New Turnkey investor - would appreciate advice

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New Turnkey investor - would appreciate advice

Brian Stratton
Stamford, CT · Member since 2016 · 12 posts · 9 votes

Hi, I'm a new investor from Connecticut looking at buying turnkey property in Memphis, TN.  I have a few specific questions and would greatly appreciate some advice.

1) Legal - I want to set up an LLC before investing. Should I get a real estate attorney from the Memphis area to set up my LLC? I'm assuming the turnkey doesn't provide attorney. Also, I assume he/she would be able to represent me/review docs. etc. during property closing? Does anyone have the contact info of a good real estate attorney in the Memphis area?

2) Accounting - should I hire a separate accountant for my property investment business from my personal day job tax return?  Right now my tax return is relatively simple and I just go to H.R. block. My intuition is telling me that filing a tax return for out of state real estate investment is more involved and I might want a "real pro" filing my tax return.  That being said, does anybody have the contact info of a good accountant if that is what I should be looking for?

3) Insurance - When it comes time for insuring my property, would I need to find a local insurer (Tennessee) to insure my property, or can my CT. insurance company (Allstate) also insure my out of state property?

Thank you for your help.

Brian

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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
9y

Brian, everything Steve said. I will only add with insurance, shop it around. Allstate may be more expensive. For rule of thumb, through our in house program we developed with a carrier, replacement cost insurance is about .40 per sq ft. A 1,000 sq ft home would be $400 in insurance that comes with General Liability, vacancy grace period, rent loss, etc.

901-848-9028
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  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    9y

    Welcome to BP @Brian Stratton. Best of luck in your out of state investing venture.

    1Reply
  • Account Closed
    Real Estate Investor · Kansas City, MO · Member since 2015 · 222 posts · 121 votes
    9y

    Welcome @Brian Stratton I'm in KC if you decide to venture this way for turnkeys!

    You might want to make sure your lender will let you purchase in an LLC. Typically, conventional financing does not allow an LLC, only your personal name. In regards to insurance, I recommend using REI Guard. They have the lowest rental insurance I have seen.

    1Reply
  • Marty Bosse
    Financial Services / Real Estate Investor · Hanahan, SC · Member since 2014 · 34 posts · 44 votes
    9y

    Hi Brian,

    I live in the northwest corner of CT but work in Shelton. I have two Turnkey Properties in Memphis. I'd be happy to meet and chat if you're open to that. Private message me if you are. 

    1Reply
  • Steven Gesis
    Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
    9y
    Originally posted by @Brian Stratton:

    Hi, I'm a new investor from Connecticut looking at buying turnkey property in Memphis, TN.  I have a few specific questions and would greatly appreciate some advice.

    1) Legal - I want to set up an LLC before investing. Should I get a real estate attorney from the Memphis area to set up my LLC? I'm assuming the turnkey doesn't provide attorney. Also, I assume he/she would be able to represent me/review docs. etc. during property closing? Does anyone have the contact info of a good real estate attorney in the Memphis area?

    2) Accounting - should I hire a separate accountant for my property investment business from my personal day job tax return?  Right now my tax return is relatively simple and I just go to H.R. block. My intuition is telling me that filing a tax return for out of state real estate investment is more involved and I might want a "real pro" filing my tax return.  That being said, does anybody have the contact info of a good accountant if that is what I should be looking for?

    3) Insurance - When it comes time for insuring my property, would I need to find a local insurer (Tennessee) to insure my property, or can my CT. insurance company (Allstate) also insure my out of state property?

    Thank you for your help.

    Brian

     Brian-

    Check with your accountant and legal for information about LLC. Also note, that it may be more complex to get financing with an LLC.

    I would get a real pro as you begin to expand your investing horizon, especially once you begin to add property. Have a consultation with your tax advisor about all the perks and structures that exist with owning real estate. 

    No special insurance, however, you will want to make sure you have a rider for rental loss, in case something happens with the property and tenants cannot pay rent.

    1Reply
  • Brian Stratton
    OP
    Stamford, CT · Member since 2016 · 12 posts · 9 votes
    9y

    Thanks everyone for the replies, this has been helpful.

    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    9y

    Brian, everything Steve said. I will only add with insurance, shop it around. Allstate may be more expensive. For rule of thumb, through our in house program we developed with a carrier, replacement cost insurance is about .40 per sq ft. A 1,000 sq ft home would be $400 in insurance that comes with General Liability, vacancy grace period, rent loss, etc.

    901-848-9028
    2Reply
  • Hadar OrkibiPro Member
    Rental Property Investor · USA / NZ · Member since 2016 · 1k+ posts · 812 votes
    9y

    Big thing in NZ now is special cover against tenant contaminating your property with Methamphetamine use or manufacture, is this common in the US ?

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    9y
    I hear these questions all the time from new beginner and they are indidictive of people who will not take action. Just saying...
    0Reply
  • Ryan Leavitt
    Insurance Agent · Chicago, IL · Member since 2016 · 12 posts · 4 votes
    9y

    @Brian Stratton I agree with @Account Closed. My agency has had tremendous success placing business with REI Guard and our clients love how easy it is to work with them.

    2Reply
  • Brian Stratton
    OP
    Stamford, CT · Member since 2016 · 12 posts · 9 votes
    9y

    ...and Lane Kawakaoka, how does your comment add anything of value to the conversation?  I asked specific questions and you post some snarky drivel insinuating how superior you are.  If you have nothing of value to add, stay off of my posts. Do it again and I will report you.

    2Reply
  • Marty Bosse
    Financial Services / Real Estate Investor · Hanahan, SC · Member since 2014 · 34 posts · 44 votes
    9y

    BRAVO! Brian

    There are a lot of folks on here that think turnkey is for the uneducated or lazy investors and make no bones about saying so. It used to bother me but I've learned to ignore it. Until they are paying my bills or contributing to my livelihood they need not worry what I do with my $.

    Now there are also many that offer great advice and are trying making sure you at least are doing proper due diligence. You will figure out who is who. 

    1Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    9y
    Originally posted by @Brian Stratton:

    Hi, I'm a new investor from Connecticut looking at buying turnkey property in Memphis, TN.  I have a few specific questions and would greatly appreciate some advice.

    1) Legal - I want to set up an LLC before investing. Should I get a real estate attorney from the Memphis area to set up my LLC? I'm assuming the turnkey doesn't provide attorney. Also, I assume he/she would be able to represent me/review docs. etc. during property closing? Does anyone have the contact info of a good real estate attorney in the Memphis area?

    2) Accounting - should I hire a separate accountant for my property investment business from my personal day job tax return?  Right now my tax return is relatively simple and I just go to H.R. block. My intuition is telling me that filing a tax return for out of state real estate investment is more involved and I might want a "real pro" filing my tax return.  That being said, does anybody have the contact info of a good accountant if that is what I should be looking for?

    3) Insurance - When it comes time for insuring my property, would I need to find a local insurer (Tennessee) to insure my property, or can my CT. insurance company (Allstate) also insure my out of state property?

    Thank you for your help.

    Brian

     Welcome aboard Brian.

    At this point in your investing you don't need an LLC. Especially if you are planning on taking our mortgages on these homes (You should be, OPM is the main draw to REI)

    Going to someone a little more sophisticated then H.R. block is a good idea, let's not forget that what you pay your CPA to prepare your taxes is also a write off.

    You would need to check with your insurance provider which states they service. Some service all 50 some service some and some only service one or a couple.

    2Reply
  • Brian Stratton
    OP
    Stamford, CT · Member since 2016 · 12 posts · 9 votes
    9y

    Thank you James.

    1Reply
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