

    I spent some considerable time on BP trying to find anyone that has worked with him and haven’t been able to.

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    @Andrew Bailey If you are new to real estate, definitely stay away from this. The projections on cash flow from turkeys never work out. 

    1Reply
  • Andrew Bailey
    OP
    Member since 2019 · 17 posts · 2 votes
    7y

    @Wayne Brooks @David Janosik

    Thank you for ur advise. I agree, giving up 50% of the equity on house is bad deal so I talked to them on phone. They said that first 2 houses will be owned by me 100%. anything after will be 50/50.

    for basically for $60k they will buy 2 houses and put it under my name 100%.

    I am thinking to just get 2 houses with them. after 3 years, I can sell those houses and buy more houses locally. It's hard to find deals for me update NY bc of high taxes and its my first time. I guess it mainly comes downs to if I want to pay $10k up front fee

    They said cash-flow is pretty good rough idea and some times its even more. I just ran some numbers using zillow cal... lets say 

    Houses purchase value = $140k

    Down payment = $28,000

    • Mortgage = $788 (P&I = $601, Taxes = $136, Insurance = $50)
    • Repairs $100, Vacancy = $100, PM = $200
    • Total expenses = $1,188

    Rent $1,600

    Cash-flow = $412 

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    @Andrew Bailey They won’t work out that well.....you’ve been warned. 

    So you know, they’re probably making $20k or so off each purchase as the typical model is to buy some junker in a crap neighborhood, put lipstick on the pig, sell it to you above value. 

    1Reply
  • Michael A.
    Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
    7y

    @Andrew Bailey This is obviously a scam. Also, what happens when the well dries up, so to speak? These incredible deals are going to be around forever, even in a recession? These guys are just going to magically print money for you like this over 15 years?

    It is great that you posted this here before buying into this.

    if it sounds too good to be true then...

    Lastly, your $20k seems like a decent down payment on a nice rental. Go buy one and be the master of your own destiny going forward.

    0Reply
  • Gary McKee
    Member since 2019 · 1 post · 2 votes
    7y

    So after gathering all the info from these threads it sounds like he's capturing money from this many different ways (this is all speculative and I have no definitive facts but here are my educated guesses):

    Kris and/or affiliates own the houses they are selling to you under this turn key program and sell it to you at a premium.

    They then charge you a $10k acquisition fee fo access to his team.

    He also owns the closing title company and he owns the mortgage brokerage so he's making commission on all of that as well.

    He most likely owns the property management company within the markets he sells to his partners.

    He also splits ALL of the ROI 50/50 including the monthly cash flow with 100% of your money..

    Is all of this bad, not necessarily. Someone would be making money off of all these transactions regardless but he will never lose, he's made all of his money upfront. If the property doesn't cash flow or appreciate it doesn't matter because that's icing on the cake for him however he won't be in business if he doesn't provide a return. His team is also doing all the work and there's definitely a cost to building a team like this. He even has team members that specialize in closing tenants on his "compassionate financing"! The investing partner is doing nothing but writing a check to earn a 10% ROI. 401k/IRA earning 7-8% most likely. Bottom line he has created a massive team and has learned how to capitalize on every aspect of the transaction!

    If you're not willing to find the hot markets, find a property with a 15% equity position, make sure the property cash flows by doing the real math, find the lenders, contract out the work that every house requires to attract renters, SELL the "compassionate financing" system and replicate this over and over then you'll never take action!  

    Kris Krohn fills the void for NON action takers, this always comes at a high price but I believe it's better than nothing.  He is an awesome motivator and I believe he really does help people.  There's no doubt that he has assembled an impressive team that's there for NON action takers that comes at a steep price.  He also offers all of this info absolutely free on youtube for the action takers who want to do it on there own!    

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

    @Tom ott knows a lot about turnkey check with him he wrote some articles

    0Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    7y
    Originally posted by @Andrew Bailey:

    @Wayne Brooks @David Janosik

    Thank you for ur advise. I agree, giving up 50% of the equity on house is bad deal so I talked to them on phone. They said that first 2 houses will be owned by me 100%. anything after will be 50/50.

    for basically for $60k they will buy 2 houses and put it under my name 100%.

    I am thinking to just get 2 houses with them. after 3 years, I can sell those houses and buy more houses locally. It's hard to find deals for me update NY bc of high taxes and its my first time. I guess it mainly comes downs to if I want to pay $10k up front fee

    They said cash-flow is pretty good rough idea and some times its even more. I just ran some numbers using zillow cal... lets say 

    Houses purchase value = $140k

    Down payment = $28,000

    • Mortgage = $788 (P&I = $601, Taxes = $136, Insurance = $50)
    • Repairs $100, Vacancy = $100, PM = $200
    • Total expenses = $1,188

    Rent $1,600

    Cash-flow = $412

    RE-read the sentence where you wrote that you give them $60k and they will buy two houses and put them in your name 100%.

    Then read it again and understand that this is not the way you buy real estate....EVER!  

    I have no idea who this person or company is, but I can tell you from 16 years of experience in the Turnkey space and seeing all the scammers come and go, there is a 0% chance that the program you laid out in your original post will work.  Zero chance.  

    You cannot build a 20 house portfolio in the next 15 years for a one time charge today of $60k.  You are guaranteed to lose your money. 

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

    hi, Recently, I found about a turn-key company owned by Kris Krohn and I talked to them on phone. Anyways, I want to know if this a good deal or not. Worse case, I lose thousands of dollars 

    Their main selling part was that they can take my $60k investment and turn it into 20 houses in next 15 years which will generate $400 cash-flow per house. These houses are single family houses and location is Tennessee, Floridia and Texas. Also they don't keep houses for long terms, which means they sell and re-buy houses every 5 years to lower the high cost of maintenance, such as the roof.

    Draw back of this turn-key company is that all of the houses will be 50/50 partnership. So on each house, they will receive $400 cash-flow and I will receive $400 cash-flow. House ownership also will be 50/50.

    Total investment they are asking is for $60k

    • $10k will go into up front fee
    • $25k will go into down payment for house# 1
    • $25k will go into down payment for house # 2


    both houses will have the following:

    • Houses purchase price is around $140k
    • 25% equity position
    • 23% ROI (might be gross roi)
    • 7% to 10% cash-on-cash ROI
    • $400 per month cash-flow (after all expenses such as mortgage, insurance, property management etc...)
    • closing cost will be in mortgage




    Their 15 year plan will follow: (rough idea)
    Year#1

    • Pay $10k up front fee
    • buy 2 houses with $50k down payment
    • cash flow $800

    Year#3

    • buy 2 more houses with refinancing
    • cash flow $1,600

    Year#5

    • Sell 4 houses and buy 5 more houses
    • Cash flow $2,000

    Year#7

    • 7 houses
    • cash flow $2,800

    Year#9

    • 11 houses
    • Cash flow $4,400

    Year#10

    • sell 11 old houses and buy 12 new houses
    • cash-flow $4,800

    Year#12

    • 15 houses
    • cash flow $6,000

    Year#14

    • 18 houses
    • cash flow $7,200

    Year#15

    • sell all houses and buy 20 houses
    • cash flow $8,000

     This sounds insane. I don't even know where to start. I would pass.

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

    @Wayne Brooks @David Janosik

    Thank you for ur advise. I agree, giving up 50% of the equity on house is bad deal so I talked to them on phone. They said that first 2 houses will be owned by me 100%. anything after will be 50/50.

    for basically for $60k they will buy 2 houses and put it under my name 100%.

    I am thinking to just get 2 houses with them. after 3 years, I can sell those houses and buy more houses locally. It's hard to find deals for me update NY bc of high taxes and its my first time. I guess it mainly comes downs to if I want to pay $10k up front fee

    They said cash-flow is pretty good rough idea and some times its even more. I just ran some numbers using zillow cal... lets say 

    Houses purchase value = $140k

    Down payment = $28,000

    • Mortgage = $788 (P&I = $601, Taxes = $136, Insurance = $50)
    • Repairs $100, Vacancy = $100, PM = $200
    • Total expenses = $1,188

    Rent $1,600

    Cash-flow = $412

    RE-read the sentence where you wrote that you give them $60k and they will buy two houses and put them in your name 100%.

    Then read it again and understand that this is not the way you buy real estate....EVER!  

    I have no idea who this person or company is, but I can tell you from 16 years of experience in the Turnkey space and seeing all the scammers come and go, there is a 0% chance that the program you laid out in your original post will work.  Zero chance.  

    You cannot build a 20 house portfolio in the next 15 years for a one time charge today of $60k.  You are guaranteed to lose your money. 

     Lol, where do we even start to explain why this doesn't work? It's literally one of the most insane pitches I have ever seen.

    1Reply
  • Andrew Bailey
    OP
    Member since 2019 · 17 posts · 2 votes
    7y

    @Wayne Brooks @James Wise @Chris Clothier @Michael A.

    oh wow, silly me, I was about to give them my $60k saving. Kris Team said everything that I wanted to hear and convinced me 100% that I could be making $10k per month in 15 year with this deal. 

    I am so glad I came here on biggerpockets first. I  will not be investing with this turn-key company. Hopefully this help other people who are thinking to invest with Kris Company. 

    I will try to buy a 2 family house my self locally now

    Again Thanks for your guys advise, it helped a lot

    2Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
    7y
    Originally posted by @Andrew Bailey:

    @Wayne Brooks @James Wise @Chris Clothier @Michael A.

    oh wow, silly me, I was about to give them my $60k saving. Kris Team said everything that I wanted to hear and convinced me 100% that I could be making $10k per month in 15 year with this deal. 

    I am so glad I came here on biggerpockets first. I  will not be investing with this turn-key company

    I will try to buy a 2 family house my self locally now

    Again Thanks for your guys advise, it helped a lot

    Good move. Sounds like a much safer option for you.

    0Reply
  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    @Andrew Bailey

    Assume we use the fantasy rents and fantasy expenses(which are unrealistic)in your example:

    -The Total Cash flow from 1 house is $400.....not $400 for each partner($800)

    -When you “refinance” every 2 years...

    ——this assumes the properties had to have gone up 25% in value to be Able to refinance, in 2 years

    ——that means you are borrowing more money which means a higher payment, which means less cash flow

    —-there is not financing available at 15% down

    ——there would have to be an endless supply of these homes

    Only those truly ignorant to real estate investing and blind to the above points could believe any of this.   

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Chris Clothier:
    Originally posted by @Andrew Bailey:

    @Wayne Brooks @David Janosik

    Thank you for ur advise. I agree, giving up 50% of the equity on house is bad deal so I talked to them on phone. They said that first 2 houses will be owned by me 100%. anything after will be 50/50.

    for basically for $60k they will buy 2 houses and put it under my name 100%.

    I am thinking to just get 2 houses with them. after 3 years, I can sell those houses and buy more houses locally. It's hard to find deals for me update NY bc of high taxes and its my first time. I guess it mainly comes downs to if I want to pay $10k up front fee

    They said cash-flow is pretty good rough idea and some times its even more. I just ran some numbers using zillow cal... lets say 

    Houses purchase value = $140k

    Down payment = $28,000

    • Mortgage = $788 (P&I = $601, Taxes = $136, Insurance = $50)
    • Repairs $100, Vacancy = $100, PM = $200
    • Total expenses = $1,188

    Rent $1,600

    Cash-flow = $412

    RE-read the sentence where you wrote that you give them $60k and they will buy two houses and put them in your name 100%.

    Then read it again and understand that this is not the way you buy real estate....EVER!  

    I have no idea who this person or company is, but I can tell you from 16 years of experience in the Turnkey space and seeing all the scammers come and go, there is a 0% chance that the program you laid out in your original post will work.  Zero chance.  

    You cannot build a 20 house portfolio in the next 15 years for a one time charge today of $60k.  You are guaranteed to lose your money. 

    the Oracle of Memphis has spoken..  this wont work on pretty much all levels  too much cash ripped out up front  relying on refinances that may or may not come .. appreciation which is not a guarantee  plus other than Chris here show me any other TK type out fit that has been in business for 15 years.. that's a LOOOONG time in this industry..  And then what?  when they move on to the next shinny guruish object.  

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  • Michael A.
    Investor · Richmond, VA · Member since 2016 · 164 posts · 114 votes
    7y

    @Wayne Brooks I just want to second the notion above from Wayne - it relies on an endless supply of these homes. How on earth can someone guarantee that?

    0Reply
  • David B.
    Investor · Worcester County, MA · Member since 2016 · 122 posts · 72 votes
    7y

    In addition to all the potential issues that people have pointed out above, I would worry about the property management, the condition of the houses ( are they well renovated?), and the grade (B,C,D?) of the neighborhoods.

    0Reply
  • Tim Davids
    Real Estate Broker · NW Indiana · Member since 2014 · 99 posts · 30 votes
    7y

    Take your 60k and buy 1 house free and clear for yourself. Re-invest the rent money for those 15 years...

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    7y

    I thought I saw a bad youtube video on this guy?

    0Reply
  • Brian Rice
    Member since 2018 · 8 posts · 9 votes
    7y

    well I have been to 4 of Kris events in Provo Utah, and have met several people who love his Turn Key partnering program. Some people have 1  -4 houses and are loving it. .. but you could also do that yourself or hire Done For You Real Estate .  KK is legit but he does charge fees to put his team to work.

    Brian 

    1Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    7y
    Originally posted by @Andrew Bailey:
    Originally posted by @Kevin Martin:

    Here fishy fishy! 

    I am new to real estate and I can really use your advise on this. I know alot of people are partnering with him so that makes me think its not fraud. Kris does have good track record

     A lot of people partnered with Bernie Madoff too. 

    0Reply
  • Randall Gonzalez
    Member since 2018 · 6 posts · 3 votes
    7y

    @Brian Rice is present in one of Kris krohn videos. Thanks for posting all this useful informations for others like me who are considering investing with him. 

    0Reply
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