Entire portfolio as turnkey

13 Replies

I've been considering a couple of options: house-hacking and turnkey properties.

I've been really turned onto the idea of turnkey investing after hearing the podcast with Engelo Rumora, and I'm interested in his company and Holton Wise's company out in Cleveland.

Is having your entire portfolio as turnkey properties a viable way to start investing in real estate?

How hands off is turnkey investing?

Is most turnkey investing cash-only, or can I use conventional or ARM mortgages to dip my toes into the pool?

Can I tap into a HELOC as a downpayment for a turnkey investment in another state?

I am putting this out there as I do more research.  Any help is appreciated!

Awesome Andrew. Jay Hinrichs wrote a free ebook on out of state investing. He has 40 years experience with hundreds of these. Check it out for sure. There are some rules you want to closely follow. Good luck with your out of state search. Thanks, Matt

http://www.biggerpockets.com/forums/517/topics/146...

You could tap a heloc on your primary residence. Some turnkeys are purchased for cash but that could be a sign the selling price will not comp out. If you buy right class of property in theory it could be more hands off. There is going to be a correlation to the class of property and the passivity of your investment. Thanks,  matt

Originally posted by @Andrew Son :

I've been considering a couple of options: house-hacking and turnkey properties.

I've been really turned onto the idea of turnkey investing after hearing the podcast with Engelo Rumora, and I'm interested in his company and Holton Wise's company out in Cleveland.

Is having your entire portfolio as turnkey properties a viable way to start investing in real estate?

How hands off is turnkey investing?

Is most turnkey investing cash-only, or can I use conventional or ARM mortgages to dip my toes into the pool?

Can I tap into a HELOC as a downpayment for a turnkey investment in another state?

I am putting this out there as I do more research.  Any help is appreciated!

Hi Andrew,

Thanks for your interest.

Have a great day.

Andrew,

I've been searching for the same thing, such as JV with other turn key operations. So far haven't found any that makes sense to me yet. What I'm finding is the other party wants me to put down most of the cash required to obtain property, while profits are split evenly. I'd have to put down between 75-80% , even had a few who wanted 100%. While I understand that the JV (other party) will be doing most of the day to day work and should be compensated for such. It puts most of the risk on you as the other party has very little to lose if somehow the deal goes south. If you're purchasing the properties all by yourself and just having them manage it then, that would be the ideal way to go. As you'll get all of the rewards while taking all the risks also. Only way I'd put down most of the money is if it was such an awesome deal making so much $$$ and the JV had exclusive rights to it. Just my thoughts.

If you're buying turn key properties from Engelo Rumora or Holton Wise's , then as long as the financials works for you, it should be good.  As both Engelo and James are both stand up guys and will treat you right. 

@Matt Rosas Thanks for that bit of information.  I've requested the book from him, should be a great read.

@Tou V.  I'm glad to hear that testimonial Tou.

Gonna head to the bank tomorrow for some HELOC quotes.

Originally posted by @Andrew Son :

Hi Andrew, great questions here.  I threw out a few answers for you to review and think about.

I've been considering a couple of options: house-hacking and turnkey properties.

Just as an aside, what is house hacking?  I have never heard that term before.

I've been really turned onto the idea of turnkey investing after hearing the podcast with Engelo Rumora, and I'm interested in his company and Holton Wise's company out in Cleveland.

Is having your entire portfolio as turnkey properties a viable way to start investing in real estate?

I think the better way to think about this, is not if TURNKEY is a viable option in real estate (because it is), but is is a viable option for you.  Some investors are not comfortable with giving up control or responsibility within their portfolio.  Others have no problem with it.  As a way to get started investing, you have to decide how much time you have to contribute to your endeavors and what level of comfort you have with allowing another company to make all of the decisions about your property for you.  If you are comfortable with the process, the area you are investing, the future of the area, the TK company, their process, the property management company and the on-going communication and service you are going to get, then starting off your real estate investing endeavors with a TK company is absolutely a viable way to get started.  Your comfort with the idea, process and company is what will really dictate how viable it is for you personally.

How hands off is turnkey investing?

Well, it should be hands-off from the standpoint of doing the heavy lifting such as locating property, providing the funds to purchase the property, providing the funds to renovate the property or physically doing any of the labor.  That is my opinion only, but after having done this for a long time and seen a lot of companies come and go, the ones who provide you with a finished product without you having to commit any of the funds are where I would look as an investor.  

Then your hands-on responsibility really comes down to due diligence.  You need to investigate the area, the company you are going to do business with and their track record.  Some choose not to go see the company where they operate or their properties, but I think most of us would agree that you absolutely should go for a site visit before buying.  You should be hands-on with your monthly statements from your property management company and you should be hands-on with your detailed scope of work.  You need to be hands-on with holding the company accountable for properly managing your property(ies) so they perform to your expectations.

Is most turnkey investing cash-only, or can I use conventional or ARM mortgages to dip my toes into the pool?

There is not a right or wrong answer here.  Buying a Turnkey property is no different than any other transaction.  You should be able to choose how you purchase the property.  Some companies will want you to use approved lenders if you want to go the financing route and mostly that will be due to customer service and speed of work issues.  That could be a red flag if they only want you to choose one lender and the rates are not competitive, but I have not seen that.  You can use private financing, hard money (not advisable ---ever!!!), cash, self directed IRA, 1031 exchange.... Mostly you need to know that you can use any method for purchase that you want to use.  Just because it is TK does not mean that special rules will apply.

Can I tap into a HELOC as a downpayment for a turnkey investment in another state?

Yes you can.  Should you - I can't answer that one - only you can.  The source of your funds however, for purchase or downpayment, is entirely up to you so long as you can show where they from (if you are using a lender) and are comfortable leveraging your personal home to purchase investment property.  

I am putting this out there as I do more research. Any help is appreciated!

I think you are off to a great start having already researched some areas and some companies.  Hopefully you get some good advice to make sure you have an investment plan in place and are making some good decisions with your money and your equity in your home.  I'm sure the people you are talking to will give you this same piece of advice, but I want to stress it to you....

You do not need to be in a hurry.  Take your time.  The opportunity has not passed you by and is not going to disappear anytime soon.  You can get great deals with really good companies if that is the route you decide to take.  Be patient and make sure you have a great plan put together and you follow that plan.

Chris

House Hacking ????  whats that?

Is having your entire portfolio as turnkey properties a viable way to start investing in real estate?

I think it's a great way. My whole portfolio is turnkey (well except for one property that accidentally became a rental property).

How hands off is turnkey investing?

Depends on how good the team is. If they are good, then it's nearly completely hands-off.

Is most turnkey investing cash-only, or can I use conventional or ARM mortgages to dip my toes into the pool?

Mortgages.

Can I tap into a HELOC as a downpayment for a turnkey investment in another state?

That I don't know, but just make sure you are working with an investor-friendly lender and they will make it happen as best as they can.

Ali makes a very important point. The two most important factors to your out of state success are your team and property selection. Make one wrong move here and you get to join the 80% of new landlords who will lose money. Thanks, Matt

Really great information here.  Bigger Pockets is awesome.

@Jay Hinrichs  House hacking is something I heard Brandon Turner say on the podcast.  It means buying a multi-family, living in one of the units, fixing it up all the while.  When you've accrued enough savings for another multifamily, off you go again.  You wake up in a couple of years with a couple of multfamilies under your belt.

@Andrew Son  just depends on how much time you want to spend on real estate. A turnkey option is less time intensive (in theory) and the other approach is more hands-on. I'd start by identifying your goals and what you're willing to do to reach them. For example, some people don't want to live in same building as their residents. 

After you identify what you're after then you determine any things you're not willing to give up to reach it (i.e. move out of a plush house to live in a 4-family). 

@Andrew Son  

  thanks I like that strategy as well

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