Thoughts on Turnkey REIs?

Question

Hello Everyone. Literally just signed up to BP a few moments ago. I am a newbie investor from San Diego thinking about buying my first rental property out of state in Atlanta, Alabama, Austin, Pennsylvania, and/or Detroit using a turnkey company. Are there any resources or recommendations that you can guide me towards? Thanks in advance and looking forward to increase my intelligence and wealth with the help of all of your knowledge and experience as I start this journey. :)

Alex Deacon · Answer

@Eric Inigo as @Gary Carver stated. Turn Key may not be the best way to go. I am in the Pittsburgh market and I dont know of any legitimate turnkey providers who you can trust and provide a good product. Think about it. If you provide turn key then why not just hold onto them yourself. Most turn key providers want to make a quick profit and then manage and handle all repairs for you for residual profit in the future. I am not saying they are all scam artists but please run your numbers and look closely at the market before committing to anyone or any area.

Gary Carver · Answer

@Eric Inigo.  Even though this is an easy entrance into Real estate . A lot  of times the value is not with Turnkeys, especially in the beginning. You might get value as you hold the property.

Timothy Moore · Answer

I agree with the folks above about further identifying your preferred market.

Once you get a chance to dig into the numbers, I will say that turnkey is generally a great way to start into real estate as it let's you leverage financing so that you need less cash down. It's also generally less risky than doing a BRRR or flip deal.

Now with that being said, be aware that turnkey providers are also in business to make money and not all turnkey deals are good. Be thorough in your due diligence, take time interviewing the right company and team to work with because you know you care about you money more than anyone else.

If you decide you'd like to invest in Detroit, I'm happy to talk to you more about the market and help you in the right direction. That my local market and i'm very familiar with it

Jarrod Covey · Answer

Hi @Eric Inigo - with the right boots on the ground any market can be turned into a turnkey.

Identifying one market to invest in to start then building a team around that city.

With the appreciation Austin is seeing, there is an opportunity to execute the BRRRR strategy and refinance into a favorable LTV.

It is worth noting that during the rent phase cash flowing is difficult here.

Mike D'Arrigo · Answer

@Eric Inigo what investment goals and criteria do you have that would lead you to all of those markets? They are all highly different markets with very different rates of returns and strengths and weaknesses. When I see such vastly different types of markets on someone's list, it usually indicates to me that they haven't clearly defined their objectives and criteria. An investor would invest in Austin for far different reasons than they would Detroit. Before doing anything, I strongly recommend you clearly identify your objectives and quantify them. If you're goal is cash flow and your criteria is to be in markets with growing populations, jobs and modern economies, then Indianapolis and Kansas City should definitely be on your list.

Ali Boone · Answer

Lots of resources out there! I run a turnkeys Facebook group (won't let me link to it on here but I can send it to you), lots of experienced turnkeys folks on here--I started buying them in 2011, and many others with experience--and tons of threads on here talking about turnkeys. I'm also just north of you in LA. As far as picking a market, I would vote for the opposite of what was suggested... I would [partially] choose your market via finding the best turnkey provider. There are some really good ones out there that are in markets I don't dig for investing, so I don't use them, but I'd say that starting by finding the good turnkey providers will save you time rather than picking a few markets you love only to find out there aren't good providers there. Just my two cents.

Jonathan Oh · Answer

@Eric Inigo If you invest via turnkeys expect to hold it for 5+ years at least. Also, do not strictly chase cash flow, and evaluate the deal as a whole - the numbers, the management, and the location. Make sure all 3 are good. In-house management provided by tk companies are usually not the best. The numbers may look good on the website, but reality may be starkly different if you end up in a bad neighborhood. Hope this helps.

Ron S. · Answer

Welcome aboard!  I agree with starting to narrow down your preferred market before looking for a company to partner with.  To help narrow down, figure out what numbers make sense to you and which markets can meet those numbers.  For example, I haven't heard a lot of newbies looking at Austin.  My numbers are really hard to meet there and it's typically a market for appreciation.  There are a lot of other factors that play into good markets, job growth, industry diversity, population growth, etc.

Once you have your market, take a look at the types of deals that can be found.  I started off in Kansas City and turnkey providers are a dime a dozen there, so I met with a bunch and purchased from one of them.  My second market was Pittsburgh and as someone already said turnkey providers aren't really a thing there, so I found an investor-friendly realtor and purchased off the MLS.

Scott Roberts · Answer

I had high hopes for Spartan invest, but I made an appointment and the girl missed it.  She apologized, said she didn’t see her calendar, and scheduled for the next day. She never called and lost my business.

I had a hard time even finding 1% deals through them. Oh well.

Dean Kaeo · Answer

@Eric Inigo I use Spartan Invest out of Alabama. Ask for Danny Cole. Great service. Still do your own sure diligence.

Thoughts on Turnkey REIs?

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