Learning the Turn-Key Business, Help Needed!

8 Replies

How's it going guys, I wanted to reach out to expirenced investors who may be already in his field of offer turn key properties. I would like to learn more on the turn-key process:

  • what is the actual term for turn-key?
  • How are these properties marketed?
  • Are these sold rented?
  • What services are offered to a turn key buyer?
  • What makes a good turn key company?
Are their any books, podcast, or meetings teach the turn key business?

In all reality it is a persons opinion on a home that doesn't need any work and you literally just need to turn the key and move right in. They can be currently rented out or ready to be rented at closing. It can also be properties that already have property management in place. I

Jerry Padilla, Lender in NY (#NMLS 1084877)
585-204-6923

Hi Cameron,

There are no hard-and-fast rules on this, but here are some high-points to the questions you asked:

  • what is the actual term for turn-key? That is the term. Turn-key implies that the property is ready for an investor from day 1, meaning all the buyer/investor has to do it buy it and turn the key to open the front door.
  • How are these properties marketed? Lots of different ways. I would say that the most common is for a turnkey company to market them directly to investors who they have relationships with - meaning that it might be posted on their website or newsletter. It is not uncommon to see these listed on the MLS.
  • Are these sold rented? Ideally (and most typically): yes, but not always. Some are in the process of being rented. Some are even sold in bad shape, with the agreement that they will be fixed up for you. With that said, be very careful of how and who these are rented to! The turnkey companies do not plan to hold the property long-term, so their tenant-selection may not be as stringent as you would like.
  • What services are offered to a turn key buyer? Typically, for a fee, turnkey companies will help with everything including financing, insurance, placing a tenant, property manager, repairs, etc. But again, this is not always true.
  • What makes a good turn key company? Philosophically: reputation and ethics - with a bit of history thrown in. Practically: strong property management.

The question that I expected but didn't see is about cost. In my experience, turnkey companies geared towards the masses (financed buyers) charge around 5%-10% above market for the houses. Depending on your situation, that premium might be worth it.

I did a lengthy, in-depth, but not that well-written article on turnkey providers a while ago. You may want to check that out here:

http://www.biggerpockets.com/blogs/4117/blog_posts/33407-my-out-of-state-search-step-6a---to-turnkey-or-not-to-turnkey

Cameron -

I have written a bunch of articles on this topic over on the Bigger Pockets blog. There is no written guide on how to start a Turnkey company, but I will say that we are going to be launching a program later this year here in Memphis for business owners all about best practices and getting started as well as learning to grow and develop a business. Get in touch and I will gladly do what I can to help.

Also want to compliment @Jeremiah B. . That was a really good answer to each of those above questions. Good stuff -

Chris

Originally posted by @Brianna Schmidt:
@Cameron Ellis - Also check out this thread

http://www.biggerpockets.com/forums/52/topics/122300-the-perfect-turn-key-company

Only got 1 vote for that post.

Come on Brianna :) haha

I hope you have been finding some amazing deals.

We have bought 12 in Ohio in the last 6 weeks.

Just started working in Dayton also. Have some great people on the ground there.

Thanks and have a great day.

thanks @Jerry Padilla @Brianna Schmidt @Chris Clothier @Jeremiah B.


Chris I'll email you later this evening or tomorrow about the event.

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