My first turnkey experience in Houston!
Inspired by similar posts about turnkey companies, I wanted to share every step of my experience with TexasTurnkeyProperties.com, which offers turnkey properties in the Houston area.
I purchased one side of a duplex in Spring, TX. It's a standard 3BR/2BA and the purchase price was listed at $99,900 with rent projected at $1100, a 1 year rental guarantee and a 1 year home maintenance warranty. I was given a scope of work, and spoke with Brian, who was able to answer most of my questions. We opened escrow back in mid-July, and we were supposed to close at the end of August. We had to push back closing twice, until we finally closed on 10/4. The first delay was due to stormy weather which delayed renovations. I was disappointed that nobody from Texas Turnkey Properties bothered to let me know they were delayed; I had to reach out several times for updates.
The second delay was due to an awful appraisal they received. After renovations, the appraisal came in at $84k, $16k below the purchase price. Shawn, the owner of the company, emailed me letting me know he couldn't sell it to me at the appraised price, but he would split the difference, making my purchase price $92k, but requiring more cash for the down payment. Coming from SF, I'm used to the notion of paying over the asking price, so it wasn't an automatic no for me. Instead, I countered him at $90k, which meant I was paying 7% over market/appraised price, but requested an additional year of rental income guarantee at $1100 and an additional year of the home maintenance warranty, which would at least give me some kind of value for that extra 7%. He accepted and we moved forward with closing.
I used a lender they recommended and had no complaints with them. I have a 30 year fixed mortgage at 4.875%, and due to the construction delays being outside of my control, they didn't charge me for a rate extension.
Right before we closed, Shawn emailed me to tell me they had a tenant moving in on10/12. Unfortunately, that tenant was unable to come up with the security deposit, so the leasing office did not let them move in. I appreciated the communication from the property management team, but now that it is the end of October and my property is still vacant, I'm wondering if the projected rent is too high for the area, or if it's just a seasonality thing. Either way, I will be receiving $1100/mo for the next 2 years, beginning in November, so I am covered, but it does make me question how well Shawn and his team truly know the neighborhood.
For now, I think it's too early to tell. The whole process was generally smooth. I would have appreciated more communication regarding renovation setbacks, but felt that the whole team was honest and reasonable. Since my intention for this purchase was long term cash flow, I'm satisfied with the terms of the deal, which is netting me about 15% COC return for the first two years.
I will update when a tenant is placed. Feel free to ask me any further questions.