share your turnkey experiences

Buying & Selling Real Estate
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share your turnkey experiences

Kay Yu
Investor · Austin, TX · Member since 2012 · 8 posts · 3 votes

i see lots of questions about turnkeys, but very few real-life experiences. (i did find one). So, for those who did buy a turnkey, would you be willing to share your story? Specifically, what did you expect? and how have those expectations correlated with reality?

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Account Closed
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
12y

I've bought 8 properties so far in Indy, all turnkey. So here are my lessons.

1. This is NOT passive investing. Even with a property manager, its a lot of work.

2. Dont do it if all you are going to buy is one or two properties. Much like stocks or any other investment, a single unit is very high risk. But a diversified portfolio will likely give a consistent return. I have had one disaster home out of all of them with a bad inherited tenant and large damages and long vacancy. But even then, I made money on the overall portfolio that year. If it was my only home, I would have lost a ton of money.

3. You need business management skills. It is a business. You need a business plan and strategy. You need good processes for due diligence, managing your PM, accounting etc etc. And things will change. You may change PM/s. You may sell a bad performing home. You need to have good financial skills to analyze your numbers and see whats working and whats not. I do that kind of stuff all day at my day job so I am good at it. It helps a lot.

4. Focus on one or two markets and learn them. Develop the networks of people you trust in those markets. If you do out of state like I do, you need them to be ethical and efficient. I will trade some efficiency for honesty any day though because in the end, you have to trust them.

5. Don't sweat the small stuff. Whether a plumbing repair costs $50 or $100 will not make or break your ROI. Extra turnovers and vacancy will. Focus on the high value factors and optimize those as far as you can.

6. Don't put all your eggs in this basket. I wouldn't make turnkey properties more than 20% of my investment portfolio (i.e my cash in, not value). There are risks, many I don't even know about. Like any investment things can go wrong and I sleep better knowing it won't ruin my life if they do.

But overall I think I can get a solid high return over a 10 year period and so consider this a good strategy, at least for now. Money is cheap, rent ratios are decent and home prices are still low. If any of those factors change, I would stop buying more. No strategy is good at all times. You have to adjust as you go. But for now I am adding to my portfolio.

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  • Emily Powell
    Investor · Houston, TX · Member since 2014 · 208 posts · 135 votes
    12y

    I too am curious as to which companies people have had good TK investing experiences with (as well as what companies people have bad experiences with, if you are comfortable posting about them, of course).

    Thanks all for your valuable input. As someone who is still gathering up the courage to purchase an out-of-state investment, I could use all the advice and real-world knowledge I can get, be it good, bad or ugly.

    0Reply
  • Pete Tam
    CA · Member since 2013 · 221 posts · 30 votes
    12y

    Thanks for your nice explanation @Jay Hinrichs . I am gathering my courage to look at TK properties. I agree with you @Emily Powell here. I am trying to gather courage as well.

    0Reply
  • Pyrrha Rivers
    Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes
    12y

    Thanks everyone for your posts. I like @Pete Tam and @Emily Powell ,

    am gathering information and thinking and rethinking my long distance investment entrance strategy and would love to know what companies you have used successfully and which ones you have encountered problems with. Is that okay to ask here? This thread has been fantastic!

    Thank you @Kay Yu for starting it.

    0Reply
  • Cameron Ellis
    Investor · Memphis, TN · Member since 2013 · 171 posts · 49 votes
    12y

    I would defiantly say read this, and understand you get what you pay for.



    http://files.investmentpropertyincome.com/200000110-0ea7d0fa1f/EBook%20-%20Investing%20in%20the%20Sweet%20Spot.pdf

    4Reply
  • Michael Slabitcher
    Specialist · Miami, FL · Member since 2013 · 56 posts · 20 votes
    12y
    Originally posted by @Jeff L.:

    Hi.

    I have two properties with MemphisInvest since 2011 and have been quite pleased. Do you have any specific questions or concerns? I will be glad to try and answer.

    Hi Jeff,

    Were the numbers provided accurate? What kind of neighborhoods are these properties in? What's your experience so far with the property management company that was in place when you purchased these properties (assuming you are still using the same property management company)? Thank you.

    0Reply
  • Pyrrha Rivers
    Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes
    12y

    @Cameron Ellis Excellent reading reference!

    Thank you!

    0Reply
  • Jeff L.
    Rental Property Investor · Franklin, TN · Member since 2010 · 43 posts · 32 votes
    12y
    Originally posted by @Michael Slabitcher:
    Originally posted by @Jeff L.:

    Hi.

    I have two properties with MemphisInvest since 2011 and have been quite pleased. Do you have any specific questions or concerns? I will be glad to try and answer.

    Hi Jeff,

    Were the numbers provided accurate? What kind of neighborhoods are these properties in? What's your experience so far with the property management company that was in place when you purchased these properties (assuming you are still using the same property management company)? Thank you.

    Happy Easter!

    Yes, the numbers were accurate. I use my own cash-flow projections (similar to Ali's cash-flow napkin and others) and what they were offering fell line with what I was seeking.

    The "kind of neighborhood" question is always tough. My two properties are in average suburban neighborhoods. Definitely not high-risk, high-crime areas but not country-club types either. they are your basic, early 1990's builds. I definitely don't feel uneasy walking through them. I have been in both of my houses and walked/driven the neighborhoods.

    MemphisInvest understands customer service. You definitely are not forgotten after the sale. I feel that my properties are in good hands. In short, property management is great. I worked with another turn-key company prior to MemphisInvest and had a bad experience so I went in with the B.S. meter turned on high.

    All in all, I believe that MemphisInvest is truly interested in helping you build a real estate portfolio. Are you going to get the same returns as if you did it yourself? No, but that's not the point. They provide a means of investing in real estate so that does't require you to become a full-time real estate investor which appeals to folks like me who are busy managing their own businesses and live many states away. Also, I understand that it is their business as well. They have to make money to provide the service. For turn-key investing, I am interested in above-average returns that do not require a full-time commitment and I feel that they provide that.

    1Reply
  • Ralph R.
    Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
    12y

    2 of my properties are turnkey. (Both duplexes) They have worked well for me, as I am a long distance landlord. I will say I think you can make more rehabbing and renting yourself, but you take bigger risks and work much harder. It also requires you to either be in the same town or have a lot more dependable contacts than simply buying a turnkey property.

    I have to agree with Ali Boone. The management company is key. My management company also handles the sales for me, and its been a total winner. I tell the Realtor when I am ready to buy, and what I am looking for. She gets with the PM, and together they look for a suitable property. It takes time and patience, but I end up with solid properties, good tenants already in place, and get a rent check right away.

    The downside is this restricts me to one location and one market for both buying and renting. No I don't get a super bargain basement price, but I do get properties in good condition that are in good repair, with rock solid tenants. No complainers, no late/short/rubber rent checks.

    I have never seen one of the properties, as I felt I wasted the airfare checking out the first property in person. I had a third property I purchased as a turnkey property, but I did have trouble with the first PM. That one was a bit of a headache until I got rid of him.

    I am a firm believer that a well thought out turnkey property is less risky, and a whole lot less headache than rehabbing and renting. Buying an established rental allows you to research both the property as well as the rental history, and even the tenant. When you buy a rental that has had the same tenant the last 2 years or more you can be pretty sure the rent will be there on the first. If the seller was a veteran landlord he either trained the tenant for you or found a good tenant in the first place. If not he got rid of them. The hardest part about buying a turnkey property is doing the due diligence, and having the patience.If done correctly I think its one of the safer ways to buy a rental property. The trade off is you won't see as much gain on the investment. (smaller appreciation, higher initial investment) Buyer beware' a real "bargain" turnkey property is likely a troublemaker.

    RR

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Cameron Ellis

    Cameron that little article is dead on ... If your going out of state buy the best you can... The lower end product as described in this article is in my opinion not appropriate for out of state investors... Given the maintenance and vacancy and tenant issues to own and run these rentals one needs to be on site to make it work in my opinion. And since there is no appreciation to speak of in these markets you want to get the most trouble free asset you can

    @Pyrrha Rivers

    curious as to why you would look out of Atlanta for rentals. Atlanta was my best market by a long shot compared to the other cash flow markets.. And your right there on site you can get the best deal and have the most control.

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    0Reply
  • Pyrrha Rivers
    Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes
    12y

    @Jay Hinrichs I'm not at home at the moment. Unfortunately I am not on site where I would have access to the best deals and have the most control. I'm in Japan trying to buy in the Atlanta Metro area or where it makes sense at this time now that the Atlanta market is getting harder. Building a team from this distance even with a daughter on site willing to help me is proving to be quite difficult because we don't have experience yet. I am considering turnkey as a way in.

    0Reply
  • Account Closed
    Douglasville, GA · Member since 2014 · 34 posts · 2 votes
    12y

    @Pyrrha Rivers Welcome to BP!

    Ryan Rutledge

    1Reply
  • Michael Slabitcher
    Specialist · Miami, FL · Member since 2013 · 56 posts · 20 votes
    12y

    Dear @Jeff L.,

    I appreciate you taking the time to tell me about your experience with MemphisInvest. I found the information very useful. Thank you so much.

    0Reply
  • Edward Sittler
    Investor · Oakland, CA · Member since 2013 · 27 posts · 17 votes
    12y

    Does anyone have experience with American Investment Properties, Inc. (indianapolisinvestment.com)?

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Edward Sittler

    Not one of the 4 companies in INdy that I lent HM to.

    From the pictures and address it looks like C stock... Property management will be the key to success or failure.

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    0Reply
  • Christian Lautenschleger
    Investor · Columbus, OH · Member since 2013 · 72 posts · 18 votes
    12y

    My first duplex, which I closed last week FWIW, is a turn key.

    So far it's "my old landlord did this". So, I'm experiencing that for them somethings need to be continued that aren't true turnkey (like trying to get a hold of the person who did the mowing).

    So, although I have long term tenants, you still have to communicate and don't be surprised when things come up you didn't think about.

    Lastly, this is my first real estate property. I view it as a learning experience first and foremost, which will hopefully make me money.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Christian Lautenschleger

    That's par for the course when ownership and or Management changes.. Many times they won't pay the rent until you fix a laundry list of stuff they think needs to be fixed.. just he world of C class properties and renters

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    JLH Capital Partners51 Review
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    1Reply
  • Christian Lautenschleger
    Investor · Columbus, OH · Member since 2013 · 72 posts · 18 votes
    12y

    @Jay Hinrichs

    Hopefully it's just a temporary thing. Oh well, it happens.

    0Reply
  • Scott Somerled
    Phoenix, AZ · Member since 2014 · 8 posts · 0 votes
    12y

    There is a wealth of information on this forum......but I haven't seen many reviews in or outside of this forum for turn key operations such as:

    midsouth home buyers

    Memphis turn key

    Memphis invest

    cashflow savvy

    I have a few rentals out of state. I self manage some and have a property manager for a few others. I am looking to purchase and use a property manager in Memphis to increase my portfolio but am not finding much feedback on these companies. I know I can always ask for referrals but prefer to do much of the homework on my own.

    For any newer investors a good starting point is to compile a list of questions from each site's FAQs page, and make sure you get all your questions answered from each company.

    0Reply
  • Scott Somerled
    Phoenix, AZ · Member since 2014 · 8 posts · 0 votes
    12y

    I also forgot to mention

    Meridian Pacific Properties

    0Reply
  • Paul Wurster
    Investor · San Antonio, TX · Member since 2014 · 129 posts · 79 votes
    12y

    @Scott Somerled

    My posts are about Midsouth.

    0Reply
  • Edward Sittler
    Investor · Oakland, CA · Member since 2013 · 27 posts · 17 votes
    12y
    Originally posted by @Jay Hinrichs:
    @Edward Sittler

    Not one of the 4 companies in INdy that I lent HM to.

    From the pictures and address it looks like C stock... Property management will be the key to success or failure.

    Thanks for taking a look Jay. Can you give a quick explanation of "C Stock"? I'm assuming there are A, B, D stock as well?

    Also, do you have any recommendations for good companies in Indy that you've dealt with?

    0Reply
  • Pyrrha Rivers
    Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes
    12y

    Hello @Scott Somerled You are asking for the same information I have been after and for the same reason. Companies a do great job of advertising, Their references will most likely be hand-picked to tell you what they want you to hear. However, I have been combing through the threads and sending PMs asking specifics when I see someone has had a positive experience. Send me a PM and I will share what I've learned.

    -Pyrrha

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    12y

    @Edward Sittler

    Yes properties are categorized a,b,c,d and the Ghetto..

    In major metro areas this is usually is well defined a long the purchase price or values... So if your in INdy and the house is 20k its going to be D.. If the same sq ft in a much nicer area is 150k its A... then you have all the rest.. Same with rent rates.. an SFR that will only rent for 500 bucks or so is on the bottom end and same sq ft that rents for 1500 is on the top end.

    The differences of course are basically crime schools and class of tenant.

    this all leads to how successful the project will be.

    Stable tenant.. who is nice to the house feels safe in the home will stay and treat you well.

    Unstable tenant, who needs their windows barred and who is really rough on the house. that leads to low financial performance

    Of course this is general feedback and its not rocket science. However I have seen a lot of financial carnage with out of area investors trying to buy the cheapest home they can that looks best on paper only to find out they had bought a paper tiger.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
  • Edward Sittler
    Investor · Oakland, CA · Member since 2013 · 27 posts · 17 votes
    12y
    Originally posted by @Jay Hinrichs:
    @Edward Sittler

    Of course this is general feedback and its not rocket science. However I have seen a lot of financial carnage with out of area investors trying to buy the cheapest home they can that looks best on paper only to find out they had bought a paper tiger.

    That makes a lot of sense. Thanks for the info!

    As others on this thread have mentioned, I am looking for all the info I can get on these kind of investment companies. Some of them seem to market aggressively, and strike me as a bit 'scammy'. I also question their projected returns, as they don't generally seem to take maintenance and vacancy into consideration.

    I would particularly like to hear what kind of cash-on-cash return people have been getting.

    0Reply
  • Pyrrha Rivers
    Investor · Yokosuka, Japan · Member since 2014 · 631 posts · 184 votes
    12y

    Has anyone worked with New Western or Eric Davis of the ERIC DAVIS GROUP INC in Atlanta?

    Thank you so much!

    Pyrrha

    0Reply
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