Veggie Turnkeys?

Question

Having just bought and rehabed a REO, it made me wonder about turn-keys. I get offers from time to time and it seems like there just isn't any meat left on the bone. Am I just seeing the wrong deals or is this common? Am I just the wrong type of buyer? Are the rules for picking one different than other investment properties because it is supposedly in good shape?

Brian

James Wise · Answer

"The newest trend I am seeing is that people want to own real estate but don't want to do the work and they are willing to pay for it."

That is the entire purpose of the turnkey industry. To provide a service to those that want to own real estate but don't want to do the work, instead they will pay a premium to someone else to do it for them. If someone is expecting another person to do the work for them and not have to pay a premium for it they are in for a rude awakening in this business.

Jay Hinrichs · Answer

@Brian Pleshek  you are your own turn key company  albeit you did it for just one property.

anyone is free to buy their own deals then do their own rehab.. its called value add.. you work for it.

Turnkey is buying from a rehabber regardless if they are a quote un quote turn key company they are simply rehabbers..

they put up the money to buy the asset.. and paid for holding costs.. they put up the money or borrowed it to rehab it.. and they are a for profit business so no they are not going to sell it to you for exactly what they have in it..

your comparing apples to oranges.

Just like when I sell new construction we make anywhere from 50 to 200k profit per house.. can you go buy your own lot.. get your own financing and hire your own GC or do your own GC yourself sure you can and you can save the profit your going to pay a building company... happens everyday.

Same with rehabbers that sell retail.. retail buyers want it done.. many time they cant get rehab loans they don't know how to.. and in many areas of the country unlike were your at were price points are so very low.. not every has 300 to 500k to buy a rehabber house then sink another 100k into cash and then finally refi.

Lost of people can do what you do which is basically use 100k or less to get a house all up and running.

If you think rehabbers  builders  turn key providers should be selling homes for cost.. not sure that's the American way of free enterprise.

Jeremy Pakalka · Answer

That's a great one!

Brian Pleshek · Answer

@Jeremy Pakalka

I wasn't looking for 59%, that's just what I got.  It was an REO auction.  I bought for $76k and have put in about $12k.  ARV is approximately $135k.  Rents will run about $1350.

Brian

Jeremy Pakalka · Answer

@Brian Pleshek When you say you buy at 59% ARV, does that include the rehab and purchase price or just the purchase price? I ask because if you are looking only at a purchase price of 59%, you could be missing out on some deals where only a very light rehab is needed. The purchase price will be higher but you could see more profits.

Brian Pleshek · Answer

@Jeremy Pakalka

That's what I was seeing too.  I just wanted to make sure I wasn't missing something.  It doesn't appear to be something for me.  I liked buying the last house at 59% ARV.  The 3-4 week rehab wasn't fun, but it's nearly over.

Brian

Jeremy Pakalka · Answer

@Brian Pleshek It will be a rare occurrence from what I have seen for a turnkey to have meat left on the bone. There are more and more companies selling turnkey properties to investors. The newest trend I am seeing is that people want to own real estate but don't want to do the work and they are willing to pay for it. They are utilizing tax incentives to invest in turnkey properties. These companies are buying distressed properties, fixing them and then putting a renter in before they sell it.