Turnkey investment opinions
Troy BaackPro Member
Member since 2023 · 13 posts · 11 votesTurnkey investment opinions
Most Popular Reply
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
3yI do think people get too caught up in the property type and area as opposed to the math that is involved. You're right, it's gotten a lot harder in the last 18 months. Not only did interest rates make the P&I payments on a property much more expensive vs rental growth, but taxes and insurance have risen as well making a lot of properties not cash flow. Many of the investors we work with have started putting a lot more down on the properties to keep payments lower, thereby making the properties cash flow. Other's are buying properties that needs some TLC that they feel they can get at a discount to fix and rent. In your case, it doesn't sound like that's going to work for you. Keep in mind that as you sift through the haystack looking for the needle, so is 90% of the people on Bigger Pockets and everyone on every RE Facebook Group. It is hard, but every market will have their bad and good deals.
30 Replies
- Bay area, CA · Member since 2021 · 383 posts · 306 votes3y
Hello Troy,
I was in the exact same boat, 2 years ago, and I got overwhelmed by the information available on the internet till I found a good turnkey provider who educated me on relevant things.
I can summarize all 3 questions with one answer: as a new investor, you need someone with you who has done the same thing many times in the past. Turnkey providers are literally that. That's how I started.
Feel free to contact me personally to learn more. I enjoy talking with new investors.
- Member since 2019 · 7k+ posts · 4k+ votes3y
Quote from @Troy Baack:
In much of the research I have done I have been struggling to find rental properties that are going to be able to cash flow well in this economy. I am looking at investing for the long term and am okay with getting into a property that only breaks even or only has a small cash flow. At this time I don't have the capacity to try and work on a BRRR or other rehab projects and I am looking at investing in a turnkey property. My main questions are:
- What are your opinions on turnkey properties?
- Are there any markets you would avoid?
- Do you have any helpful tips you would give to new investors?
1. turnkey is the best
2. none
3. go there, visit the turnkey co. , make connection - Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes3y
I do think people get too caught up in the property type and area as opposed to the math that is involved. You're right, it's gotten a lot harder in the last 18 months. Not only did interest rates make the P&I payments on a property much more expensive vs rental growth, but taxes and insurance have risen as well making a lot of properties not cash flow. Many of the investors we work with have started putting a lot more down on the properties to keep payments lower, thereby making the properties cash flow. Other's are buying properties that needs some TLC that they feel they can get at a discount to fix and rent. In your case, it doesn't sound like that's going to work for you. Keep in mind that as you sift through the haystack looking for the needle, so is 90% of the people on Bigger Pockets and everyone on every RE Facebook Group. It is hard, but every market will have their bad and good deals.
- Real Estate Agent · Hilton Head, SC · Member since 2023 · 9 posts · 3 votes3y
Good Morning Troy,
Welcome to real estate investing! These are very broad questions, but I will try my best to answer them with information that you can utilize to refine your search going forward.
1) Turnkey properties for rental investments is all about "ease" of ownership. It comes down to finding one that works for you with the numbers, and here is where many factors come into play. First, it depends on how much cash you will be putting down on the deal, because this will effect your payments, and whether you can begin cash flowing instantly, or further down the line. Second, location, location, location. Check the Rental Projections & even better the Rental History for any specific units that interest you - make sure the demand is there. Third, with it being a turnkey property listing prices will tend to be higher than compared to a property that needs a little but of TLC, but there are deals in every market, it is just about finding the one that works best for your needs and numbers.
2) A difficult question to answer as this comes down to your preferences, wants, and needs in a property. Find an area that works for you both for pride of ownership purposes and of course the numbers.
3) Helpful Tip - There is so much information out there, just begin each day narrowing your focus a little more regarding each aspect of the investment. EX: how much you want to put down, max price line you want to spend, locations, timeframes, etc.. until you have a detailed guide/outline for moving forward.
Hope that helps - and may you find the property that works the best for you!
Sincerely,
Ryan Bunting
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Troy Baack:
In much of the research I have done I have been struggling to find rental properties that are going to be able to cash flow well in this economy. I am looking at investing for the long term and am okay with getting into a property that only breaks even or only has a small cash flow. At this time I don't have the capacity to try and work on a BRRR or other rehab projects and I am looking at investing in a turnkey property. My main questions are:
- What are your opinions on turnkey properties?
- Are there any markets you would avoid?
- Do you have any helpful tips you would give to new investors?
Tip yes, pay cash and get 10% net caps, all while sitting at home, I live on the beach and do all my business OOS , Its ALL about knowledge and your network.
Good luck
- Real Estate Agent · Omaha, NE · Member since 2023 · 47 posts · 23 votes3y
As a new investor, the most important thing is having experience around you. Build a team that has done what you're wanting to do. All markets will have good and bad deals, you just need to know the difference, and how to find them. Turnkey properties can be great if you're wanting to build equity in a property while not having to worry too much on renovations, and other problems like that. You're on the right path, I wish you luck and excitement!
- 3yAlex HilemanPro MemberReal Estate Agent · Pittsburgh, PA · Member since 2023 · 224 posts · 147 votes
Check what the market rents are in an area you are interested in. I would start with a market you know, like one close to where you live now. Websites like AirDNA, Rentometer, and Apartments.com can provide you with relevant rental data.
- 3yMason WeissBusiness MemberRealtor · Phoenix, AZ · Member since 2021 · 523 posts · 239 votes
What about buying a property and turning it into a mid term rental? Higher gross rent and then you need to learn the management piece which is inexpensive but some learning up front. Right now, long term rentals without a 40% down payment won't cash flow.
- Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes3y
@Troy Baack Back in 2012, I dipped my toes into turnkey investing with a property in Birmingham, Alabama. Bby 2015, I had 11 of these properties under my belt.
Honestly, turnkey investing is a solid starting point, especially if you're not an accredited investor. The BRRRR strategy it's just... too much effort, too much risk. And if you're sitting on a net worth over half a mil or earning above $150k annually, it might not be the best use of your time.
Now, not all turnkey properties are created equal. Always opt for a third-party property management company and find your own tenant. Every time I let the turnkey provider choose a tenant, it was a disaster. They're just looking to fill the space, not necessarily with quality tenants.
In terms of markets, I'd steer clear of primary ones. While I've had luck in places like Birmingham, Atlanta, and Indianapolis, they've become pricier. I'd be wary of places like Detroit and Baltimore. It's definitely trickier to navigate turnkey investing now than it was in 2015. As for sourcing properties, there are some big names out there. But remember, they might charge you a premium (10-20k over what the property is actually worth). If you're looking to save a bit, maybe find a smaller house flipper. It's a balance of risk and reward.
For newbie turnkey investors, it might make sense to pay a bit more for a smoother experience. But be cautious about overpaying. If you're banking on property appreciation without adding value, you need to get it at the right price. That's partly why I've shifted my focus to apartments.
- Member since 2023 · 13 posts · 11 votes3y
Quote from @Travis Biziorek:
The best of both worlds is finding a team that offers a turnkey-like experience without selling you a turnkey product.
I know it exists because it's exactly what I do.
That way you have a team that manages the cosmetic rehab for you and you keep the equity created along the way.
As a brand new investor that is a little outside of my wheelhouse right now. Eventually I would love to work with a team like that but at this point I am just trying to get into the game.
- 3yCorby GoadeBusiness MemberInvestor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
You said that you are having trouble finding cash flowing properties and also that you are okay with break even. Those are two different things.
I own a turnkey operation, so you can take what I say with a grain of salt, but...
If you are in this for the long haul, I would not worry much about day one cash flow. If you are buying in a desirable market that is growing and someone else is paying the bills for now, you'll be happy you did that in 7-10 years.
If you focus on cash flow, you'll get paid right away, but it's less likely that your cashflow or equity will grow in any meaningful way, and it's really hard to scale when all you are doing is making your DTI lower by fractions of a point with every purchase. That appreciation and equity will be important in the long haul and much more valuable that any cash flow.
Plus, over time, the more desirable markets will cash flow better anyhow.
Regardless of where you land, taking action will trump waiting for a "good deal" every time.
Best of luck!
- Member since 2023 · 13 posts · 11 votes3y
Quote from @Corby Goade:
You said that you are having trouble finding cash flowing properties and also that you are okay with break even. Those are two different things.
I own a turnkey operation, so you can take what I say with a grain of salt, but...
If you are in this for the long haul, I would not worry much about day one cash flow. If you are buying in a desirable market that is growing and someone else is paying the bills for now, you'll be happy you did that in 7-10 years.
If you focus on cash flow, you'll get paid right away, but it's less likely that your cashflow or equity will grow in any meaningful way, and it's really hard to scale when all you are doing is making your DTI lower by fractions of a point with every purchase. That appreciation and equity will be important in the long haul and much more valuable that any cash flow.
Plus, over time, the more desirable markets will cash flow better anyhow.
Regardless of where you land, taking action will trump waiting for a "good deal" every time.
Best of luck!
I may have been unclear in my first post but I am definitely in this for the long haul. I understand that it is nearly impossible to find cash flow and appreciation together right now in the turnkey market and I am fine if I am able to get either or. That was what I intended when I talked about break even. If I can get a place in a desirable location that breaks even for a while, great, I'll get a return on my appreciation. If I can find a place that will cash flow consistently but doesn't have the best appreciation opportunity, great, I'll sink a chunk of profits into my principal or bank it for the next property. My big concern is getting into analysis paralysis instead of pulling the trigger when the target is in front of me so I am right there with you. I would rather get my hands on a few ok/good deals now, than wait forever until that unicorn deal comes around. I feel like building up will help to create the opportunities in the future.
- 3yLinda LabbePro MemberInvestor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes
We are working in Detroit area and are finding great opportunities . There are turn Key properties available and the 2 % rules works in decent neighbourhoods. We also do a lot of work the 1031 exchanges where the desire is great cash flow in good areas . More then willing to chat and share what we have learnt
- Real Estate Agent · Atlanta, GA · Member since 2020 · 414 posts · 233 votes3y
Hey Troy - with turnkey properties you need to put a high down payment with today's interest rates. You can find a turnkey that works in most markets (with large DP), but I would advise avoiding markets with low to no population growth unless you have a competitive advantage there.
Turnkey properties can be great as long as your time horizon is well out into the future.
Do you know anyone that does value add deals that is looking for a capital partner? You may be well served if you can find someone who needs money where both of you benefit. Just a thought!
- 3yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Turnkey is a convenience, which always cost more.
Logical Property Management4.9453 Reviews - Member since 2023 · 13 posts · 11 votes3y
Quote from @Josh Bowser:
Hey Troy - with turnkey properties you need to put a high down payment with today's interest rates. You can find a turnkey that works in most markets (with large DP), but I would advise avoiding markets with low to no population growth unless you have a competitive advantage there.
Turnkey properties can be great as long as your time horizon is well out into the future.
Do you know anyone that does value add deals that is looking for a capital partner? You may be well served if you can find someone who needs money where both of you benefit. Just a thought!
Josh-I do not currently know anyone who does value add deals. I am working on starting to build my network and get in contact with people in different fields of REI but my time is very much at a premium right now as I have 3 small children, my W-2 job, Navy reserves, and volunteering at my church. That was one of the things that very much interested me in the turnkey space, the time input is significantly lower, even though I would be paying a premium for the product. As I am looking at building long term family wealth I have less worries about low performance in the short term. As long as I am able to find locations that have future growth potential I am perfectly okay with playing the long game.
- Real Estate Agent · Atlanta, GA · Member since 2020 · 414 posts · 233 votes3y
Quote from @Troy Baack:
Quote from @Josh Bowser:
Hey Troy - with turnkey properties you need to put a high down payment with today's interest rates. You can find a turnkey that works in most markets (with large DP), but I would advise avoiding markets with low to no population growth unless you have a competitive advantage there.
Turnkey properties can be great as long as your time horizon is well out into the future.
Do you know anyone that does value add deals that is looking for a capital partner? You may be well served if you can find someone who needs money where both of you benefit. Just a thought!
Josh-I do not currently know anyone who does value add deals. I am working on starting to build my network and get in contact with people in different fields of REI but my time is very much at a premium right now as I have 3 small children, my W-2 job, Navy reserves, and volunteering at my church. That was one of the things that very much interested me in the turnkey space, the time input is significantly lower, even though I would be paying a premium for the product. As I am looking at building long term family wealth I have less worries about low performance in the short term. As long as I am able to find locations that have future growth potential I am perfectly okay with playing the long game.
Good stuff man! Our brokerage works with a lot of folks in your situation that invest in ATL and live out in California. Feel free to reach out - would love to chat to see if there is anything I can do to help!
- 3yPhil AveryPro MemberInvestor · Houston, TX · Member since 2023 · 79 posts · 47 votes
Quote from @Doug Smith:
I do think people get too caught up in the property type and area as opposed to the math that is involved. You're right, it's gotten a lot harder in the last 18 months. Not only did interest rates make the P&I payments on a property much more expensive vs rental growth, but taxes and insurance have risen as well making a lot of properties not cash flow. Many of the investors we work with have started putting a lot more down on the properties to keep payments lower, thereby making the properties cash flow. Other's are buying properties that needs some TLC that they feel they can get at a discount to fix and rent. In your case, it doesn't sound like that's going to work for you. Keep in mind that as you sift through the haystack looking for the needle, so is 90% of the people on Bigger Pockets and everyone on every RE Facebook Group. It is hard, but every market will have their bad and good deals.
Nailed it, and I completely agree.
- 3yOzzy SirimsiBusiness MemberReal Estate Agent · Baltimore, MD · Member since 2016 · 1k+ posts · 782 votes
If you have ton of money laying around
You have no time and you cannot trust anyone
Sure do turnkey.
if you have time that you can search a team, good realtor, honest GC, then do not invest in turnkey.
- 3yLinda LabbePro MemberInvestor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes
we are working the Detroit Toledo areas and are finding great projects that cash flow and are under arv so have some value and should apricate more then willing to discuss what we are doing with anyone who wants to chat
- 3yLindsay DavisBusiness MemberReal Estate Broker · Birmingham, AL · Member since 2019 · 322 posts · 200 votes
@Ryan Bunting and @Lane Kawaoka offer some good answers to your question. Let me chime in by adding a few more pros and cons.
In terms of the pros, turnkey providers are a good option for out-of-state (and other long-distance) investors who want to own rentals without the headaches of being a landlord. If time and capacity are your bottleneck, turnkey investing could work for you.The biggest downside, however, is the added costs. Turnkey providers charge a percentage of gross rents and may price their rent-ready inventory at or above market value, so turnkey solutions aren’t for investors who want to buy at a discount to market and/or DIY-ers who want to rehab distressed deals themselves.
Spartan Invest4.8134 Reviews - 3yPhil AveryPro MemberInvestor · Houston, TX · Member since 2023 · 79 posts · 47 votes
Quote from @Lindsay Davis:
@Ryan Bunting and @Lane Kawaoka offer some good answers to your question. Let me chime in by adding a few more pros and cons.
In terms of the pros, turnkey providers are a good option for out-of-state (and other long-distance) investors who want to own rentals without the headaches of being a landlord. If time and capacity are your bottleneck, turnkey investing could work for you.The biggest downside, however, is the added costs. Turnkey providers charge a percentage of gross rents and may price their rent-ready inventory at or above market value, so turnkey solutions aren’t for investors who want to buy at a discount to market and/or DIY-ers who want to rehab distressed deals themselves.
Thanks!! That actually helped a lot. I think I have a good handle on this now. Thanks again!
- 3yBobby PaquetteBusiness MemberReal Estate Agent · Abilene, TX · Member since 2019 · 223 posts · 88 votes
Quote from @Troy Baack:
In much of the research I have done I have been struggling to find rental properties that are going to be able to cash flow well in this economy. I am looking at investing for the long term and am okay with getting into a property that only breaks even or only has a small cash flow. At this time I don't have the capacity to try and work on a BRRR or other rehab projects and I am looking at investing in a turnkey property. My main questions are:
- What are your opinions on turnkey properties?
- Are there any markets you would avoid?
- Do you have any helpful tips you would give to new investors?
1. Buy a low cost turnkey
2. Do you NEED cashflow right now?
3. I chose to Long Distance BRRRR, and its how I built up some equity AND cashflow to start
- 3yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Turnkey properties = easy investment, ready for rent. Research providers & property quality. Set goals, build a team, follow local markets, analyze finances, diversify slowly, think long-term, keep learning, network with pros.
- Real Estate Agent · Memphis, TN · Member since 2021 · 88 posts · 50 votes2y
Hi Troy!
There are alot of different turnkey providers in the states so I can see where it would be tough to try to choose. The best advice I can give is search them on BP and see what others are saying then google that company and book a call with each. I would look at how long that company has been around, their processes, and what their stats look like. Also make sure you are seeing how that company is running their numbers. Some can be inflated and show better numbers than what you will actually see. Overall you can still find turnkey properties that cashflow! Goodluck with the process and I am more than happy to answer any questions that you may have.
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