I need help. I am looking to do my first Real Estate deal buying turnkey properties to generate cash flow.

59 Replies

Just an introduction to help you help me: 

I live in Los Angeles, CA, and I am the Regional Manager for a marketing company. LA property prices are completely out of control, and the amount of bids a house gets just tells me here is not the right market at the moment. I didn't have success trying to buy a house here and by looking for solutions I found Podcast #26 (MemphisInvest) on biggerpockets, I got really interested about what they do because I think buy and hold is a very smart strategy, especially for someone like me who knows how to live frugally. 

My Plan:

I am looking for a reliable property, which means it has to be in great condition since I will be investing remotely, and close to decent schools (very important), with low crime rate neighborhoods, and for the last but not least a great management company. 

I expecting to generate approximately $1,000 in net cash flow with under 200K Loan amount and 50K Out of pocket. It could be one property or two, or six or 10. I am open to SFH or Multi-Unit.

My Short Term Goal:

At least $1,000 in net cash flow in 2015 and I want to be generating over 3K in net cash flow by the end of 2016 through my investments. Then I plan to do other type of higher return investments, since my monthly expenses will be covered. I need this peace of mind.

First, I would like to hear your advice.

Please let me know if you can give any pointer on any good turnkey companies and management companies in these areas I am referring below. Or if you know a better area for me to invest.

I have been looking Georgia, Tennessee, Indiana, Florida, Virginia, Missouri, Minnesota even Hawaii.  

I am not yet convinced about the best place to invest, but I am looking the deals individually. 

I saw this research http://www.realtytrac.com/news/real-estate-investi... , about which states are the best markets to invest (ROI). Any opinions on that?

I count with the biggerpocket community to help me reach my goal and tomorrow be a better biggerpocketer to pay back with my knowledge and good deals. 

Thanks, 

@Fellipe Novaes Welcome to BP.

You will find a lot of forum posts and articles dedicated to the topic of turnkey rentals.  Many of those companies are even reviewed on here as well.

Although I am not a turnkey investor I read a lot of threads on them here on BP and the website turnkey-reviews.com seems to be gaining traction as a dependable place to get reviews of turnkey companies.  It is a legit site ran by @Brie Schmidt and Jay Hinrichs.

Try turnkey-reviews.com, I know 2 BP members here run the site. Let me know if you are in the point of high return investment. A gut-out rehab or new development is great in DTLA. Specially if the price range is 300-380k price range, a lot of people qualify for loans that size according to LACDC. These are for low income housing.

Hi @Manolo D.

Very cool tip about turnkey-reviews.com . I am reading their website. 

I have tried to buy a property near downtown, especially around the USC-90007 area, because it is appreciating like crazy, plus the USC village will be outstanding and all the people working downtown that wants to live in a house 5-10 min from work will live there. However I was outbid badly, several offers in cash from investors over the asking price. I then looked for all the surround areas and it has been also a very aggressive territory regarding trying to compete with investor and find a decent deal to do a rehab. My  original plan was to find a duplex, which made it even harder. I had two investors with me planning to do a joint venture there, but we had to put that on hold. I heard the margin on the flips are getting very tight. I let you know if we come up with anything like this again. 

Thanks for your reply. 

Hi Michael Noto, 

I didn't know about turnkey-reviews.com and I like what am reading so far. Thanks for the tip, it is important to hear they are trustworthy.

What do you think about turnkey investment? 

I just read the two hottest flip zips in LA are 90003 and 90002 so south central. Average roi 48% puts that in top 10 roi flip zips nationally. I never formally flipped but that seems like there is enough wiggle room there to make a go at it.

@Fellipe Novaes

@Manolo D.

Hi Matt, 

I am familiar with these areas, and from my personal experience these are kind of very bad areas, with very high crime rate, and it might not be easy to work there. I don't know how easy is to sell a property there right now, but one thing I know, is that the prices they are asking are ridiculous high. All because of the crazy speculation near that area, you now see horrible houses costing twice as much they should, and the margin to profit after a flip is getting compromised, because there is a "limit" that who is looking to buy a house there can really afford. Although I see almost every house in those streets being remodeled right now, which means the market is definitely hot for flipping, I am impressed to see a 48% ROI.

I am now focused on buy and hold in order to build a portfolio to generate cash flow. 

Thanks for the info. 
Fellipe  

Originally posted by @Matt R. :

I just read the two hottest flip zips in LA are 90003 and 90002 so south central. Average roi 48% puts that in top 10 roi flip zips nationally. I never formally flipped but that seems like there is enough wiggle room there to make a go at it.

@Fellipe Novaes

@Manolo D.

@Fellipe Novaes I hear ya. I think you might be surprised how much lower crime is there compared to some TK markets. It is definitely transitioning like the rest of the geo located central LA areas as you noted.

For B&H Vegas looks promising in many ways. I think there are a couple Tk companies there or you could virtually TK from LA. Bp Phillip Dywer can manage those perhaps too.

Good luck with your search!

Hey Fellipe, I live in LA as well and also buy out-of-state. As far as markets, interesting article. A lot of random info, but the first map seems to be in the ballpark (without looking at all the specific cities it lists). As for your list, typically VA, HA, and FL aren't known for a lot of cash flow. FL has some trickster cities in there that can work, but I haven't found any big opportunities there (more small cherry-picked hard to find type of stuff). Usually the insurance and property tax rates kill off the cash flow there. VA oftentimes, depending on where, and usually HA have prices that are too high to allow for cash flow. The rest of the markets you list are options, but there are more out there too. A lot of it depends on what you want in a property. Some markets will let you get newer nicer properties in nicer locations, while other markets offer higher returns, etc. Lots to do with preferences.

Hi Ali,

The article does cover a lot of different things, and instead of only make it easier it just got me more confused. However, I like to learn most of the data available because I associate things faster this way. I was curious about the insurance on those critical areas and I am glad you mentioned that. Regarding property tax I analysed a map also from realtyrac with property taxes from every county in US. Florida and Texas for example were really high, and It definitely influences on the cash flow. I want learn if there are any tricks like lower taxation, or incentives in some states. I heard advices regarding states with better landlord laws like Indiana. Hawaii was an idea to have a vacation rental, this would be also a home project, like buying a duplex to retire there. I had a good experience with Vacation Rental in Santa Monica, but that was a temporary deal, and I wish it wasn't because can be very profitable with very low maintenance when system is in place. Today I saw an article on latimes that they were discussing to regulate and possibly even ban it there. Unknown!  I can tell you know a lot about the subject I am very interested right now (Turnkey Rental Properties), and I checked your website which has a lot of cool stuff. Since you live so close let me know if you are up for a cup of coffee sometime. I am planning to buy one or two properties this month or next. I would really use your advice. 

Thanks for the support. 
Fellipe

 

Originally posted by @Ali Boone :

Hey Fellipe, I live in LA as well and also buy out-of-state. As far as markets, interesting article. A lot of random info, but the first map seems to be in the ballpark (without looking at all the specific cities it lists). As for your list, typically VA, HA, and FL aren't known for a lot of cash flow. FL has some trickster cities in there that can work, but I haven't found any big opportunities there (more small cherry-picked hard to find type of stuff). Usually the insurance and property tax rates kill off the cash flow there. VA oftentimes, depending on where, and usually HA have prices that are too high to allow for cash flow. The rest of the markets you list are options, but there are more out there too. A lot of it depends on what you want in a property. Some markets will let you get newer nicer properties in nicer locations, while other markets offer higher returns, etc. Lots to do with preferences.

@Fellipe Novaes The crime rate is not that bad, however, don't use it for rentals, just flips. My workers live in the 900xx zip codes, they have first hand information on the movements for those zip codes, it's like a special niche, it might tricky but it could be done. One of my superintendents did a deal with an investor that he will renovate and rent the house, the house was bought around 300k in cash, and I would have valued it after rehab around 400k after looking at it with a 22-25k rehab. I talked to the investor and he says selling only takes less than 10 days, however, they are cash on buy then cash on sell type of deals.

Originally posted by @Fellipe Novaes :

Just an introduction to help you help me: 

I live in Los Angeles, CA, and I am the Regional Manager for a marketing company. LA property prices are completely out of control, and the amount of bids a house gets just tells me here is not the right market at the moment. I didn't have success trying to buy a house here and by looking for solutions I found Podcast #26 (MemphisInvest) on biggerpockets, I got really interested about what they do because I think buy and hold is a very smart strategy, especially for someone like me who knows how to live frugally. 

My Plan:

I am looking for a reliable property, which means it has to be in great condition since I will be investing remotely, and close to decent schools (very important), with low crime rate neighborhoods, and for the last but not least a great management company. 

I expecting to generate approximately $1,000 in net cash flow with under 200K Loan amount and 50K Out of pocket. It could be one property or two, or six or 10. I am open to SFH or Multi-Unit.

My Short Term Goal:

At least $1,000 in net cash flow in 2015 and I want to be generating over 3K in net cash flow by the end of 2016 through my investments. Then I plan to do other type of higher return investments, since my monthly expenses will be covered. I need this peace of mind.

First, I would like to hear your advice.

Please let me know if you can give any pointer on any good turnkey companies and management companies in these areas I am referring below. Or if you know a better area for me to invest.

I have been looking Georgia, Tennessee, Indiana, Florida, Virginia, Missouri, Minnesota even Hawaii.  

I am not yet convinced about the best place to invest, but I am looking the deals individually. 

I saw this research http://www.realtytrac.com/news/real-estate-investi... , about which states are the best markets to invest (ROI). Any opinions on that?

I count with the biggerpocket community to help me reach my goal and tomorrow be a better biggerpocketer to pay back with my knowledge and good deals. 

Thanks, 

 I think your goals are very possible in the Midwest, if your debt to income will be less than 45%, credit above 700 and are willing to take loans on a bunch of turnkeys you could reach 1k/mo. Ideally you would want to visit the markets you are considering buying in, check out the turnkey providers and run your own numbers.

@Fellipe Novaes welcome to BP!

If you are unable to attain your goals within a 2 hour drive of you home, then I would recommend the Mid-West for strong ROI. Of course, I'm a little partial to Indianapolis...

Also, don't get too caught up with 3rd party crime stats.  I see that used a lot by out of State buyers and they end up not buying anything due to what "looks" like high crime.  There is crime "everywhere" and even affluent neighborhoods can show up as "hot spots" when, in fact, it could just be gas station drive-offs that are getting recorded.

IMHO - I would rely heavily on the local team you build in the market you pick.  The property manager and realtor will be a wealth of inside information and can help you navigate your investment decisions.

This post has been removed.

Sure! I'm out of town this weekend but can meet up after that. Send me a PM so we connect and I can give you my contact info and such.

@Matt R.  Where did you get your stats on hottest "flip zips?"  Considering I graduated from USC in real estate finance, I love the idea of South Central and really appreciated your post!  Would love to know where you read that!  Thanks :)

@Fellipe Novaes good luck!  

And @Ali Boone, hi there! I'm in Venice too. Not looking at turn key now, but did enjoy your website. As fellow REI'ers living in Venice, hope we can meet one day!

This post has been removed.

Welcome to the site @Fellipe Novaes!

As many others would suggest, if not staying local, strongly consider the mid west due to the low barrier to get started. The market is steady and waiting for investors to take advantage. Wish you the best of luck!

@Brandon Uehlein ,

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@Fellipe Novaes

Great to hear you're taking some good steps to reach your goals. I'm sure you will find plenty of out of state investors in CA due to the high price points and low rent to value ratios.

I too invest buy and hold out of state because of simlilar matters. Aside from building up a strong network close to you that shares similar interests, take a trip to an out state company you may be interested and go see it first hand. Alot of times what might work for one person may not work for you. So, plan ahead and go see your area of choice before you decide to make your decision. A firsthand look may open up new doors to your long term plans as well.

Best wishes!

@Fellipe Novaes welcome to BP
Sounds like a man with vision on a mission, I wud apply some keywords like turnkey and any areas ur interested in investing in so u automatically get notifications with these keywords in it, have a good hint around the forum and u will find what ur looking for.
All the best on ur venture!

P.S I have a similar situation in my area so education will help me to invest in other areas so good on u for not letting ur geographical situation limit ur goals to invest!

@Fellipe Novaes

Welcome to BP!! Good luck on your quest for a great ground team/PM, and a property or properties cash flowing to net you $1,000 a month preferably close to your home. If you are unable to find any achieving these numbers in CALI then look around BP Marketplace.

Thanks

Derrick

Originally posted by @Rafael Norat :

@Fellipe Novaes

Great to hear you're taking some good steps to reach your goals. I'm sure you will find plenty of out of state investors in CA due to the high price points and low rent to value ratios.

I too invest buy and hold out of state because of simlilar matters. Aside from building up a strong network close to you that shares similar interests, take a trip to an out state company you may be interested and go see it first hand. Alot of times what might work for one person may not work for you. So, plan ahead and go see your area of choice before you decide to make your decision. A firsthand look may open up new doors to your long term plans as well.

Best wishes!

It is the first time I hear anything about Pennsylvania. What are the numbers there compared with Midwest? 

Thanks for the support. 

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