Feedback on Turn Key RE Companies
Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes
Feedback on Turn Key RE Companies
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes@Account Closed I hear ya about cradle to grave... you partner with them to the end or at least as long as your in business.
I was one of the first into the Turn Key space along with a few others I entered in 2002 ish.
95% of those that were in the space then are gone...
And 10 years from now 95% of those that are in it will be off and doing other things just the way RE works...
54 Replies
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jonathan Mednick Just a Silly question:
If you and Homeunion is only selling A class properties that need little to no work.. why would a potential buyer use you guys at all. . why not just buy right off of the MLS and put it with a local PM
your not working for free Home union is not working for free especially if they are as you describe.. IE full time employee's big operation etc etc. And they don't own the assets so they must take a sizeable commission on top of your fee... does seem on the face that anyone buying with this model is paying a very large premium to market .
And are in a negative equity situation day one.
So I would surmise that anyone buying from them is paying far more for the same asset that they can buy with a decent to good RE broker in the same market place.Just curious on your thoughts on this...
I get the B C full rehab were your the turn key guy and entitled to your profit for doing all the heavy lifting like all the other turn key guys in the country.
Or is it that the investments are at a risk level that you need this kind of oversight..
- Redwood City, CA · Member since 2014 · 83 posts · 19 votes11y
Hi Jay,
I just wanted to chime in here since you all are talking about the company for which I work, HomeUnion. We do not just sell A class properties from the MLS. Sure we do sell some of those but we also work with some of the most reputable TKP companies and offer properties from a variety of other sources as well.
Sure people can buy MLS properties on their own...but most people don't know which markets, neighborhoods and properties are best suited to fill their investment needs and are therefore often unsuccessful. They also don't necessarily know which property managers are the best and let's face it, a bad property manager can sink an investment faster than anything.
The services we provide help mitigate a lot of the risk that's involved in owning Single Family Rentals. Our data scientists do very deep dives on the economic conditions around markets to identify the ones that are best for investing. The ones with solid/stable job and population growth, those with favorable rent to home value ratios, are supported by multiple industries, etc. We then take a look at each neighborhood to determine the best ones in which to invest, those that are close to jobs, decent schools, have good owner to renter ratios, etc. Then we start looking at any and all available properties in those neighborhoods and identify only the best investments.
Once we have a list of good investment properties, we talk with our investors to understand what their investment goals. Are they trying to generate the most cash possible in the short term or are they looking to maximize their wealth over the medium to long term or are they trying to do something else? The answers we get from them greatly affect the properties we recommend as different markets, neighborhoods and markets provide different investment results.
So bottomline, is we're not tied to any one market, we offer investment advice and provide a true end-to-end solution for our clients. If you dig into our asset management services, you'll see that we've automated many of the functions thus providing better service to both our investors and their tenants which ultimately result in better ROIs.
-S
Originally posted by @Jay Hinrichs:
@Jonathan Mednick Just a Silly question:
If you and Homeunion is only selling A class properties that need little to no work.. why would a potential buyer use you guys at all. . why not just buy right off of the MLS and put it with a local PM
your not working for free Home union is not working for free especially if they are as you describe.. IE full time employee's big operation etc etc. And they don't own the assets so they must take a sizeable commission on top of your fee... does seem on the face that anyone buying with this model is paying a very large premium to market .
And are in a negative equity situation day one.
So I would surmise that anyone buying from them is paying far more for the same asset that they can buy with a decent to good RE broker in the same market place.
Just curious on your thoughts on this...
I get the B C full rehab were your the turn key guy and entitled to your profit for doing all the heavy lifting like all the other turn key guys in the country.
Or is it that the investments are at a risk level that you need this kind of oversight..
- Investor · La Crescenta, CA · Member since 2013 · 174 posts · 50 votes11y
@Shai Neubauer Sorry to pick on you, but you are actually using HU. I'm still wrestling with the PM charge. I assume it is 1% of the purchase price / mo. That would equal 10% of rents collected if the 1% rule is in effect and all rents are collected each month. You would loose when you have a vacancy, but you might win if there is no charge for placing a new tenant. Are you collecting more, less, or equal to 1% of the purchase price? Did you get an A/B property?
Does the 1% include maintenance? If so, that would give you a very steady cash-flow. Are there any adjustments for vacancy?
- Flipper/Rehabber · Brooklyn, NY · Member since 2015 · 41 posts · 19 votes11y
Originally posted by @Jim Workman:
@Shai Neubauer Sorry to pick on you, but you are actually using HU. I'm still wrestling with the PM charge. I assume it is 1% of the purchase price / mo. That would equal 10% of rents collected if the 1% rule is in effect and all rents are collected each month. You would loose when you have a vacancy, but you might win if there is no charge for placing a new tenant. Are you collecting more, less, or equal to 1% of the purchase price? Did you get an A/B property?
Does the 1% include maintenance? If so, that would give you a very steady cash-flow. Are there any adjustments for vacancy?
No worries I enjoy talking about this and its helpful to myself and hopefully to you and others as well.
My first year PM with them is actually only $450 for the year because thats how they originally set it up. I did not have too much of a problem with there 1.5% of purchase price (it is 1.5% and not 1%) because it stays that way forever since the purchase price is always the same. Obviously can be an issue during vacancies but hopefully you buy in good enough areas where they are 5% or under. My bigger problem with them is the 3.5% fee to acquire a property which as an investor I can never do. Hopefully they have this changed because the one property I do have with them did not include that and I am very happy with it so far.
The 1.5% does not include maintenance as I already did have a maintenance call.
I bought in what I believe is between a B- neighborhood.
- Birmingham, AL · Member since 2013 · 149 posts · 44 votes11y
Originally posted by @Jay Hinrichs:
@Jonathan Mednick Just a Silly question:
If you and Homeunion is only selling A class properties that need little to no work.. why would a potential buyer use you guys at all. . why not just buy right off of the MLS and put it with a local PM
your not working for free Home union is not working for free especially if they are as you describe.. IE full time employee's big operation etc etc. And they don't own the assets so they must take a sizeable commission on top of your fee... does seem on the face that anyone buying with this model is paying a very large premium to market .
And are in a negative equity situation day one.
So I would surmise that anyone buying from them is paying far more for the same asset that they can buy with a decent to good RE broker in the same market place.
Just curious on your thoughts on this...
I get the B C full rehab were your the turn key guy and entitled to your profit for doing all the heavy lifting like all the other turn key guys in the country.
Or is it that the investments are at a risk level that you need this kind of oversight..
Jay,
Great questions.
1. As I said it's both A and B class properties. HomeUnion AL, LLC is a brokerage and HomeUnion buyers are purchasing directly off the MLS with Jim's assistance as their ILM and agent.
2. Those commissions come in to the HomeUnion AL brokerage paid by the seller, not the buyer. These commissions are the only fees we earn in the sale. There are no additional fees. With the analysis tools HomeUnion has and ILM/agent market experience, they rely on this service to help them select the right property especially if they are out of the area. It's truly a brokerage on steroids with the technology they have behind their service.
3. The most important distinction is that HomeUnion in each market is an actual licensed brokerage, where most turnkey providers are not. Everything we do is by the book and completely transparent. It has to be or I would not be their broker.
3. Turnkey providers (including myself) would provide a turnkey property at the maximum price we could get with a tenant in place and cash flowing. Homeunion buyers have the benefit of not paying this premium. They buy it, fix it with the contracted turnkey provider, coordinate with HomeUnion corporate to lease it and get all the benefits of equity. It's a complete self contained echo system. Their buyers would pay no more than any other local investor going after the same property.
3. Absolutely zero negative equity in any property a HomeUnion purchases. The properties are cash flowing with the minimum cap rate buyer desires. Of course the cap rates would be less than what one would receive for a C class property but HomeUnion buyers expect a higher quality property and level of service.
4. As for other fees that HomeUnion corporate may charge post closing, it's no different than any other management company. I don't have any additional info on it because I don't participate in those services. I can assure you that the only fees on the HUD is to the listing and selling brokerage. As a broker, there is no way I would allow additional commissions or fees on the HUD.
- Birmingham, AL · Member since 2013 · 149 posts · 44 votes11y
Originally posted by @Jim Workman:
@Shai Neubauer Sorry to pick on you, but you are actually using HU. I'm still wrestling with the PM charge. I assume it is 1% of the purchase price / mo. That would equal 10% of rents collected if the 1% rule is in effect and all rents are collected each month. You would loose when you have a vacancy, but you might win if there is no charge for placing a new tenant. Are you collecting more, less, or equal to 1% of the purchase price? Did you get an A/B property?
Does the 1% include maintenance? If so, that would give you a very steady cash-flow. Are there any adjustments for vacancy?
Shai,
As I stated previously, I do not participate in HomeUnion corporate's post closing services and leasing so you would have to inquire with them as to how they calculate these management fees. However, 10% management fee of the total month rent is standard.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jonathan Mednick now you got me curious.
So your the managing broker for HU and they have one of their employees hang their license with your firm ? is that correct.
then the only properties HU sells their clients are one's that are on the MLS.. So if they are not your direct listings your splitting the BAC with the listing office.. So HU only compensation is 3% of the purchase price like a normal broker then they pay you some sort of split I would imagine.. Is that what your saying.
NOt sure how that all works... if the agent who has his license with you is also making a salary.. there has to be some profit happening somewhere other than 3% of what is normally 80 to 120k purchase which is considered A and B in your markets generally.
Then HU becomes the PM for the folks.. how do they do that from Irvine or are you saying they are just charging a fee on top of local PM fee's to manage the PM for the buyer... is this how it works...
@Account Closed
With all due respect these cash flow markets are just not that complicated no one needs some advanced algorithm to decide were to buy cash flow properties..
there are about 20 markets in the US that provide cash flow properties. IE there is enough inventory to get mass and your purchase to rent ratio is good enough to get ( at least on paper ) a 10% return Net or a little better which seems to be the bar most want to get.
So don't think there is really any value to all of that the information is on line and any one can access that data on a city in 30 minutes or less.. :)
I suspect HU is just like any other marketing company be it Norada Maverick Real Weath network Hartman etc etc.. you pick a market by picking a provider who will work your system and pay you to play.. that how it works no mystery in that.
but hey its the investors choice at the end of the day if they feel they want the level of help you provide or the other companies provide and don't want to deal direct with a turn key provider then that's fine for sure.. after all its their money.
- Redwood City, CA · Member since 2014 · 83 posts · 19 votes11y
If all investors are only looking for cash flow, then no one would invest in California, but alas, cash flow is not the only thing people invest in and cash flow is not the only goal. In fact you could argue that many have have invested in CA properties over the years have done exceptionally well...especially those that have invested in the San Francisco Bay Area where I live.
Some of our clients are indeed looking for cash flow properties and we have those in our inventory. Others are looking for a combination of both cash flow and appreciation while others are just looking at building their wealth through appreciation. We help investors find properties that match their goals...
Bottomline, it's not as easy as you let it on to be. But that's what's great about the World, we can have differing opinions and it's alright :-)
As a side note, there are a ton of additional services we provide to make the whole investment process as easy as possible. Our goal is to ultimately make it was easy to invest in SFRs as it is in the stock market so that all different types of investors can take advantage of this tremendous asset class. Our services isn't for everyone. A lot of the amazing investors here on BiggerPockets are DYIers and they don't have need for our services. However, there are others that don't have the time to do the research on markets (even if there are only 20 worth investing in as you suggest), properties or property managers. So for those we do all the research for them and present it to them so they can make informed investment decisions, then we help them maximize their returns over the lifetime of the investment. In short, we partner with our investors from start to end.
-S
Originally posted by @Jay Hinrichs:
@Jonathan Mednick now you got me curious.
So your the managing broker for HU and they have one of their employees hang their license with your firm ? is that correct.
then the only properties HU sells their clients are one's that are on the MLS.. So if they are not your direct listings your splitting the BAC with the listing office.. So HU only compensation is 3% of the purchase price like a normal broker then they pay you some sort of split I would imagine.. Is that what your saying.
NOt sure how that all works... if the agent who has his license with you is also making a salary.. there has to be some profit happening somewhere other than 3% of what is normally 80 to 120k purchase which is considered A and B in your markets generally.
Then HU becomes the PM for the folks.. how do they do that from Irvine or are you saying they are just charging a fee on top of local PM fee's to manage the PM for the buyer... is this how it works...
@Account Closed
With all due respect these cash flow markets are just not that complicated no one needs some advanced algorithm to decide were to buy cash flow properties..
there are about 20 markets in the US that provide cash flow properties. IE there is enough inventory to get mass and your purchase to rent ratio is good enough to get ( at least on paper ) a 10% return Net or a little better which seems to be the bar most want to get.
So don't think there is really any value to all of that the information is on line and any one can access that data on a city in 30 minutes or less.. :)
I suspect HU is just like any other marketing company be it Norada Maverick Real Weath network Hartman etc etc.. you pick a market by picking a provider who will work your system and pay you to play.. that how it works no mystery in that.
but hey its the investors choice at the end of the day if they feel they want the level of help you provide or the other companies provide and don't want to deal direct with a turn key provider then that's fine for sure.. after all its their money.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed I hear ya about cradle to grave... you partner with them to the end or at least as long as your in business.
I was one of the first into the Turn Key space along with a few others I entered in 2002 ish.
95% of those that were in the space then are gone...
And 10 years from now 95% of those that are in it will be off and doing other things just the way RE works...
- Professional · Glenview, IL · Member since 2015 · 114 posts · 65 votes11y
in my opinion you use companies like home Union to shop around turnkey providers to identify a market you like ... Once you get that far your best bet is to work directly with the provider (actual owner not a broker) to get the best deal. In the past when I used home Union I had to mark up my prices to cover the fees they charge which I don't do anymore selling directly to individual investors. I highly recommend turnkey-reviews.com as an alternative source to find providers to avoid complications. I often refer buyers to my competition if they want a specific market. For example even locally I refer clients to my ex-partner Alex at eliteinvest.com. As Jay mentioned there are only a hand full of markets and providers that have been around for more than 7 years so it's not hard to find the reputable players. I'm now exceeding 1,000 rentals in chicago and will be at 10,000 in less than 10 years. Rule of thumb buy with local broker vs turnkey provider if they have less than 200 homes sold. Experience is everything in this business especially on property management side of the equation.
- Rental Property Investor · Cherry Hill, NJ · Member since 2015 · 626 posts · 495 votes11y
I just don't get the HU 5% cost the first year and then paying them to manage the PMs 1% of my purchase price which is more than 10% of collected rents.
It just seems like HU just cuts too much into the bottom line for minimal service. There is no relationship with wholesalers, rehabbers or other investors. With HU you are subjected to what is on the MLS which means additional competition and retail pricing. The turnoff for me is I couldn't understand what I was getting for the 3% finders fee if I was purchasing a property I could find on realtor.com. If you look at my previous post in this thread, I gave a full and complete rundown of my understanding of Norada and HU. There were no challenges, so I have to say that my understanding is complete and clear.
The one thing that is preventing me from moving forward is the trust issue and the fact that I couldn't get any feel of reliability of any entity. I am glad this thread came back to life and the discussion is continuing. I am hoping to get some solid answers.
- Birmingham, AL · Member since 2013 · 149 posts · 44 votes11y
Originally posted by @Jay Hinrichs:
@Jonathan Mednick now you got me curious.
So your the managing broker for HU and they have one of their employees hang their license with your firm ? is that correct.
then the only properties HU sells their clients are one's that are on the MLS.. So if they are not your direct listings your splitting the BAC with the listing office.. So HU only compensation is 3% of the purchase price like a normal broker then they pay you some sort of split I would imagine.. Is that what your saying.
NOt sure how that all works... if the agent who has his license with you is also making a salary.. there has to be some profit happening somewhere other than 3% of what is normally 80 to 120k purchase which is considered A and B in your markets generally.
Then HU becomes the PM for the folks.. how do they do that from Irvine or are you saying they are just charging a fee on top of local PM fee's to manage the PM for the buyer... is this how it works...
@Account Closed
With all due respect these cash flow markets are just not that complicated no one needs some advanced algorithm to decide were to buy cash flow properties..
there are about 20 markets in the US that provide cash flow properties. IE there is enough inventory to get mass and your purchase to rent ratio is good enough to get ( at least on paper ) a 10% return Net or a little better which seems to be the bar most want to get.
So don't think there is really any value to all of that the information is on line and any one can access that data on a city in 30 minutes or less.. :)
1, You are correct with the inclusion that any off market properties HomeUnion considers must be go through the contracted local turnkey provider which usually means the TKP is the seller of the property. We have sold several off market properties via our local TKP to HomeUnion buyers this way.
2, All parties share in the commissions received.
3. HomeUnion handles all property management which I assume would include whatever fees they assess to their clients. As for handling the management, they do not use local PM's here in Birmingham but I would ask that Scott perhaps shed light on this since again, I am not involved in post closing services.
4. As for the value of the information, sure anyone can assemble disparate pieces of information from various sources online but the way HomeUnion brings it all in house with their research and data scientists as well as pulling the MLS feed into their systems for each market is unlike anything I have ever seen before. Buyers are presented with information in a truly impartial way so they can best determine best markets to deploy their capital and invest. Most local turnkey providers can only provide so much and often it's a leap of faith on behalf of the buyer based on their conversations, own research, intuition and feedback they receive from the TKP. HomeUnion gets it right and there is a real value to the service they offer.
4. And finally, almost all of the TKP's here in Birmingham only offer C class properties. That eliminates a lot of properties HomeUnion and their buyers would consider.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jonathan Mednick I just got to chuckle ... research scientist for SFR purchases seems to be over kill to the extreme and maybe its good for those that just need all sorts of detail.
When the reality is it comes down to a few key points... One your provider of the property whether its a turn key provider or sourced off of MLS is giving you a good product.. the only way to know that is by a good 3rd party home inspection.. Nothing a scientist does sitting in front of a computer will substitute for that.
And you MUST have bullet proof local PM.. trying to PM B ham from CA in my mind is a recipe for disaster long term. and I highly doubt they do that.. I suspect they sub out management to a local firm.
SFR is just not that complicated it really is not.. I can see that level of detail if someone were going to say be building a subdivision or buying multi million dollar type deals that rely on local metrics to make them work. But plain jane SFR's I don't get it. you can have all the CA scientist research you want... But the rubber meets the road at the ground level and with the properties in Situ .... you have one bad tenant and it blows all that research right out the window.. no amount of scientific research will keep you from the bad tenant risk.. or all of a sudden the street you bought on turns into rentals and your values drop from A to B.. and of course since your buying these A properties and turning them into rentals your degrading the neighborhood just by that fact.. I wonder if the scientist study that effect on neighborhoods...
But again I suspect engineer types love all the minute data LOL> us RE pro's it really comes down to the team on the ground and the last place I would want my team is 6 states away.
- Birmingham, AL · Member since 2013 · 149 posts · 44 votes11y
Originally posted by @Jay Hinrichs:
@Jonathan Mednick I just got to chuckle ... research scientist for SFR purchases seems to be over kill to the extreme and maybe its good for those that just need all sorts of detail.
When the reality is it comes down to a few key points... One your provider of the property whether its a turn key provider or sourced off of MLS is giving you a good product.. the only way to know that is by a good 3rd party home inspection.. Nothing a scientist does sitting in front of a computer will substitute for that.
And you MUST have bullet proof local PM.. trying to PM B ham from CA in my mind is a recipe for disaster long term. and I highly doubt they do that.. I suspect they sub out management to a local firm.
SFR is just not that complicated it really is not.. I can see that level of detail if someone were going to say be building a subdivision or buying multi million dollar type deals that rely on local metrics to make them work. But plain jane SFR's I don't get it. you can have all the CA scientist research you want... But the rubber meets the road at the ground level and with the properties in Situ .... you have one bad tenant and it blows all that research right out the window.. no amount of scientific research will keep you from the bad tenant risk.. or all of a sudden the street you bought on turns into rentals and your values drop from A to B.. and of course since your buying these A properties and turning them into rentals your degrading the neighborhood just by that fact.. I wonder if the scientist study that effect on neighborhoods...
But again I suspect engineer types love all the minute data LOL> us RE pro's it really comes down to the team on the ground and the last place I would want my team is 6 states away.
I agree with you on most points but as you know, it's a subjective process for buyers on how they acquire, disseminate, analyze, and act on data provided from any TKP.
At the end of the day every good TKP wants a strategic relationship with a buyer so they keep coming back. It behooves them to insure they keep their buyers happy.
Every buyer is different so depending on their needs, resources and experience, they need to align themselves with the TKP that best fits their investment model and long term strategy.
Even though my operation provides acquisition services and sales, I still recommend our client's to obtain third party inspection services (at their expense) much to the chagrin our our renovation partner. At the end of the day, it's all about providing excellent service and keeping the client happy.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jonathan Mednick So Jonathan what are your thoughts of moving into A class markets and turning owner occ areas into rental areas.. how do you think that will affect the value in on those streets... Do you think it will cause values to fall rise or stay the same ?
Since it sounds like HU is primarily in that asset class and is selling for a combination of cash flow ( lower cash flow in A class) and appreciation may be negatively affected by turning owner occs into rentals as those homes just will NOT be maintained to the same quality of a owner occ... just does not happen.
I know out here in the hot west coast markets it would not affect it at all.
Whats your personal opinion on this.. and what do the scientist at HU have to say about the socio demographic shifts if indeed a street ends up with 20 to 30% of the homes as rentals or more. ?
what say you ?
- 11yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Interesting thread so far and I have laughed a little here and there at some of the responses. Just wanted to say that I am familiar with both companies. With Home Unions as we were probably one of the first companies to try and work with them. I did personally like Don and CP and I know I am leaving out a couple of other gentlemen that we met with. We just didn't see the true long-term value. It appeared like a lot more glitz and glamour for a lot of money and not a ton of more value. I do know they have changed their business model, but my opinion is that the value add is still not there for most investors. Some will probably love them and they will love all the shiny objects, but I don't see the true value.
I also want to give Marco one credibility plus for something he said earlier. Marco has been to our offices in Dallas on a trip with investors to view multiple opportunities there. I think he may have had a client buy a couple of properties from our company. Marco has always been up front and he knew from the beginning that we were not going to do a lot of business - we simply were not having any difficulty finding investors wanting to use our services. But he had a client that wanted to look and learn and he personally met them. He never asked for extra money. He was also up front about how he got paid. His clients paid the same price as any other client buying properties so there was no additional mark up. He was straight up. I personally would not need or use his service, but his service is not geared toward an investor like me so he would never try to convince me either.
Again some investors want a service like Norada and Home Union and that is ok. IMO, which one is a better fit should come down to personal service and not shiny objects, but we real estate investors have been known to make funny decisions! So I am sure both companies have plenty of investors interested.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Chris Clothier you and I probably met the owners at the same Linda Pillagas event at LAX.. I remember them talking about getting vetted and all the quality homes they would rep etc.. I then pop on their website and the inventory they were marketing did not match what they were talking about so I personally thought this is just as you say a bunch of whisles and bells that may attract some and great if it does..
- Birmingham, AL · Member since 2013 · 149 posts · 44 votes11y
Originally posted by @Jay Hinrichs:
@Jonathan Mednick So Jonathan what are your thoughts of moving into A class markets and turning owner occ areas into rental areas.. how do you think that will affect the value in on those streets... Do you think it will cause values to fall rise or stay the same ?
Since it sounds like HU is primarily in that asset class and is selling for a combination of cash flow ( lower cash flow in A class) and appreciation may be negatively affected by turning owner occs into rentals as those homes just will NOT be maintained to the same quality of a owner occ... just does not happen.
I know out here in the hot west coast markets it would not affect it at all.
Whats your personal opinion on this.. and what do the scientist at HU have to say about the socio demographic shifts if indeed a street ends up with 20 to 30% of the homes as rentals or more. ?
what say you ?
Really depends on the area but as we all know, when a neighborhood converts more to rentals, it could affect values. I see this primarily in the C class areas. I can only speak for Birmingham when I say the impact is minimal for A and B areas . Many of those renters often look for a lease option with the property and usually better maintain the property.
As for market depreciation, it just has not happened here in Birmingham in the A to B class areas with rentals. For example, Center Point, just North of downtown about 20 minutes is probably 50% rentals and is a C+/B class area. A year ago we could pick up properties for $28K and under. Today, it's more like $35K-$40K and turn key properties in have been selling above $70K with rents of $900+. Sales prices continue to rise in this area so go figure.
Where the markets out West, South Florida and Northeast are hot, they have wild appreciation swings. Birmingham is conservative and it won't happen here. Average appreciation is about 1.76% where the national level is 4%+ according to some financial web sites. That is why Birmingham is a cash flow buy and hold market while Miami (my old market) is going through another bubble and is a flip market. Same goes for most of the markets out West.
As for HomeUnion, less cash flow, better appreciation and stronger tenant pools I believe is the goal for their investors. As for their data scientists, best that someone from HomeUnion responds so they can adequately respond to your query.
- Livingston, NJ · Member since 2015 · 8 posts · 13 votes11y
Originally posted by @Justin Ericsson:
in my opinion you use companies like home Union to shop around turnkey providers to identify a market you like ... Once you get that far your best bet is to work directly with the provider (actual owner not a broker) to get the best deal. In the past when I used home Union I had to mark up my prices to cover the fees they charge which I don't do anymore selling directly to individual investors. I highly recommend turnkey-reviews.com as an alternative source to find providers to avoid complications. I often refer buyers to my competition if they want a specific market. For example even locally I refer clients to my ex-partner Alex at eliteinvest.com. As Jay mentioned there are only a hand full of markets and providers that have been around for more than 7 years so it's not hard to find the reputable players. I'm now exceeding 1,000 rentals in chicago and will be at 10,000 in less than 10 years. Rule of thumb buy with local broker vs turnkey provider if they have less than 200 homes sold. Experience is everything in this business especially on property management side of the equation.
I'm slightly confused with regards to what you wrote that I made bold above. I don't seem to be able to distinguish between the two types of companies on turnkey-reviews.com For example, there is your site, http://profitfromrentals.com, where you seem to purchase the properties and do all of the turnkey work and then there are other sites like (from what I understand) Maverick who simply connect you with the providers. Like I said, I'm having trouble distinguishing between the two types of companies on the website.
- 11yCurt DavisBusiness MemberFlipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
I dont think you can consider affiliate marketing companies a " TK " provider so I dont know why they would have a profile on a site like TK-Reviews. Maybe @Brie Schmidt or @Jay Hinrichs could elaborate on this one.
Curt Davis - KAIZEN Realty538 Reviews - Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes11y
We originally separated providers from promoters, but some companies do both. There are also hybrid type companies which the investor purchases the asset and the TK company does the rehab and manages after. Until we define what is what we list them all as providers
Second City Real Estate4.821 Reviews - 11yAlex CraigBusiness MemberReal Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
What am I missing here? Paying 1% or whatever for these services. My comments to each service out to the side. It seems like the 1% fee is under the assumption the PM is not competent enough to do this for their clients. If a PM company can't do every task below with the exception of portfolio reviews in other markets, then I would fire that PM.
- Ongoing property management (So 2 companies to manage?)
- Payment of all expenses (Isn't this what auto draft is for?)
- Ongoing market intelligence (PM can do this as they have licensed agents in their office)
- Bi-annual property inspections (i.e. every 6 months) (Doesn't Property Mgmt do this?)
- Investment portfolio reviews (cant the PM company from each market provide this info and the investor can put together the info?)
- Insurance monitoring (What is to monitor except quote it out every year if rates go up?)
- Performance reports (Any legit PM company will provide monthly and yearly statements on demand through their PM software)
- Etc. (what else is there that a good PM cant do)
- Redwood City, CA · Member since 2014 · 83 posts · 19 votes11y
In HomeUnion's case. we're not managing the PM, we are the PM. So there are not 2 companies to manage for the investor. Sure auto draft does work for that, but not all investors want to deal with setting that up. They also don't want to get involved with writing checks when maintenance occurs...and no not all PMs provide all the services we state. Our previous model was working with various PMs in the market, but we found them to be inadequate in a lot of ways so we've made improvements to the process and brought PM functions in house. We've since seen much better results for our investors.
- 11yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Account Closed so I take it you have offices and employee's in each state and a RE broker in house as well to be the licensure.
Is that what your saying...
- Redwood City, CA · Member since 2014 · 83 posts · 19 votes11y
Originally posted by @Jay Hinrichs:
@Account Closed so I take it you have offices and employee's in each state and a RE broker in house as well to be the licensure.
Is that what your saying...
Yes, in the majority of the markets in which we offer our services, we do indeed have employees and licensed RE Brokers in house. In the few where we do not, we work with TurnKey Providers who's properties meet the high standards required by our clients. Even in those markets, we're hiring and building out the required infrastructure to provide our end-to-end services.
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