Turnkey Providers with In-house property management

18 Replies

Hi, I am relatively new RE investor from Arizona and in the process of researching Turnkey providers to purchase SFH/MF (duplex, triplex, quadplex) for cash flow and appreciation. Are there any with in-house property management? The ones that I have looked at so far(RWN, Roofstock, Norada) don't seem to. Some of the markets I am considering include GA, NC, FL, TX. All suggestions, comments for turnkey providers and markets welcome. Thank you

@Ritu Gupta I recently closed on a Single family home property in Cleveland with Martel Turnkey. They have a 3rd party property management but they are very reliable and I have not had any issue with them since I closed. 

Also, I used Roofstock to close on another property in Memphis, TN and it was completely worth it. They also have a 3rd party property management but extremely reliable. I have not had any trouble with them. 

@Ritu Gupta - Great post!  I think investing in a turnkey rental property that comes with in-house property management is one of the most important factors of success with your investment.  And you're right...it's very hard to find a turnkey rental property company that actually is the property management company as well. 

I run a turnkey company here in Jacksonville, FL and we have in-house property management as well.  I just sent you private message and would be happy to help in any way.

Another company that I think very highly of that also has in-house property management is REI Nation which is run by @Chris Clothier .  He's in 5-10 markets across the country and would be a great resource for you. 

@Ritu Gupta Ask yourself if in house property management is that important and why. In principle it sounds good but isn't always best. We've done it in house but now use 3rd party management. We found that it is extremely difficult to be the best at everything. It's hard to be great at finding good properties, doing good rehabs and providing excellent management. We've chosen to turn the management over to well vetted 3rd parties that are true experts at management and that is their whole business. The main argument for in house is that they will do a better job because the turn key company controls them but that argument doesn't really hold with a 3rd party PM that is well vetted and screened. That PM is often managing hundreds of properties for a turn key company. Often times, the majority of their doors come from the turn key company so they are significant motivation to do a good job. A turn key company that does a signifcant volume will have have a lot of control over their PM. There is no guarantee that an in house PM will do a better job. In fact, I know of a small turn key company that was doing in house management. They got over extended and started robbing Peter to pay Paul by using renters deposits to keep things going. Property management is a key part of your success and personally, I think you want to have the best management regardless of whether it is in house or 3rd pary. 

Hey Ritu! I've bought and been involved with turnkeys since 2011 (I feel like I eat, sleep, and breathe them). I second Mike's question- any reason for the in-house property management requirement? I've looked at that debate-- in-house vs. 3rd party-- for years, ever since I've been involved with them, and my current pros and cons list for each balance each other out. I've not yet seen such a major pro to in-house that makes me want to insist on it. I actually, in all honesty, tend to lean towards 3rd party. Happy to expand on why, if you're interested.

Duplexes are still doable in turnkey world, but triplexes and fourplexes are tough. Evvvvvery now and then a triplex will still come up, but it's not often. I haven't seen a fourplex in years.

As far as the markets you mention... all of those are going to be on the most minimal side of cash flow in terms of the cash flow range of turnkeys. NC I don't know of any turnkey providers. Texas still has some, but they're a little sparse. Jacksonville is an option in FL but that's the only city I know there that will cash flow. Atlanta doesn't have any turnkey providers left there that I know of, but I do work with 'former turnkeys' there that are now being sold as off-market properties. I'm from Atlanta and most of my personal properties are there. Happy to answer any questions on those.

Not sure if any of that is helpful!

It's not the market you mentioned, but I use a turnkey company in Indiana with an in-house PM, and so far so good.

Hi @Ritu Gupta   We offer turnkey properties in Wisconsin and feel it is important to be very closely aligned with property management.  Our property management group is owned almost entirely by our turnkey division, with the remaining portion owned by the general manager of the property management company to ensure he has some skin in the game.  We feel this better allows us to own our promises and gives our clients the comfort in knowing we can't pass the buck.  Best of luck in your investing future! 

@Ritu Gupta , as some others mentioned, I would not be whole-heartedly opposed to turnkey operators that use 3rd party management.  Management overall tends to be a scale business, if there is not adequate density in an area, it does not make sense to have a management company present there.  

I would also be very cognizant of whether the number being presented look good because the management company is charging below market rates.  There is no issue with this on its face, but if you ever need to replace the management company, and the in-house manager was charging below market rates (there is a chance they do this to make more money on the sale, since they are the flipper too), your returns will take a hit.


@Ritu Gupta I think its extremely important to talk to investors who have actually worked with a turnkey company and what their experience has been. When I decided to work with Martel Turnkey, I spoke with 2 investors who had bought multiple turnkeys with them and that eased me into the process of buying. So I would suggest you reach out to the company you are potentially thinking of investing with and ask them to connect you to investors who have purchased property from them. You can set up a list of questions to ask them regarding property management and returns on investment. That might help with the decision making. Good luck 

Hi Ritu, you need to look at a 10 year plan with RE. There are various 'levels' as I call them with how you can invest in RE. Level 1 is doing everything yourself from identifying the property, doing the analysis for CF or appreciation, doing the rehab if required, leasing and PM. You may also consider farming out the PM to a PM company. Level 2 is where you want to be a passive investor and you go the turnkey provider route. As mentioned above there are companies that do everything from soup to nuts. However my concern with these is the fact that they do not provide any guaranties on CF (forget appreciation) and even PM costs. I feel that I would be much more comfortable with a turnkey provider who says I have built or rehabbed the property and stand behind it for 5 yrs. They only offer 1 yr. Level 3 is where you take passive to the next level and fund with crowd funding companies like Crowdstreet, Realty Moghul etc. There are some very good deals to be had here and your risk is also reduced. So all depends on what your strategy is. All the best. 

Rita,

Please note there are many Turnkey companies that are in the markets you have identified. You would want to clarify with the company – if they provide in-house property management. As a future client, you want to be sure that they not only know how to manage properties, but also their business. I simply advise you to call the prospects and just ask simple questions. By simply calling them, you will learn quickly how responsive they are to calls. However, you must be very careful accepting subpar management because the service came attached to a turnkey or passive investment. 

Respectfully, 

Originally posted by @Steve Donovan :

Hi @Ritu Gupta  We offer turnkey properties in Wisconsin and feel it is important to be very closely aligned with property management.  Our property management group is owned almost entirely by our turnkey division, with the remaining portion owned by the general manager of the property management company to ensure he has some skin in the game.  We feel this better allows us to own our promises and gives our clients the comfort in knowing we can't pass the buck.  Best of luck in your investing future! 

Thanks Steve. I am not very familiar with the Wisconsin market at all. Feel free to message me with more detailed information. I'd be happy to take a look