Turnkey: are prices negotiable?

Question

I'm looking to buy my first rental house, from a turnkey provider since I'm a beginner and out of state.  Turnkey providers have prices listed for each property, is it common practice to make an offer below the asking price (and then negotiate counter offers), like I might normally do with an MLS listing? It that normal/acceptable? Or is that not part of the Turnkey culture? Thanks all

Philip Sriployrung · Answer

Michael brings up a really good point. I'm looking to buy my first TK also, but doing as much research as possible. It does seem that most of the TK providers are investors in rental properties themselves. If they're seeking to expand their own inventory of SFR and already have great cash flow, why would they be selling these awesome deals and not keep them for themselves? I'm happy to pay above market value for the convenience of being hands off, but is there a catch?

@Dawn Anastasi posted somewhere in the forums that it's kind of like a gold rush. Companies sell the shovels to would be gold-miners for what seems cheap. The gold miners get burned out and sell the shovels back to the company for half what they paid for it. Is that what's happening here with TK's. The big companies are making profits when we buy and then cash in again when we fail?

My goal isn't to be a cynic here, just trying to do my due diligence in understanding how all this works.

Russell Brazil · Answer

Yes you can make a lower offer a turnkey property....however I do disagree with your sentiment above. When I am buying a property for myself, I am rarely trying to get it at bottom dollar for a variety of reasons. First, getting an extra 1% or 2% off a property is going to have very little effect long term. Also if I am trying to negotiate as hard as possible...I could likely damage my reputation with the people on the other side of the transaction, and if it is an agent, Im likely going to do business with him again in the future, and Id rather they have the impression I am easy to work with an not difficult....because when I get offers from people I perceive as difficult to deal with from previous transactions, I dont sell to them.

Im not saying your strategy is wrong, and it may work for you....but realize there are plenty of professionals out there not negotiating for bottom dollar who are not doing this as a hobby.

Matthew Paul · Answer

Remember you are in California , what sounds like a smokin deal in your area could be way over priced in another state .

Jay Hinrichs · Answer

Account Closed  Mike you have asked this question more than once ( why do these company sell these properties if they are so great and then just keep them all themselves)

that's a good question.. reality is.. its just like any business  I build new construction homes. I think they are all great but I have to sell them to make money.. just like any other home flipper .. or commercial developer.

think of these guys as commercial developers they are developing properties to sell for cash flow. Granted most of them own some themselves ( at least most that I fund).. but its their core business to buy rehab and sell ( and make a profit doing it) investment properties.

There is not a company on the map that could simply start day one keeping all the properties. NO property cash flows enough to allow them to get from point A to point B.

Just like NO investor who starts out can just quite their day job and buy a rental here and there and live off of 200 a month per door. .Unless they were already independently wealthy.

Same reason ANY company sells their product they can't keep it all.  So No need to beat that dead horse.... LOL

but finding value in the market place is an investor job.

Michael D. · Answer

Oh - and back to the original question: It's hard to negotiate on a truly TK, already rented place, for the simple reason that the seller is almost by definition in no rush and has already a good handle on the property and cash flow.

Now it might be different if the seller is not really a TK operator, he's just selling a property that's already performing and he doesn't want anymore. In that case he might just over-price it hoping to snag someone, but really just wants it sold.

Mike Hanneman · Answer

Why am I looking for a discount? Because it's a business, if you are not looking for the absolute lowest price for your investment/business then you are running a hobby! It has nothing to do about affording full price.

Those "savvy real estate investors" might not be too savvy then. There are deals everywhere. Just because a lot of people have passed on it doesn't mean it isn't a great deal for you. Some people won't ask for a lower price, some won't do any repairs, others are just looking for something different. I know that some of those examples don't deal with turnkey but deals are everywhere.

Jo-Ann Lapin · Answer

You want to negotiate on manner as to not insult current owner. Here in If the property is truly turn key and well located not a heck of a lot on the table to negotiate

Account Closed · Answer

@Jay Hinrichs I ask this question over and over because I'm very passionate about RE. I LOVE real estate. It's beautiful and everyday I'm thankful that I discovered it and that it's provided me financial freedom at a young age. The reason is that it's a great long term investment. Turn-key operators should know this because that's what their clients care about.

I believe that if TK providers believe in the product, they should want to do their own property management. If they don't do PM then they don't value the long term benefits of real estate, and then I don't want to partner with them because they don't get it.

Account Closed · Answer

You don't know anything about my real estate mentors. I'm sure there are not exceptions to every rule. But are you saying just because there may be 1 good on the internet there's less bad deals on the internet? Even though my mentor is less savvy than you, he does own over 1000 houses, so I'm gonna listen to him.

And the point I'm trying to make is, every single thing I have ever bought, I have always had to way 3 different options. Price. Service. Quality.

I have never found the best service with the highest quality, for the lowest price. Would you agree? Does your primary home fit that criteria.

I'm just saying be careful especially with online deals.

Account Closed · Answer

Why are you looking for a discount? If you can't afford the full price, you probably shouldn't be making the offer...

I don't know about you all, but savvy real estate investors have told me there are never good deals online. It begs the question, how many pairs of eyes have seen this investment and passed on it? Knowing that do you still want it?

Also, my question that no one seems to be able to answer about TK providers is, do you want to buy an investment that a TK provider doesn't want? They know the power of cash flowing real estate, why would they sale a great deal?

Turnkey: are prices negotiable?

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