Turnkey. Am I a wussy?

Buying & Selling Real Estate
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Turnkey. Am I a wussy?

Tony Velez
Hvac 路 North Haven, CT 路 Member since 2015 路 298 posts 路 79 votes

Am I a wussy for thinking turnkey for my first real estate investor?  Be honest I can take it. 馃槉

Thanks

Tony V

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James Wise
Real Estate Broker 路 Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH 路 Member since 2013 路 30k+ posts 路 20k+ votes
10y

Turnkey is a service just like any other service. Will you pay more for everything to be done on your behalf instead of doing it yourself? Yes, of course. Just like it will cost more money to have your car fixed by a mechanic as opposed to doing it in your garage.

It is a trade off. Do you want others to do work for you or do you want to save a few bucks and do it yourself? 

One important thing to think about: When you are doing it yourself to save a few bucks are you taking time away from your other earning potential?

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  • Michael BarbariPro Member
    Banker 路 Downers Grove, IL 路 Member since 2014 路 396 posts 路 107 votes
    10y

    @Tony VelezNot at all. Everyone has their preferences. If it works for you and your family then do it. Just do your research and know what you're getting into. Good luck!

    1Reply
  • Tony Velez
    OP
    Hvac 路 North Haven, CT 路 Member since 2015 路 298 posts 路 79 votes
    10y

    @Michael Barbari thanks I'm just thinking out loud. So many different ways to invest. It's like real estate overload on the brain. Lol

    Tony V

    1Reply
  • Michael BarbariPro Member
    Banker 路 Downers Grove, IL 路 Member since 2014 路 396 posts 路 107 votes
    10y

    @Tony Velez

    Tell me about. It's exciting and addicting. Take your time and know all your options. What's the reason on investing in turnkeys first?

    1Reply
  • Tony Velez
    OP
    Hvac 路 North Haven, CT 路 Member since 2015 路 298 posts 路 79 votes
    10y

    I guess the simplicity of it. Maybe get my foot in the door.  I haven't looked into the numbers yet but I plan on it. Well see.

    0Reply
  • Larry Fried
    Investor/RE Broker 路 Eugene, OR 路 Member since 2014 路 3k+ posts 路 968 votes
    10y

    @Tony Velez Well maybe, but if so then I am a wuz as well, as that is exactly how I have started in REI. So, from one wuz to another - go for it!

    3Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber 路 Memphis, TN 路 Member since 2008 路 5k+ posts 路 2k+ votes
    10y

    It all depends on where you are investing.  If you are looking long distance then it would be a good place to start.  I would try to narrow down the markets you are interested in then start to identify the providers in those markets. 

    Good luck

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    0Reply
  • Ali Boone
    Real Estate Coach 路 Venice Beach, CA 路 Member since 2012 路 6k+ posts 路 3k+ votes
    10y

    Even if someone thinks you are a wussy, who cares! Turnkey is awesome :) Someone can call me a wussy (or worse) all they want because I only buy turnkeys, and it won't wipe the smile off my face :) I love them. I don't stress about them, I don't spend any time on them, and I get some lovely cash each month from them. I think people knocking the turnkey idea is hilarious.

    5Reply
  • Cal C.
    Investor 路 Peachtree Corners, GA 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y

    Look up this thread 

    difficulty selling rental properties at loan amount Read it a couple of times then read it again!   Then go find something to buy and hold in your local area.  
    4Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber 路 Memphis, TN 路 Member since 2008 路 5k+ posts 路 2k+ votes
    10y

    If people buy rental property under a long term buy and hold strategy and then have difficulty selling it within a few years then yes, there will be difficulty selling it, its no secret.  If you go buy a new car at the dealership you wont be able to sell it back to them the next year for even what you owe on it.  

    the TK buying process serves a purpose for many investors, especially ones who are busy with their full time career and when the numbers dont work in their local market.  

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    3Reply
  • Royce Talbo
    Investor 路 Kaneohe, HI 路 Member since 2012 路 218 posts 路 104 votes
    10y

    @Tony Velez I wouldn't do it.  Yes it is easy and it is easy because they do all the work and take away most of the value.  Secondly all you will be doing is collecting a pay check and not really learning anything.  Everything should be good to go and you will not run into any problems but again how will you learn.  Another issue is how do you know which TK companies to trust if you are new and dont know what you are doing.  They could sell you something that seems good but after you get into it you learn that its not what it seems. 

    My advice is to find a good realtor who deals with investment properties and then buy one within driving distance of your home.  Hire a property manager to get you started and watch how things work out.  After that try managing your own property to further your learning experience.  After all of this if you want to turn to TK because it is easier then at least you have the tools you need to know what is going on. 

    3Reply
  • Account Closed
    Real Estate Agent 路 Las Vegas, NV 路 Member since 2015 路 2k+ posts 路 1k+ votes
    10y

    turnkey sounds easy but it can be much more costly then finding your own local deals as@Cal C.

    points out 

    1Reply
  • James Wise
    Real Estate Broker 路 Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH 路 Member since 2013 路 30k+ posts 路 20k+ votes
    10y

    Turnkey is a service just like any other service. Will you pay more for everything to be done on your behalf instead of doing it yourself? Yes, of course. Just like it will cost more money to have your car fixed by a mechanic as opposed to doing it in your garage.

    It is a trade off. Do you want others to do work for you or do you want to save a few bucks and do it yourself? 

    One important thing to think about: When you are doing it yourself to save a few bucks are you taking time away from your other earning potential?

    8Reply
  • Cal C.
    Investor 路 Peachtree Corners, GA 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y
    Originally posted by @Curt Davis:

    If people buy rental property under a long term buy and hold strategy and then have difficulty selling it within a few years then yes, there will be difficulty selling it, its no secret.  If you go buy a new car at the dealership you wont be able to sell it back to them the next year for even what you owe on it.  

    the TK buying process serves a purpose for many investors, especially ones who are busy with their full time career and when the numbers dont work in their local market.  

     There are always deals out there and it is absolutely insane to buy something where you can't at the very least break even immediately!  Even if you are investing for appreciation.  That would be the same thing as buying a stock at a price 5%-10% above what you could sell it for.  

    4Reply
  • Account Closed
    Real Estate Agent 路 Las Vegas, NV 路 Member since 2015 路 2k+ posts 路 1k+ votes
    10y

    What happens in a year or 2 or ten if the turnkey business is gone you are stuck with a property thousands of miles away with no control and as mentioned no way out without a loss 

    2Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber 路 Memphis, TN 路 Member since 2008 路 5k+ posts 路 2k+ votes
    10y

    Well if the TK provider is not around anymore then you just transfer your home to a new property management company.  There are always options, some maybe less favorable then others. 

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    4Reply
  • Account Closed
    Real Estate Agent 路 Las Vegas, NV 路 Member since 2015 路 2k+ posts 路 1k+ votes
    10y

    @Curt Davis of course you are right but the anxiety level and cost factors are what keeps me at home. There seems to be almost as much work and effort as turnkey as doing one at home 

    0Reply
  • Curt DavisBusiness Member
    Flipper/Rehabber 路 Memphis, TN 路 Member since 2008 路 5k+ posts 路 2k+ votes
    10y

    There will always be stress regardless if your investing local or long distance.  I can tell you that managing and overseeing renovations is stressing enough. 

    Curt Davis - KAIZEN Realty538 Reviews
    WebsiteView Page
    1Reply
  • Brandon Elliott
    Investor 路 Birmingham, AL 路 Member since 2015 路 10 posts 路 4 votes
    10y

    Re-read what @Royce Talbo said for my opinion.  He nailed it.  The only scenario in which I'd do a TK is if I had much more money than time.  But personally I'm not to that point yet, and besides, I want to learn th real estate business inside and out.  You won't do that with a TK

    2Reply
  • Adam Anderson
    Developer 路 Palm Harbor, FL 路 Member since 2015 路 307 posts 路 96 votes
    10y

    Before I started using BP I didn't even know Turn Key companies existed but once I found out about them, I initially though it was the way I was going to build my portfolio.  I researched 6-7 providers and found quite a bit of differences but all had a pretty good product and what seamed like a good management team.  Generally speaking the projected returns were lower than they would be if you found the property yourself but that's the trade off for having it done for you.  I love the business model but remembered that I decided to invest in real estate so I could have at least some control or influence over the returns. 

    I think you first need to decide what market or area you want to invest in then look at your options in that market.  If you don't want to manage the property you can higher a property manager anywhere.  Its also not that hard to find an investor friendly realtor who can help you with the search. If you can find the right team, you can buy and hold rental property in any market

    2Reply
  • John Cohen
    Rental Property Investor 路 Mineola, NY 路 Member since 2014 路 838 posts 路 212 votes
    10y

    @Tony Velez turn key could be a great alternative for some people. I would rather get into a large multifamily deal as an investor, because you might have some vacancy problems with turnkey single family stuff. Single family rentals can become a headache if you pay a premium for a done deal. My recommendation is keep chugging away until you find the right deal.

    1Reply
  • Tony Velez
    OP
    Hvac 路 North Haven, CT 路 Member since 2015 路 298 posts 路 79 votes
    10y

    @Cal C. I didn't see the link

    0Reply
  • Cal C.
    Investor 路 Peachtree Corners, GA 路 Member since 2014 路 1k+ posts 路 1k+ votes
    10y

    no link I'm on my iPad and I can't post links.  Just go to bp search.

    0Reply
  • Sky Mikesell
    Principal 路 Charlotte, NC 路 Member since 2010 路 200 posts 路 89 votes
    10y

    @Tony Velez    it is a good question... the reality is there is not a one size fits all... for one investor to tell you it is good or bad for you is absurd...    "a good deal"  is relevant to each and everyone of us... how much experience we have... what our goals are... how much money we have allocated for investing...  and again what our goals are... A good deal for me and a good deal for you and a good deal for donald trump are all going to be different.   If turnkey works for you right now then go for it... if you want to start tackling your own deals down the road you can. you dont have sign a contract to buy turnkey for every real estate deal forever.  you are smart for asking the question... do whatever ever is a "good deal" for YOU right now. 

    4Reply
  • Alex CraigBusiness Member
    Real Estate Professional 路 Memphis, TN 路 Member since 2009 路 1k+ posts 路 1k+ votes
    10y

    If you can do it in your backyard, then it is a no brainer, do it.  If you can't and you want to own property, then turnkey is a good option.  I would think hard about buying a property in another market through a real estate agent who will then oversee the rehab of the property. A lot of individuals take for granted the experience needed to oversee a $25,000 project renovation, dealing with local code, local utility and other idiosyncrasies of a particular market.  There seems to be a perception on bigger pockets that you can get a much better deal if you bypass Turnkey and hire a realtor; I disagree.

    901-848-9028
    8Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    10y

    @Tony Velez there are many layers to turn key... you have the actual turn key providers who you can deal with one on one.. you have those that market for turn key providers and help you deal with the provider... And of course you could simply look at MLS deals and realtors.. you just need to buy a home that either already has a tenant and just do your normal inspections. or one that has had recent reno's and again do an inspection.. the turn key provider is basically just a rehab flipper of rentals.. Chris Clothier likes to point out that turn key is a very over worked term in the industry and I agree with him.

    YOu can also deal with the rental fix and flipper who then owns their own management company.. or one's that work with one closely... there are many ways to acquire rental properties... when you buy pre rehab that can get dicy no matter the company because there are many things that need to take place prior to your earning any income. this is why the public and the Marketers of turn key generally want tenant in place on a fresh rehab property  it gives investor cash flow from time of  closing.. However I know some bougtique fellows that are not realtors will use their sourcing ability and their rehab ability and bring you a deal at cost with a pretty small mark up  usually less than a sales commish to an outside agency.. so there is that program as well.. need cash for that.. in the old days I used to do the Hardmoney loan to help you buy and rehab but most of us lenders won't do that for newbie or out of state investors anymore risk are to high.

    But get on line check out all the different companies there are 100's  and there are probably 30 plus viable markets ...

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