Any Recommendations on Buying a Turnkey at $45k-$65k?

29 Replies

Hi,

this is Jie. I'm a new member to BiggerPockets. 

Right now I'm doing a 1031 exchange that I need to buy a replacement property for $45k or more. I plan to buy in the price range of $45k-$65k for a turnkey property since I don't want to pay too much out of pocket. Can anyone give me some advices on good market and turn key providers in today's market? I'm looking for long term investment that can give me decent cash flow (cap rate 8%+)

Thanks!

Jie

Fremont, CA

This post has been removed.

Hi Jie! I'm a turnkey owner/promoter and my two fave markets in that range right now, with considering the market itself and the available turnkey providers in them, would be Kansas City and Philadelphia. KC being the primary one due to way shorter construction times from the turnkey folks. At least the ones I work with.

If you are looking at cash flow, this is a good price point, you will need to move quickly to identify the properties. 

From what I've seen there are several markets in the midwest (OH/IN) and some submarkets of TX and OK where this would work. I would go with what you're most familiar with and where you feel you can build a strong team. 

Good luck!

Originally posted by @Ali Boone :

Hi Jie! I'm a turnkey owner/promoter and my two fave markets in that range right now, with considering the market itself and the available turnkey providers in them, would be Kansas City and Philadelphia. KC being the primary one due to way shorter construction times from the turnkey folks. At least the ones I work with.

 do you have contact info or something for the Philadelphia turnkey companies?  thanks!

I would avoid turnkey at the amount.  Either there are short cuts, bad neighborhoods, etc.  at $45k, your tax hit couldn't be that much.  Isn't there any losses you can offset it?  Save more money

Yeah, send me a PM. And I agree about the $45k range (I don't even know good providers that have that range) but $65k is totally doable and good.

Whoops, @Mark Redmann forgot to attach your name to the last one.

Doesnt anyone realize that the TK providers for any given market are all just a google search away?  

@Jie Li

What you need to keep in mind is that when you buy homes in the $65k range or lower, property management becomes one of the most important elements to your success.  There are lots of markets that offer this type of product but not all have real solid mgnt in place.  

You should do some research on several markets that offer this type of product and then dig in a little to figure out who you think might be best for your company.  Go to Turnkey-reviews.com to use that as one of your due diligence pieces.  You can find these companies ow your own and get a better price.

Good luck

This is the 2nd replacement property for 1031. The sold one is $335k, 1st replacement is $270k.

Right now I'm looking at Kansas City, Pittsburgh, Cincinatti, and Indianapplas for $45k - $65k turnkey property. I've never heard of TX market for this price. And I'm open to any healthy markets with good team. 

Usually I buy $100k+ for turn key properties. This is going to be new for me at this price rang because of 1031. I do need to have a good property management company taking care of it for me after closing.

Thanks!

Jie

@Curt

That is what I'm doing now. I'll check the website. Thanks!

I was trying to check some turnkey providers in Biggerpockets, but not a lot of info I can use as references.

@Mark

 Do you have Philadelphia turnkey companies contact info? Which provider do you use for Kansas City? What's your experience with them?

Thanks!

I personally have bought 3 turnkeys all in that range and they are all performing amazing right now. Grant it, they are all less then a year old but the point is that it can be done. And not in high crime areas.  From my own research, the only markets I have found in that price range where you can get decent properties like that not in high crime areas are Indy and KC.   Im buying in Indy now but will move on to KC after a few more.  From there, I start my due diligence process all over again with the KC sellers.

PM me if you want specifics on who I have worked with in Indy.  I have at this point pretty much spoken to all the players there and have my own personal opinion on each one.

@Swat

What submarkets of TX at this price range? Do you have more info?

Thanks!

Jie

@Jie Li

  AS Curt Mentions be uber careful in major mid west markets when your buying at the lower price point and only have one property to boot..

your either going to be happy or not so happy...

I like some of the outliers and sub markets for this price point since your buying these for any hopes of appreciation... stable smaller markets that don't move and have a somewhat tamer tenant base at those price points are something to consider

Personally to try to avoid tax on 45 to 60k  and risk a low end rental may not be the best course of action.. it may be better to simply pay your cap gain and use the money as a down for a much better property that will probably serve you better over time...

May of the Top TK companies no longer sell this lower end product for the reasons @Curt Davis   states

there are small suburbs around the Kansas City area that a person can find a good house at 45k and above. Do some research on Raytown, MO and independence MO to see the prices and rental incomes. I can send you an example of a address in the 45k to 50k range that is rehabbed and can rent for $850.0 per month.

@Jay

Thanks for your advice. Me and my husband figured out that adding up the cap gain tax,  depression recapture and CA state tax make it a big chunk of the profit. So we would prefer to exchange it and just put a little more cash out of  pocket. This is our 1st exchange, so we're learning here too.

Jie

I would say that are you better off going to an out of state market and doing an exchange on a single family home is better than doing an exchange on a condo or townhouse here in California. I would also agree that doing one in Mo. that rents out at $800+ would give you a good cash flow but I have friends in Indianapolis that have been doing find for years in that market. Don't know about KC and the TX market can get as wild as their sand storms. Your $45K house there may end up abandoned after a while. I have had that happen to me twice on houses in that price range there. Right now I cannot even give them away, still paying property taxes though. 

I know its very comfortable thinking you will be paying cash for a house but honestly you may reconsider using the $65K as a down payment on a slightly more expensive house if it will give you the same cash flow. You would have a better quality house and the same or better cash flow.

Just my .02c

@Jie Li   A couple of suggestions when buying turnkey:  Get a 1 year warranty because many of the houses have hidden problems that the rehabber doesn't know about.  Get an appraisal so you know its market value.

An alternative in KC is to use William Robison like I did.  As a RE broker that knows the KC suburbs, he helped me find an investment property from all that were available.  More importantly, he is a great property manager which is the most crucial aspect of remote investment.  As such, he will handle placing tenants.  Compare that to the turnkey paradigm.

@Jim

How would William Robison help you with the renovation work? Is he accurate on rehab cost estimate, and return projection? how long have you been working with him? and how is your returns compare to turnkey?

Thanks!

Jie

@Gordon,

I've heard of Independence, but not Raytown, MO. Could you send me some sample properties to see the prices and rental incomes? Do those properties fully rehabbed, and managed by a good company?

Thanks!

Jie

Take a look at Grand Rapids Michigan.   We are getting national attention for our growth,  rental market and investment opportunities.   8% in that range is definitely do able even with a property manager,  and I know a good one =). 

@Gilbert,

I'm running out of conventional loan for this 2nd replacement property. so I have to either pay cash, or get a commercial loan. At this moment, I'd like to try a lower priced market (maybe $65k is more realistic than $45k) to see whether it works. All our rest turnkey properties are $120k+. So I'm learning here too.

Thanks!

Jie

@Jie Li

I think you will have to visit each property or turnkey provider that you are looking to invest in and with. The problem you will hear from most BPer's is that you should not invest in properties that cost $45k because they are in lower class neighborhoods and your investment experience will be terrible!! They are mostly absolutely correct especially if you don't have an experienced property manager that knows the area and or maybe grew up in those same types of areas and or maybe lives in those areas... This makes it much more easier to manage with experienced PM this will be your key to success in ANY area!!

Good Luck and Happy Investing!!

PS: $120k and up homes have vacancies, maintenance issues, horrible tenants as well... Unfortunately it's true!! 

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