Turn Key Rental Properties.
Real Estate Agent · Fort Worth, TX · Member since 2015 · 48 posts · 12 votes
To Turn Key or not to Turn Key, that is the question.
What is the better investment strategy? Buy wholesale and fix up a property to hold for a rental or invest in a Turn Key rental that already cash flows?
Don't over complicate this.
For whatever reason people on this forum give the impression that there are only two options.
1. A full blown gut job rehab.
2. A freshly renovated turnkey house.
This is just not true, there are more options.
Hookup with a Realtor and find an area that you are comfortable with. Look at some houses that are well priced and make some offers. Houses that were owned by little old ladies are great finds. They are usually in great shape but priced well because of how outdated they are. We have been very successful targeting properties that are decently price because they just need minor "love" to get them up to snuff.
@Jason Utley, go for "wholesale and fix up a property to hold for a rental", because, that is your opportunity to 1: buy under market value (can't readily do that with turnkey); and 2: add more value than it costs, ending up with increased EQUITY from the get go (again, unlike most turnkey scenarios).
The initial delay in renting it out should be well worth it, because you will have extra exit strategies up your sleeve: selling at a profit, OR refinancing after the rehab so you can do it all again, with Other People's Money! Cheers...
I'm new myself but I think which ever one brings you a cash flow that your comfortable with and fits your risk profile is the way to go.
Personally, I have been looking at turn key properties fixed up and managed by the same people. That is only because I am looking to invest in out of state properties. If I was buying a place in my town/city, I would probably want to buy a fixer upper at a discount, put the money, blood, sweat and tears into it and have it cash flow until the day I'm dead.
Typically the reason why people go with TK is because they dont live in a market where they can fix up, rent and cash flow or because they dont have the time or know how to do that.
You will always get higher returns by doing it yourself just like any other thing. If you don't want to deal with the process of buying distressed, fixing up, renting out for whatever reason, then it could be a good idea for you go to TK.
Just depends on your situation. I used to buy local and do it myself until my market got too expensive. Now I go TK out of state. I will go back to local and doing it myself if the prices ever go back to reasonable where I live.
Pretend you know a more than average about cars and how they work. If so would you rather buy a car from somebody needing to sell it fast, knowing you could fix it up and make it worth more almost instantly or would you rather go buy a car at a used car dealership?
IMO, start from your goals and intentions for your REI and work the decision tree.
If you disdain the risk, work and speculation in flips -- you get one set of choices.
If you want to buy&hold, collect rents, you get another.
If you're still on the fence, have yet to establish goals or have never done remodeling . . . suggest you sit it all out until you know what you can tolerate.
Here is what I did. I bought a small place to fix and flip - made a little money,
then I did it again, made a little more money. I did it until I have enough profit to keep one of the homes as a buy and hold.
I did this over and over again and built my little empire... :)
Don't over complicate this.
For whatever reason people on this forum give the impression that there are only two options.
1. A full blown gut job rehab.
2. A freshly renovated turnkey house.
This is just not true, there are more options.
Hookup with a Realtor and find an area that you are comfortable with. Look at some houses that are well priced and make some offers. Houses that were owned by little old ladies are great finds. They are usually in great shape but priced well because of how outdated they are. We have been very successful targeting properties that are decently price because they just need minor "love" to get them up to snuff.
To Turn Key or not to Turn Key, that is the question.
What is the better investment strategy? Buy wholesale and fix up a property to hold for a rental or invest in a Turn Key rental that already cash flows?
Jason, great question, defiantly this is a very loaded and complex case to dissect. We have to begin by defining Turnkey - many people use this very loosely and it may carry a broad range of defiant as you engage with one operator to another.
TURNKEY = accountability, economies of scale, easy access to expertise, passive income
That is the most rudimentary definition of a real Turnkey asset and experience. Ultimatley, you want a sophisticated operation, that can offer dedicated and transparent communication, to insure your asset is truly passive income hassle free. It is a simple and easy manner to earn rental income without having to do the work. If you can define an operator who offers all the aforementioned, you will gain on the years of expertise and talent in the organization, mitigate cost risks, increase ROI and enhance your efficiency. Lets be real with a full-time job, family and kids, I can only rely on TK, similar to many people I engage and network with, the goal is to be able to utilize this resource to your advantage, build wealth using proven and existing systems. The mere cost of attempting to do this yourself, is just not realistic at least if you have a full time job, I know that is the case with myself and my immediate circle of friends/acquaintances. Why not enjoy the economies of scale a TK operator can bring to the table. Furthermore, you have a built-in accountability system, as the operator you will engage has been involved at every level of the process, therefore they can be held accountable no finger pointing. Time Value of Money is something to consider as you weight to Turnkey and Not to Turnkey.
NOT REAL TURNKEY = NO ACCOUNTBAILITY, NO RELIBAILITY, MISC. CONSTRUCTION
**Any combination of the aforementioned (NOT REAL TURNKEY) is not real turnkey, it is a loose way of explaining a process that does not offer any added value, security and/or accountability, it is a service, however, not a comprehensive hassle free service)
Property Manager = Concentrates and cares about fees, this is #1
TK Property Manager = Concentrates and cares about investor ROI, this is #1
Finally, I want to end with the consideration, that you still need to do what you feel comfortable with and define your risk profile for yourself. With that being said, yes, I am biased towards turnkey, but, similar to many engagements based on this matter, I suspect that me and my wife are buying TK to build wealth as many other TK real estate investors.
Keeping it simple for me has been the most successful experience I have had to date. I have been in all the discussed scenarios within the forum and I must say, they all have there own underlying dynamics disadvantages and advantages, but for someone who is full time, TK is an easy and simple point of entry to participate in REI for building sustainable wealth. I pick immediate cash flow over anything else, simple rules of finance and economics, the theories are real, the science points in the TK direction.
Hope this helps your REI journey as you maneuver these complex waters.
@Steven Gesis, I agree with much of what you wrote, (do you sense a BUT?)
BUT, under Turnkey, you wrote:
As far as I can tell, those two terms are mutually exclusive. As far as the Investor is concerned, the "Operator" IS a middleman! And largely, the cost of that Operator to the Investor is what eats up much of the property's potential (non-Turnkey) profit! (I might have other points to raise, another time),,,
@Steven Gesis, I agree with much of what you wrote, (do you sense a BUT?)
BUT, under Turnkey, you wrote:
As far as I can tell, those two terms are mutually exclusive. As far as the Investor is concerned, the "Operator" IS a middleman! And largely, the cost of that Operator to the Investor is what eats up much of the property's potential (non-Turnkey) profit! (I might have other points to raise, another time),,,
Brent, I think we need to drill down this subject matter a little further:
The operator is the source, they are not the middlemen in a Real Turnkey scenario, they are your gateway to wealth building with no premiums, for example:
Sure, they will sell the home direct to the investor, not through a middleman such as: "Real Estate Gurus" (example: Real Wealth Network, Epic Realty, HomeUnion) these are middle men that tack on $5-10K for the home. Domestic buyers are going to be subject to lender appraisal, so the home cannot be anymore then market value. You pay no premiums for having a tenant, in-fact you save money because the placement fee is extinguished by them facilitating a tenant with the home at transfer. You can get better construction quality and material because you are using their expertise and their economies of scale. Lastly, they deliver a value beyond jus the cash-flow, they give you the upperhand on your Time Value of Money.
Is this true with all Turnkey operators = NO
Is this true with sophisticated, well established and proven Turnkey operator = YES
If someone is seeking true passive turnkey, you can get efficiency, low rice and no premium middleman stuff.
This is a service just like any other service. Always remember just because you can cook, does not mean you will stand in the kitchen at a restaurant.
I beg to differ, I do not think these are mutually exclusive, I do think they certainly can be, but for the sake of my post, these are not considered mutually exclusive.
I'm new myself but I think which ever one brings you a cash flow that your comfortable with and fits your risk profile is the way to go.
Personally, I have been looking at turn key properties fixed up and managed by the same people. That is only because I am looking to invest in out of state properties. If I was buying a place in my town/city, I would probably want to buy a fixer upper at a discount, put the money, blood, sweat and tears into it and have it cash flow until the day I'm dead.
Matt, great point, I think you are moving down the right path. First you need to define what your comfort and risk level looks like.
Secondly, using a streamlined operation that offers all services in house gives you more accountability for the asset and keeps the operator engaged and involved through the term of your relationship, this way you are not merely being passed along. If you are investing out of state, this is the best solution you can have, someone with the expertise, operation, administrative capacity and well established communication means.
Sure, if it is in your own backyard, maybe DIY, but lets be real, can you compete against established economies of scale and place that much time in the project if you are employed full time somewhere. You still want management services, you still need construction services and you still need to acquire it. I am not saying this is the be all end all, I am just saying that a full time turnkey operator will defiantly/should be able to bring advanced savings both monetary and time to your plans.
Typically the reason why people go with TK is because they dont live in a market where they can fix up, rent and cash flow or because they dont have the time or know how to do that.
You will always get higher returns by doing it yourself just like any other thing. If you don't want to deal with the process of buying distressed, fixing up, renting out for whatever reason, then it could be a good idea for you go to TK.
Just depends on your situation. I used to buy local and do it myself until my market got too expensive. Now I go TK out of state. I will go back to local and doing it myself if the prices ever go back to reasonable where I live.
Alexander, all great points!
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
@Steven Gesis, if you mean: any property that is sold at market ARV, already tenanted, is called a "turnkey property", then I agree. No middlemen needed.
But why didn't you just say that? What's with the "Operator" talk?
But I suspect you are referring to purchases where there IS still an Operator involved afterwards, getting ongoing payments after all, right? ie. MIDDLEMAN!
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
@Steven Gesis, if you mean: any property that is sold at market ARV, already tenanted, is called a "turnkey property", then I agree. No middlemen needed.
But why didn't you just say that? What's with the "Operator" talk?
But I suspect you are referring to purchases where there IS still an Operator involved afterwards, getting ongoing payments after all, right? ie. MIDDLEMAN!
Brent, yes, you got it. The operator is your direct Turnkey provider, someone who can not only operate the front end of the business but also continue the management business after disposition to the client. No, I do not think this is the same as a Middleman, you need a service provider and then middle men such as guru marketing companies are the middleman. Hope that brings more clarity to the subject.
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Scott, thanks for the detailed response, I just want to make sure we define "cream of the crop" - the ones willing to pay a fee to play :) Nothing wrong in that, but lets make sure we are placing the correct boundaries on these loose statements. Happy investing!
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Scott, thanks for the detailed response, I just want to make sure we define "cream of the crop" - the ones willing to pay a fee to play :) Nothing wrong in that, but lets make sure we are placing the correct boundaries on these loose statements. Happy investing!
The cream of the crop means the properties that will provide our clients with good returns while minimizing the risk as much as possible. Obviously, it's impossible to remove risk entirely, but we have a variety of ways in which we reduce risk pre and post investment.
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Scott, thanks for the detailed response, I just want to make sure we define "cream of the crop" - the ones willing to pay a fee to play :) Nothing wrong in that, but lets make sure we are placing the correct boundaries on these loose statements. Happy investing!
The cream of the crop means the properties that will provide our clients with good returns while minimizing the risk as much as possible. Obviously, it's impossible to remove risk entirely, but we have a variety of ways in which we reduce risk pre and post investment.
Scott, thanks for clarifying, just seemed a little confusing perhaps. Certainly risk mitigation is a critical element associated with Turnkey, that speaks exactly to my earlier points, that maximum risk mitigation is achieved by working with operators that house the entire Turnkey operation from acquisitor to management. Not piecemeal or working with middlemen/intermediary services.
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Scott, thanks for the detailed response, I just want to make sure we define "cream of the crop" - the ones willing to pay a fee to play :) Nothing wrong in that, but lets make sure we are placing the correct boundaries on these loose statements. Happy investing!
The cream of the crop means the properties that will provide our clients with good returns while minimizing the risk as much as possible. Obviously, it's impossible to remove risk entirely, but we have a variety of ways in which we reduce risk pre and post investment.
Scott, thanks for clarifying, just seemed a little confusing perhaps. Certainly risk mitigation is a critical element associated with Turnkey, that speaks exactly to my earlier points, that maximum risk mitigation is achieved by working with operators that house the entire Turnkey operation from acquisitor to management. Not piecemeal or working with middlemen/intermediary services.
And HomeUnion does not offer a piecemeal service EVER. We offer end-to-end services on every property we offer. What I mean by end-to-end is that we work with understand their investment goals, recommend vetted properties (the cream of the crop nationally) that will help them reach their goals, help them acquire financing (when and if appropriate), do all the legwork to acquire the properties on their behalf, rehab the property (when necessary), market the property to get great tenants, provide all ongoing maintenance and do all the day-to-day management necessary, and we'll even help our clients sell their property when they are ready.
There was a time, several years ago, when we did not provide soup-to nuts services, but we do now.
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Scott, thanks for the detailed response, I just want to make sure we define "cream of the crop" - the ones willing to pay a fee to play :) Nothing wrong in that, but lets make sure we are placing the correct boundaries on these loose statements. Happy investing!
The cream of the crop means the properties that will provide our clients with good returns while minimizing the risk as much as possible. Obviously, it's impossible to remove risk entirely, but we have a variety of ways in which we reduce risk pre and post investment.
Scott, thanks for clarifying, just seemed a little confusing perhaps. Certainly risk mitigation is a critical element associated with Turnkey, that speaks exactly to my earlier points, that maximum risk mitigation is achieved by working with operators that house the entire Turnkey operation from acquisitor to management. Not piecemeal or working with middlemen/intermediary services.
And HomeUnion does not offer a piecemeal service EVER. We offer end-to-end services on every property we offer. What I mean by end-to-end is that we work with understand their investment goals, recommend vetted properties (the cream of the crop nationally) that will help them reach their goals, help them acquire financing (when and if appropriate), do all the legwork to acquire the properties on their behalf, rehab the property (when necessary), market the property to get great tenants, provide all ongoing maintenance and do all the day-to-day management necessary, and we'll even help our clients sell their property when they are ready.
There was a time, several years ago, when we did not provide soup-to nuts services, but we do now.
Scott, that sounds like a lot of moving parts all over the country, having such a diverse and far reaching hyper local network spanning the entire country sounds really great and complex. In some cases it does sound that the consumer would place some risk in the sense that the assets are not income producing from day one as you may be able to get from a Turnkey operator, so there may be a little downtime on money as you go through construction and place them with property management companies, unless you centralize your management company, not sure how that would work in regards to regulation. For example in Ohio if you intend on managing someones home, you must be a licensed State of Ohio brokerage, do you have brokerage offices around the country ?
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Scott, thanks for the detailed response, I just want to make sure we define "cream of the crop" - the ones willing to pay a fee to play :) Nothing wrong in that, but lets make sure we are placing the correct boundaries on these loose statements. Happy investing!
The cream of the crop means the properties that will provide our clients with good returns while minimizing the risk as much as possible. Obviously, it's impossible to remove risk entirely, but we have a variety of ways in which we reduce risk pre and post investment.
Scott, thanks for clarifying, just seemed a little confusing perhaps. Certainly risk mitigation is a critical element associated with Turnkey, that speaks exactly to my earlier points, that maximum risk mitigation is achieved by working with operators that house the entire Turnkey operation from acquisitor to management. Not piecemeal or working with middlemen/intermediary services.
And HomeUnion does not offer a piecemeal service EVER. We offer end-to-end services on every property we offer. What I mean by end-to-end is that we work with understand their investment goals, recommend vetted properties (the cream of the crop nationally) that will help them reach their goals, help them acquire financing (when and if appropriate), do all the legwork to acquire the properties on their behalf, rehab the property (when necessary), market the property to get great tenants, provide all ongoing maintenance and do all the day-to-day management necessary, and we'll even help our clients sell their property when they are ready.
There was a time, several years ago, when we did not provide soup-to nuts services, but we do now.
Scott, that sounds like a lot of moving parts all over the country, having such a diverse and far reaching hyper local network spanning the entire country sounds really great and complex. In some cases it does sound that the consumer would place some risk in the sense that the assets are not income producing from day one as you may be able to get from a Turnkey operator, so there may be a little downtime on money as you go through construction and place them with property management companies, unless you centralize your management company, not sure how that would work in regards to regulation. For example in Ohio if you intend on managing someones home, you must be a licensed State of Ohio brokerage, do you have brokerage offices around the country ?
Yes, we have all the proper licenses required in all the markets we are currently active. As we expand into new markets, we build the necessary infrastructure to properly service our clients and all proper licensing.
Just wanted to clarify, in MOST cases, HomeUnion does not act as a middleman. The majority of the properties that we recommend to our clients are not those offered by a turn-key provider. There are instances where we do recommend turn-key provider properties, but that's definitely the exception, not the rule.
One downside of working with a turn-key provider is that they own the property they are selling. While there are some positives that go along with that, there are also some negatives...the biggest one is that every dollar you spend on the property, is a dollar in their pocket, so it's not in their best interest to sell you the property at the best price possible.
It's always a good idea to make sure the property appraises for the price they are asking. Find out how much they paid for the property, ask for an itemized list of all the repairs they've made and their costs...then work with them to find a fair price for the property. Make sure you give them some room for profit though. They deserve something for all the hard work they've done to get the property into it's current condition.
No matter what, please do your due diligence on whomever you purchase from...we don't work with a majority of the turn-key providers out there for a reason (granted, our standards are pretty strict).
Scott, where do you get the majority of your operational/cash flowing inventory? Just speaking from experience, we were approached by your group for our inventory in Q2 of 2015, unfortunately the fees to work with your group are just to great and not fair to pass this along to the consumer. I think many turnkey providers may not want to work with "marketing" companies, they can provide the same if not better direct service without escalating the cost of the asset. Open for clarification, I do not mean this to come-off the wrong way, just confused because the local representative even sent us the terms of the agreement to consider working with HomeUnion, we cordially declined. I like the concept, just not sure, that your are NOT a "middleman"
The properties we recommend come from a variety of sources, the MLS, private owners, funds, and yes some turn-key providers....basically, we vet out every piece of inventory that's available to find the best investments for our clients. As I mentioned, there are occasions, where we are the middleman to a turn-key provider, but that is the exception, not the rule. I don't know about the details of us approaching your organization, but as mentioned, we approach pretty much everyone, but only recommend the cream of the crop to our investors.
Scott, thanks for the detailed response, I just want to make sure we define "cream of the crop" - the ones willing to pay a fee to play :) Nothing wrong in that, but lets make sure we are placing the correct boundaries on these loose statements. Happy investing!
The cream of the crop means the properties that will provide our clients with good returns while minimizing the risk as much as possible. Obviously, it's impossible to remove risk entirely, but we have a variety of ways in which we reduce risk pre and post investment.
Scott, thanks for clarifying, just seemed a little confusing perhaps. Certainly risk mitigation is a critical element associated with Turnkey, that speaks exactly to my earlier points, that maximum risk mitigation is achieved by working with operators that house the entire Turnkey operation from acquisitor to management. Not piecemeal or working with middlemen/intermediary services.
And HomeUnion does not offer a piecemeal service EVER. We offer end-to-end services on every property we offer. What I mean by end-to-end is that we work with understand their investment goals, recommend vetted properties (the cream of the crop nationally) that will help them reach their goals, help them acquire financing (when and if appropriate), do all the legwork to acquire the properties on their behalf, rehab the property (when necessary), market the property to get great tenants, provide all ongoing maintenance and do all the day-to-day management necessary, and we'll even help our clients sell their property when they are ready.
There was a time, several years ago, when we did not provide soup-to nuts services, but we do now.
Scott, that sounds like a lot of moving parts all over the country, having such a diverse and far reaching hyper local network spanning the entire country sounds really great and complex. In some cases it does sound that the consumer would place some risk in the sense that the assets are not income producing from day one as you may be able to get from a Turnkey operator, so there may be a little downtime on money as you go through construction and place them with property management companies, unless you centralize your management company, not sure how that would work in regards to regulation. For example in Ohio if you intend on managing someones home, you must be a licensed State of Ohio brokerage, do you have brokerage offices around the country ?
Yes, we have all the proper licenses required in all the markets we are currently active. As we expand into new markets, we build the necessary infrastructure to properly service our clients and all proper licensing.
Sounds interesting to say the least .........
Interesting thread! Love a good turnkey thread...
I think @James Wise said it best. A house is a house. How you acquire it and have it managed doesn't make it apples vs. oranges. Its just a house.
The point of the thread is there is more than 1 way to skin a cat.
Acquisition, rehab, leasing and managing and exit. All ways you can create value and make money... OR screw up and lose money.
The labels "turnkey" "wholesale" etc... mean very little in this industry today. Although I do like some of the things that @Account Closed has said. Its like a purists approach to turnkey which is a philosophy I have been preaching for years (with very few listening or caring LOL).
As far as the Middleman debate... I think its just a matter of "does this person or entity add value to my investment or take value out of my investment???"