How do you find reputable Turnkey companies?

Question

Hello all,

What questions do you ask to see whether a turnkey company is reputable? Does anyone have any recommendations for good turnkey companies? I am in the Raleigh area, but am open to investing out of state. I recently received an email from bigger pockets and a turnkey company was sponsored in it, does that mean it is reputable/is that an endorsement from Bigger Pockets? Sorry for all the questions and thank you in advance!

Karen Braddy

Karen Braddy · Answer

Thank you both so much, I really appreciate the helpful info!

Lane Kawaoka · Answer

I started with turnkey remote rentals in 2009-2015 while working my engineering W2 job. Then went into syndications once my net worth went over 500k. Overall @Drew Sygit is right but if your net worth is low and you are busy its a great way to get started.

Frank Rodrigues · Answer

@Karren Braddy From having over a decade of experience in working with turnkey providers I would recommend first to have a conversation over the phone with them and see what they actually provide from A-Z and be sure they are true turnkey providers (with property management) and a real portfolio to look at with multiple options. I would also recommend travelling to see the actual properties if you are not 100% sure, this is your hard-earned money so you want to make sure it's going into the best opportunity possible. There are some great markets that I have experience with so feel free to PM me if you have any questions. I hope that helps and best of luck!

Drew Sygit · Answer

The biggest challenges with Turnkey providers:

1) Terrible renovation work - we've taken over many properties that investor bought turnkey and they were shocked to learn the true condition of their property from our TakeOver video.
---So, get a GREAT property inspector NOT recommended by the turnkey company to avoid bias.

2) Misrepresenting Property Class - have seen many turnkey providers in Metro Detroit area sell OOS investors Class C properties as Class B.
---So, learn the neighborhoods where you plan to invest and use Google Streetview to virtually explore them.

3) Poor Tenant Screening - they typically can't sell a property until they place a tenant. So, they have a conflict of interest in waiting for the right tenant.
---So, insist on them providing the rental application and supporting docs for your review. This means YOU need to learn how to evaluate a rental application!

4) Poor Property Management - Where do you think a turnkey provider will put their best staff, on selling properties and making $5k+/transaction or on property management and making $80/month transactions?
---So, ask about their standard operating procedures and make sure your management contract has an easy termination clause.

What are your options if you expereince one of the above? Everyone thinks they can sue to solve the problem.

Do you realize how much it will cost to hire an OOS attorney to sue the turnkey company?

Unfortunately, the majority of investors that experience terrible service from turnkey companies, figure out that it's not worth spending tens of thousands of dollars suing their turnkey provider and just move on - which allows the turnkey provider to not change their ways and stay in business:(

Joseph Schweizer · Answer

Hi @Karen Braddy!

I would like to echo James that due diligence on the property/neighborhood is the most important aspect. At the end of the day, the property is yours.

There are many popular turnkey providers mentioned all over BP. I would recommend searching the forums for "turnkey provider" or "turnkey companies" and you will find many mentioned. Then search for any specific provider you are interested in to find forum discussions and reviews. Once you narrow down your search, call each provider you are interested in. You should also contact investors who have made a purchase with the provider recently and investors who have worked with the provider long term with multiple transactions. Some investors also go visit the providers in person if that is something you are interested in.

I purchased a turnkey property for my first investment (see post below). I would be happy to answer any questions you may have about my experience.

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

Best Wishes!

James Wise · Answer

The 1st thing investors need to do is understand how to do due diligence on a property. If you buy the property right it doesn't really matter whom you bought it from. At the end of the day a turnkey company is someone who is offering a property and property management services.

If you buy the property right, you can always change property managers if it's not working out. If you overpay for the property by $30k-$40k you'll likely never recoup that loss.

To ensure you don't make a mistake on the property itself always get a home inspection and an appraisal. Doing those two things will go incredibly far to reduce your risk with the investment.

How do you find reputable Turnkey companies?

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