Quick question for those of you who invest turnkey

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Quick question for those of you who invest turnkey

Ryan Dossey

Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes

What do you find lacking with most providers you talk with?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

10y

@Ryan Dossey this is a multi faceted question.

the industry goes like this.

1. West coast marketing companies... these are highly organized sales orginizations that are real estate brokers.. they don't own the assets they specialize in marketing properties for turn key companies.. they include .. Maverick.. Home Union, Norada and many more but those are some of the top players.. what they do is they do all the heavy marketing IE webinars SEO all the stuff that local on the ground turn key companies are not that great at.

2. Then you have your actual turn key company in the city or market.. these are like Memphis invest ( the big dog) and many many more like them.. these are vertically intergrated companies they may allow out side sales or may not.. they buy and control their own inventory and they have PM in house.

3. The what I call boutique Turn key company.. this would be a smaller company that has a variety of services they offer.. many times its a you buy you rehab and we manage scenario .

One of the main advantages to Turn key is that a properly renovated rental will stand up to a 3p appraisal so the buyer can secure financing form the Lenders that have come back into the space.

and right now is a great time rates are super good and DCR's with 20 to 30% down many times are 2 to 4 X..

The key to all these companies is after care.. And of course the rental business as a whole is a tough one. Its hard to control what your tenant does. and most of the time when you communicate with your owner its bad news.. LOL.. if its going perfect no need to commuinicate.. but people being people stuff happens.

I think since I started in the Industry financing Turn key in 2001 and over 2500 deals later what I personally see is most of the top end turn key companies have 100% moved out of the hood.. and are selling much better product than back in the day.. So price point is important .. some areas and local demographics in a town are just not something a out of state investor needs to risk.. its not their desire to change a culture or nation.

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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
10y
Property management quality of service!
3 Reply
Account Closed
Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
10y
I live in Hawaii and CA so I don't do TurnKeys since these are very profitable markets but it seems the total lack of valuation fundamentals is very common.
2 Reply
Ryan Dossey
OP
Real Estate Broker · Indianapolis, IN · Member since 2014 · 3k+ posts · 2k+ votes
10y
Originally posted by @Ali Boone:

Property management quality of service!
Can you dig into that a bit more? Obviously clear communication. And managing as agreed. But any other takeaways?
0 Reply
Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
10y
You can't really tell who you are talk with is legit. Everyone is a salesman and they all say yes they can. Unfortunately you don't know who is worth a S until you start into due diligence process with you inspector and cross referencing conversations with agents, property managers, local holiday inn/churches/schools.
3 Reply
Henry J.
Monterey Park, CA · Member since 2014 · 157 posts · 80 votes
10y
Matching personality and work ethics. Trust level / keeping his or her word. Communication responsiveness (turn around time). Right inventory (location, price, return) that I want to buy.
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
10y
@Ryan Dossey this is a multi faceted question.
the industry goes like this.
1. West coast marketing companies... these are highly organized sales orginizations that are real estate brokers.. they don't own the assets they specialize in marketing properties for turn key companies.. they include .. Maverick.. Home Union, Norada and many more but those are some of the top players.. what they do is they do all the heavy marketing IE webinars SEO all the stuff that local on the ground turn key companies are not that great at.
2. Then you have your actual turn key company in the city or market.. these are like Memphis invest ( the big dog) and many many more like them.. these are vertically intergrated companies they may allow out side sales or may not.. they buy and control their own inventory and they have PM in house.
3. The what I call boutique Turn key company.. this would be a smaller company that has a variety of services they offer.. many times its a you buy you rehab and we manage scenario .
One of the main advantages to Turn key is that a properly renovated rental will stand up to a 3p appraisal so the buyer can secure financing form the Lenders that have come back into the space.
and right now is a great time rates are super good and DCR's with 20 to 30% down many times are 2 to 4 X..
The key to all these companies is after care.. And of course the rental business as a whole is a tough one. Its hard to control what your tenant does. and most of the time when you communicate with your owner its bad news.. LOL.. if its going perfect no need to commuinicate.. but people being people stuff happens.
I think since I started in the Industry financing Turn key in 2001 and over 2500 deals later what I personally see is most of the top end turn key companies have 100% moved out of the hood.. and are selling much better product than back in the day.. So price point is important .. some areas and local demographics in a town are just not something a out of state investor needs to risk.. its not their desire to change a culture or nation.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
8 Reply
Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
10y
@Ryan Dossey points out, valuation is a problem with some. Some turn key companies (not all) put substantial mark ups on their properties. I'd be careful of those that only sell to cash buyers (especially to foreign nationals that don't know values) or don't accept appraisal contingencies.
2 Reply
Sam Van Horebeek
Hong Kong, Hong Kong · Member since 2015 · 140 posts · 89 votes
10y
@Ryan Dossey
It is a question on what return you are looking for and the convenience that you are looking for. For example, we compare the return that a turnkey provider is offering versus having an investor doing it himself. As pointed out above already, turnkey provider often add a substantial markup to the property that you might not be aware off until you compare with a property that you buy directly yourself.
Good luck!
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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
10y
@Ryan DosseyMy perspective from a TK provider is selling properties to cheap so that the #'s look good. The end result is massive maintenance cost. # 1 thing to look for in a property to cheap is age of HVAC, Roof and H20. Second thing to look for in a property priced to cheap is flooring finishes. Too much carpet and vinyl rolled floor will dramatically increase your turn cost. 3rd thing to look for is exterior maintenance items such as water drainage issues, trees hanging over house, fences and external buildings. Lastly, it is about the PM. Turnkey providers should offer a higher level of service then PM's that are not turnkey. Interview the TK PM and ask, "what makes you better and what makes you different." Good TK providers offering PM business will be mostly comprised of investors who bought from them and they realize how important the PM is and those companies are always focusing on how to make PM better.
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
10y
You nailed it. The big thing, more than anything else in my opinion, is the communication. That's where I've seen and experienced the biggest lack. But it can be hard with people who focus on investors too, because a good portion of investors don't care about friendly communication, they only care about their money. But newer investors, communication freaks like me, or timid investors can really need that communication.
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Marco Santarelli
Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes
10y
Originally posted by @Ryan Dossey:

What do you find lacking with most providers you talk with?
This is a good question Ryan...
Many companies fail to respond in a timely manner, if they reply at all. (We hear this complaint often.)
Another thing lacking is the failure to understand a client's needs and goals.
Last but not least, most providers we know of, talk to, and work with, lack a clearly defined written set of procedures and systems.
Continued success!
1 Reply
Matt R.
Sherman Oaks, CA · Member since 2013 · 3k+ posts · 2k+ votes
10y
@Ryan Dossey I have hardly talk to any but have researched quite a few. Garbage locations that will have little chance of hitting the numbers advertised long run. This is rountinely backed up by actual local investors.
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