Turnkey purchase process

19 Replies

As I have stated in another post I am looking to purchase an investment property (1st as strictly investment) and one of the options I am looking into is a turnkey property. I would go with someone with a good reputation around BP but that isn't good enough for my wife and she thinks we need to hire a buyer's agent for any purchase we make.  Is this how the turnkey process works or are we expected to go directly through the turnkey company?

I understand that most, if not all, turnkey companies charge a premium for their services and renovations at time of purchase but are there normally contracts (or should there be) in place to ensure they stay there for X amount of years? I believe mutually beneficial arrangements are best and would love to pay a premium for piece of mind that a reputable company renovated and is now taking care of my investment but would hate to pay that premium just to have someone walk away laughing all the way to the bank.

Would somebody out there be willing to walk me through the purchase process of a turnkey property?

It sounds like this may be a question for people specifically in your area so you should use your city/state in your post title and in your post so you show up on the radar of others in your area. I'm in MA and I have never heard of a "turnkey property" nor  have I heard of a company that specializes in the sale of turnkey properties. Maybe this is something that is common in your area so including the keywords will help you out. 

@Rob Beland thank you for the reply. Turnkey properties are discussed quite a bit on these boards and are generally in the Midwest from what I see.  I see a lot in Ohio and Memphis, TN.

Hey Kevin,

I've always only bought turnkeys for myself and can help you through the process if you need. Not sure I understand who you are talking about when you say someone staying there for X number of years? Do you mean the turnkey company or the tenants?

A buyer's agent is an option, but that's not typically how it works. Turnkeys are usually unlisted and all a buyer's agent could help you with is the paperwork and getting through the process since you'll be a first-time buyer, but there are people who will do that for free (I can help you with all that). Plus agents don't usually work with turnkeys so they wouldn't be familiar of the process either. 

The good news, you can tell your wife, is there is literally nothing about a turnkey property that you can't check up on and verify. So no worries there. If you work with the right company, everything will flow fairly smooth and easy and everyone will help. 


@Ali Boone thank you for the reassurance. In my post I was referring to the turnkey company. I have read horror stories about turnkey companies just leaving after the sale, or shortly after. This is also another hurdle with the wife, getting reviews of turnkey companies from other people (realtors) in the regional area. She is stuck in the mindset of purchasing a primary residence rather than investing as a business decision.

How do you go about vetting a turnkey company for your personal purchases? Do you fly out to meet them at their office and scope out the area in person or are phone calls enough?  I think out of state turnkeys are the best option if I can get over a few hurdles within the household.

@Kevin Elwood

 The first turnkey property I bought, the company flew me out, put me up in a hotel, and paid for a rental car.  I toured their properties and neighborhoods, and learned about their culture, met most of their staff, and interviewed with key personal. This was all on their dime, but I had to commit to making some property purchase before they did this, and give them a substantial deposit toward that first house.  It was a very worthwhile investment on their part because I have bought several properties from them and also provided a good deal of private lending.  The company has rapidly grown using this model, and they still do this kind of service, but there are few others who do.

You can always go visit a turnkey company and their market on your own, and I do recommend it for a whole lot of reasons, especially when you are making the first investment with that company and in that market.  Still before you even get to that stage you should learn as much as you can about the company and the market prior to your visit, ask for client references and call them, do searches on reviews, and by all means make sure they have really good property management. preferably in house, but if not then a really reliable affiliate.

All good advice above. This gentleman below, Chris Clothier,  is a bp member and manages around 1500 of these turnkeys. Needless to say he has been around this block a couple thousand times and a great resource for anyone interested in learning more. He is a straight shooter and personally runs the largest TK company in the US.

Good luck with your search!

Originally posted by @Joe Mueller :

Larry Fried what company provided that turnkey service?

 Joe, I am not sure the BP rules allow me to say on this forum, so to play it safe I'll PM you that info.

@Larry F. that sounds like great service! I am sending you a PM and hopefully you will be able to give me more info on this company.

@Matt R. Chris' Memphis business is one of the few I was looking at so thank you for the reference. I have actually been looking into the Memphis and Ohio areas and trying to dig into the economies and viability of each locations to back my claim to my wife that this is the way to go.

You will find Memphis to be a great market, that is why there are many TK companies here.  There are a handful of legit ones and more that are not.  Make sure to do your due diligence. 

Good luck

@Larry F. if they could afford to do that...... I would be worried that they were making a pretty penny off of you! How were they able to pay all those expenses? And have your best interest in mind? They have to make money somehow or they wouldn't be in business, right? 


Is a great site to find turn key companies. 

@Curt Davis

@James Wise

Have great reviews on here and contribute greatly to this site on their knowledge of the local areas. They both are agents as well as property owners and turnkey managers. Good luck!

@Kevin Elwood

@Joe Mueller

It will be hard to get reviews of the turnkey companies from local realtors because most of them will have no idea what you are talking about. As far as how I choose with turnkey folks to work with... I have a few experts I work directly with and they do intensive vetting of all the turnkey providers out there and meet them in person, hang out with their ground teams for a few days, etc. I end up piggy-backing off what they find in terms of the providers because even having been in turnkey world now for 4 years, they still find things about providers I wouldn't have even thought to look for or see as a red flag. 

When you say the turnkey companies leave after the sale...how do you mean? The PMs leave too, or who goes where?

Hey Kevin,

I'm in Portland - not far from you.  If you ever want to grab coffee and talk shop - just let me know.  I own 6 out of state rentals, though I opted to not use turnkey after some rather extensive research. 

Buying turnkeys is a very complicated discussion, but here are quick hits:

Chris Clothier and Memphis Invest is simply the gold standard in turnkey providers.  I have never used them, but if I ever go turnkey - they will be my first call.

Using a buyers agent is an option - but is not common and you will likely need to pay for them on your own dime.  If you go this route, get a RE agent who has worked extensively with SFRs, and expect to pay 2%-3%.

Instead of using an agent, I would post the specifics of the deal on BP - including the address and price.  The community is both big and well informed, and my hunch is that you will get a good review of the deal.

Turnkey providers DO charge a premium.  That's how they stay in business, and have the money to fly prospects out, rent them cars, etc.  This premium may be worth it - but be sure to understand the amount of that premium.

Remember that turnkey is a business - and the providers are in the business of selling.  So, always remember that it's your job to look out for your best interest (not theirs).   

Happy hunting.

@Ali Boone I kind of figured it would be hard to get info from local realtors as it really is two completely different avenues of real estate. I think my wife actually coming around and feeling a bit more comfortable with this process just from the feedback we have received from the threads I started here. It's great to have a resource like BP to tap into whenever we have a question or concern.

When I express concern about the company leaving after I purchase the property I am talking about the PM if they are the same company as the TK company.

@Jeremiah B. thank you for chiming in, you have confirmed a few of my assumptions.

Oh yeah. No worries there. They stick around, but even if one were to leave for some reason, you can hire any property manager you want. I've had properties where I changed out the PM because I didn't like the turnkey one.

@Kevin Elwood

  Hey there I am here in Lake Oswego and have a little experience in this game I have owned 350 of these type of homes and have made literally 2 thousand loans to turn key companies in all market of the US.. from my offices here in PDX.. I was one of the very first lenders to get into the TK space in 2001.  so my roots run deep.

Listen to your wife.. having a 3rd party vette your turn key deals is not a bad thing how can it be especially if it is a knowledgeable  agent in the area..

However I like to recommend you start with PM and work backwards.. find a market you like then seek out PM companies that are unaffiliated with TK.. they will give you some good advice on areas that they like to work in.. Remember the nice sales person who sold you the home ( like the one's that have responded on this thread) they get paid the day you close and they are gone no further responsibility other than moral support LOL).. TK operator has made their money... ME as the hard money lender making this all happen I have made my money... now you the investor are manu a manu with your PM.. Its you and him or her for the life of the investment.. So why not start there.. You could easly cut out the West coast marketing agents who only take a rake off the top thereby costing you more money.. Or talk with a TK like Curt who actually owns the assets for Memphis invest I  Chris C. NO need to talk to someone in LA selling you something in Indy or only recommend the markets they get paid to sell.

This is a funny industry... as homes in these areas are readily available off market were as in our market that is not the case..

I wrote a little e book on the do's and don'ts of buying out of state properties.. NO recommendations just the little behind the scenes stuff that someone like me has leanred over 20 years and literally thousands of these types of homes.. I am happy to send it to you

just PM me.

Originally posted by @Kevin Elwood :

As I have stated in another post I am looking to purchase an investment property (1st as strictly investment) and one of the options I am looking into is a turnkey property. I would go with someone with a good reputation around BP but that isn't good enough for my wife and she thinks we need to hire a buyer's agent for any purchase we make.  Is this how the turnkey process works or are we expected to go directly through the turnkey company?

Turnkey properties are not listed on an MLS so there is no buyers agent involved. A good reputation on BP is a starting point but it's not the end all and be all. I would certainly recommend going to the market not just to meet the TK people but to get to know the market that you are considering buying in. No harm ever comes from doing that and it could prevent some big mistakes. I've written a report on how to buy out of state and what to look for in a TK company. I'm happy to send you a copy if you want. You might also want to check out some of the podcasts of my radio show on my website. I talk about these topics a lot. Let me know if I can be of any help.

@Jay Hinrichs , I would appreciate it if you would send me a copy of the ebook as well. I always appreciate your impartial insights as they relate to out-of-state, turnkey investments.

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