Spartan Invest - Birmingham Turnkey Case Study

Spartan Invest - Birmingham Turnkey Case Study

Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes

Hello BP Community!

In efforts to give back to the community, I wanted to document the process of acquiring my first turnkey property through Spartan Invest. I know when I was first researching the forums, case studies like the one I am attempting to do were very helpful and provided me lots of insight into the process of acquiring a turnkey property through a full service turnkey provider. 

Part I - Making contact

I first made contact with Spartan Invest by reaching out to them through a link I found on their website. The response time was great and I heard back from their VP Sales, Maureen within 24 hours. 

Part II - The Discussions

From the time we made contact (almost a month ago) up until now, Maureen has been more than accommodating. Communication has been really good and any questions I had were answered. What I really appreciated about everything is that she was very transparent. There was a slight fall-out in communication a week ago but it was because Spartan Invest is currently growing very rapidly and it seems like their team is overloaded. They are now currently looking to hire new help in order to meet the demands. I just want to note that during the week where they dropped the ball on communication I began to worry and was considering crossing Spartan Invest (SI) of the list. I decided to reach out to the CEO @Clayton Mobley who is very active on the forums to see what was the cause and he was very responsive and explained the situation. Maureen (who spearheads all sales) was on a business trip and was swamped, but when she returned she made sure to reach out to me and explained everything. She was very transparent once again and openly took fault and owned up to the lack of service during that time. Not only did she admit to her lack of service, but also provided a solution to what SI was doing to remedy this. I personally really appreciated this "find solutions, not excuses" approach.

Part III - The Properties

Before being able to start seeing what properties were available, I had to provide pre-approval for a loan. SI recommended a lender that they typically use due to the familiarity the agent (Graham Parham) had with their type of deals. Of course, Maureen ensured that she was willing to work with any lender I chose as long as she was able to vet them before hand. Main reason for this was she wanted to make sure that the lender would be able to close the deal. I decided to go with Graham and up until this point the service and responsiveness from him has been excellent and their rates were what the market commanded as well. 

Once I was pre-approved, I began to receive pro-formas of available properties. One thing I liked about SI was that their pro-formas were very well made and allowed the flexibility for you to change and add your own contingencies when doing financial analysis. 

Part IV: Putting a Property under Contract

Once I found a property I was interested in and committed to get under contract, Maureen passed my off to Scott who would be my personal representative throughout the rest of the process. I want to note that before committing to getting the property under contract, I was provided with Scope of Work being done on the property, the PM agreement, and also a draft of their typical sales contract. As of now I am currently getting a contract underway this property. I shall update as I progress! 

Cheers!

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Most Popular Reply

Chris ClothierBusiness Member
Rental Property Investor 路 memphis, TN 路 Member since 2009 路 2k+ posts 路 3k+ votes
9y

@Jay Hinrichs, the funny thing about monthly calls to a client, the bar is already set so low for out of state investors.  In my experience, most come into an investment expecting the worst and happy if there is any communication at all.  To have a company that says they will call you monthly and actually do it is a HUGE differentiator when it comes to buying Turnkey properties.  It is why we do it, it is why JWB in Jacksonville does it, and it is why Spartan does it.

I actually had a TK company come visit me for advice in our offices who advertised their great customer service and the fact that they called clients monthly.  He was astonished when I introduced him to our seven customer service team members.  He told me they only said that because they saw us saying it.  They didn't actually do it because they didn't believe we actually did it.  It was unbelievable.  So the fact that a TK company provides a monthly call once you own the property should be seen more as a long-term commitment than anything else.  

So, why don't more do it?  It takes that commitment to long-term.  It takes big money, time, team member commitments.  A company has to hire someone full time to handle a position like this.  And then a commitment to hire more team members as you provide service to more investors.  It takes a firm belief that by providing better communication and raising the bar for what investors expect,  you will attract your ideal clients.  Ideal clients are those that are buying not because a piece of paper says they will get a good return, but because the actions of a company and the commitment they show to being great tells an investor that they will be able to sleep well at night.  @Chris A., this fact should provide you with a lot of comfort at this point.

So even if the conversation is nothing more than everything is going great with your property, providing that contact, that monthly check-in, that call each month is a really big deal.  At least it is to the investors that I want to attract...

See this reply in the discussion

136 Replies

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  • Real Estate Investor 路 Miami, FL 路 Member since 2013 路 474 posts 路 214 votes
    9y

    Awesome! Congrats, good luck and look forward to this story unfolding!

  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    Update: 04-01-2017

    Contract is signed and we are moving forward with the steps to close. One thing I am new to is the fact that the property itself is on a septic system. There is a contingency clause for this in our contract so we shall see what comes up during the inspection. 

    Was wondering if anyone could weigh in on this? My research says that tanks last anywhere between 25-30 years. The property itself was built in 1953 so not sure if the tank has been replaced since or not? Is there anything more I would need to do on my end or does the inspection notify me of all these things? Would love to hear advice from the community about dealing with properties that have septic tanks. 

    Cheers! 

  • Rental Property Investor 路 Honolulu, HAWAII (HI) 路 Member since 2011 路 4k+ posts 路 2k+ votes
    9y
    My friend closed a property with a septic. Just get a 3rd party septic inspector in addition to the regular inspector. Don't worry about the horror stories.
  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    Update: 04-24-2017

    Renovations are underway and according to my lender - it seems like we are going to appraise the house soon. Last I heard from Scott (2 weeks ago) the house was 99% done. Waiting on picture of before/after renovations on the house, but must admit that the communication with SpartanInvest has been sparse. I understand during this stage there is not much to do but wait. However, it would still be nice to get some form of weekly communication. Maybe @Clayton Mobley can weigh in on the lack of communication. 

    Until the I receive an update from Spartan - thats it for now!

  • Clayton MobleyPro Member
    Birmingham, AL 路 Member since 2014 路 875 posts 路 947 votes
    9y

    Hey @Chris A., good to hear from you! I spoke with both Maureen and Scott and it sounds like you received a call yesterday to discuss the progress of your investment. From the info I received, we've already received a security deposit for your property, so it should be cash flowing by the time you close. If you didn't receive a call, definitely let me know as that would mean we have a seriously crossed wire! 

    As you said, there isn't much to do right now but wait - and honestly that part won't change as we go forward. One of the primary draws of turnkey is that the investor can be pretty hands-off. Once the rehab is complete and your new tenant is in place, we'll check in with you each month to go over any updates, questions, progress etc. Of course, if something important comes up outside of those monthly check-ins, we'll make sure you're kept abreast - we won't just wait till the monthly call ;) You'll also have access to your own PropertyWare account, so you can access all the info about your investment 24/7 without having to wait on a call. But, if everything goes the way it should, you shouldn't need to spare much thought for your investment - good turnkey investments don't require a lot of checking in. 

    Of course, we know the first investment in any niche is always a bit nerve wracking, especially if its out-of-state - you're putting down a lot of money and entrusting people across the country to turn it into more money over the course of several years, and we know that's ..... a bit intense. But rest assured that we will always keep you updated on any important developments. You'll be able to track rent payments and contracts on your own, whenever you want, in addition to speaking to Stephanie each month. We're in this with you for the long haul and we want to make sure you have the best experience possible, and part of that means taking care of all the leg work so you don't have to ;)

    If you have any other questions, feel free to tag me here or contact me directly any time.

    All the best,

    Clayton

  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    9y

    @Chris A.  I understand your desire for constant communication but remember these companies have multiple deals going. and sometimes nothing happens during a week.. so there is nothing to report.

    and I for the life of me would not understand why a landlord would need a monthly check in on a rental that is performing.. what are they going to say.. Yes your tenant is paying all is good.. you can figure that out by looking at the PW software. 

    Not that you are asking for a monthly check up call ... Clayton mentioned that.. 

    so it sounds like you paid cash and they did rehab and yoru refinancing is that the case.. or are you not closing until the home is finished.

    If that later is the case remember the seller probably is carrying debt and there is every motivation to get your deal done and closed.. One reduce holding cost for the vendor and so they can make their profit. 

  • Equity Raiser and Turnkey Provider 路 Cleveland, OH 路 Member since 2016 路 4k+ posts 路 1k+ votes
    9y
    Originally posted by @Chris A.:

    Hello BP Community!

    In efforts to give back to the community, I wanted to document the process of acquiring my first turnkey property through Spartan Invest. I know when I was first researching the forums, case studies like the one I am attempting to do were very helpful and provided me lots of insight into the process of acquiring a turnkey property through a full service turnkey provider. 

    Part I - Making contact

    I first made contact with Spartan Invest by reaching out to them through a link I found on their website. The response time was great and I heard back from their VP Sales, Maureen within 24 hours. 

    Part II - The Discussions

    From the time we made contact (almost a month ago) up until now, Maureen has been more than accommodating. Communication has been really good and any questions I had were answered. What I really appreciated about everything is that she was very transparent. There was a slight fall-out in communication a week ago but it was because Spartan Invest is currently growing very rapidly and it seems like their team is overloaded. They are now currently looking to hire new help in order to meet the demands. I just want to note that during the week where they dropped the ball on communication I began to worry and was considering crossing Spartan Invest (SI) of the list. I decided to reach out to the CEO @Clayton Mobley who is very active on the forums to see what was the cause and he was very responsive and explained the situation. Maureen (who spearheads all sales) was on a business trip and was swamped, but when she returned she made sure to reach out to me and explained everything. She was very transparent once again and openly took fault and owned up to the lack of service during that time. Not only did she admit to her lack of service, but also provided a solution to what SI was doing to remedy this. I personally really appreciated this "find solutions, not excuses" approach.

    Part III - The Properties

    Before being able to start seeing what properties were available, I had to provide pre-approval for a loan. SI recommended a lender that they typically use due to the familiarity the agent (Graham Parham) had with their type of deals. Of course, Maureen ensured that she was willing to work with any lender I chose as long as she was able to vet them before hand. Main reason for this was she wanted to make sure that the lender would be able to close the deal. I decided to go with Graham and up until this point the service and responsiveness from him has been excellent and their rates were what the market commanded as well. 

    Once I was pre-approved, I began to receive pro-formas of available properties. One thing I liked about SI was that their pro-formas were very well made and allowed the flexibility for you to change and add your own contingencies when doing financial analysis. 

    Part IV: Putting a Property under Contract

    Once I found a property I was interested in and committed to get under contract, Maureen passed my off to Scott who would be my personal representative throughout the rest of the process. I want to note that before committing to getting the property under contract, I was provided with Scope of Work being done on the property, the PM agreement, and also a draft of their typical sales contract. As of now I am currently getting a contract underway this property. I shall update as I progress! 

    Cheers!

     Wow thanks for this information! It is great to see others are doing good work in other markets!

  • Chris ClothierBusiness Member
    Rental Property Investor 路 memphis, TN 路 Member since 2009 路 2k+ posts 路 3k+ votes
    9y

    @Jay Hinrichs, the funny thing about monthly calls to a client, the bar is already set so low for out of state investors.  In my experience, most come into an investment expecting the worst and happy if there is any communication at all.  To have a company that says they will call you monthly and actually do it is a HUGE differentiator when it comes to buying Turnkey properties.  It is why we do it, it is why JWB in Jacksonville does it, and it is why Spartan does it.

    I actually had a TK company come visit me for advice in our offices who advertised their great customer service and the fact that they called clients monthly.  He was astonished when I introduced him to our seven customer service team members.  He told me they only said that because they saw us saying it.  They didn't actually do it because they didn't believe we actually did it.  It was unbelievable.  So the fact that a TK company provides a monthly call once you own the property should be seen more as a long-term commitment than anything else.  

    So, why don't more do it?  It takes that commitment to long-term.  It takes big money, time, team member commitments.  A company has to hire someone full time to handle a position like this.  And then a commitment to hire more team members as you provide service to more investors.  It takes a firm belief that by providing better communication and raising the bar for what investors expect,  you will attract your ideal clients.  Ideal clients are those that are buying not because a piece of paper says they will get a good return, but because the actions of a company and the commitment they show to being great tells an investor that they will be able to sleep well at night.  @Chris A., this fact should provide you with a lot of comfort at this point.

    So even if the conversation is nothing more than everything is going great with your property, providing that contact, that monthly check-in, that call each month is a really big deal.  At least it is to the investors that I want to attract...

  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    9y

    @Chris Clothier  Seems like a perfect job to out source to India. 馃榾   Actually I like that keeps you in front of your client and you could let them know about something special that came up etc.   do you drive every property monthly as well ?   I know how folks simply don't answer their phone these days and prefer text.  I could see text being warmly received and creates a record

  • Chris ClothierBusiness Member
    Rental Property Investor 路 memphis, TN 路 Member since 2009 路 2k+ posts 路 3k+ votes
    9y

    I think the point is, Spartan is doing it and the CEO is telling the client that on-going communication is something they value.  That is a big deal.  They understand that communication is super important and it becomes part of their ov er-all "value" to an investor.

    As for what you tell them when you call...you build relationships and sometimes the conversation is about the portfolio and sometimes the conversation is personal.  Depends on the investor and what is happening with their properties.  It is all about building a real relationship.  As Clayton said, in the end it is all about building a long-term relationship.  Companies that understand this will be the ones that grow, sometimes very quickly, and they will be the companies that have ridiculous customer loyalty and satisfaction.  

  • Jay HinrichsBusiness Member
    Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
    9y

    @Chris Clothier  I see this issue as a major problem for crowdfunders..  IE a thousand or more little investors .. and the investor with 5k in  deal wants the same amount of communication as a 500k investor.  Although I find larger investors are much less demanding than smaller investors. More experience etc.

    We are seeing this on BP these days with crowdfund deals that went sour and investors complaining of lack of communication

    I think the business community and sales folks simply are not old school like this they NEVER answer their phones.. I always answer mine even if its to say I have to call you back.. and e mails same day unless I am fishing or up in my little plane and can't 

    Communication is Key.. so you guys keep it up.. !!!

  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    @Jay Hinrichs @Clayton Mobley @Chris Clothier

    Thank you for all the feedback and insight! As a first time investor I agree with Clayton that I do have the first time investor blues. I am trying to keep track of my investment like a hawk - but as I go through the process I am becoming more familiar with all the steps and am beginning to truly understand why everyone says the first investment is the hardest. 

    One of the criteria I had when finding a turnkey provider was that they had to be a company that I would be able to start a long-term relationship with and rely on when expanding my portfolio. A part of this is that communication is paramount. I understand Jay's point in keeping my expectations on communication in check but again it is because this is my first investment. 

    Once I get past this first investment - I am sure I will be able to ease back and be able to put my full confidence and trust in Spartan. 

    As always, thank you for the response Clayton and everyone else! Also Chris - I hope to be doing business with your company in the near future too! 

  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    Update: 05-01-2017

    Renovations are officially done and appraisal and inspections are to happen this week. 

    Already a tenant ready to move in once the place is ready. (great news from the Spartan team)

    Breakdown of investment:

    Price: $82,000

    All in Investment: $22,400 (20% down @5.25% 30 year)

    Rent: $795

    Tax: $320 annual

    Insurance: $510 annual

    Cap: (will let everyone calc on their own because it seems like everyone has their own way)

    CoC: ((will let everyone calc on their own because it seems like everyone has their own way)

    All in all the process has been very smooth and Spartan Invest has been very patient with me and the team has been able to answer all my questions and step me through the process. Although communication may have been a little loose at times, when important events occurred - Spartan always made sure to reach out. Lack of communication was subject to my own high standards for communication which I admit can be over the top and a lot to ask for. 

    I will post pictures once I receive them from Spartan and will update monthly with any news!

  • Investor 路 Dallas, TX 路 Member since 2013 路 619 posts 路 128 votes
    9y

    @Chris A. hope you are planning to get a 3rd party home inspection before closing to make sure the scope of work agreed upon was completed and its up to code for that city/state.

  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    @Gautam Venkatesan Thanks for looking out, my 3rd party inspector just finished his inspection and I have forwarded the report to Spartan. Waiting to discuss what items should be addressed before the sale moves forward to close. What items should I expect to be addressed with no questions asked?

  • Investor 路 Dallas, TX 路 Member since 2013 路 619 posts 路 128 votes
    9y

    @Chris A. can you share some numbers from the PM agreement with Spartan? Monthly PM fee, lease up fee, fee if the same tenant renews lease, fees for eviction, etc?

  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    @Gautam Venkatesan

    PM fee: 9% of monthly rent

    Lease Up fee: 1st months rent (they only sign 2 yr contracts)

    Same Tenant Renew: $500

    They didnt list a eviction fee in their agreement. Maybe @Clayton Mobley can weigh in? 

  • Investor 路 Dallas, TX 路 Member since 2013 路 619 posts 路 128 votes
    9y
    Originally posted by @Chris A.:

    @Gautam Venkatesan Thanks for looking out, my 3rd party inspector just finished his inspection and I have forwarded the report to Spartan. Waiting to discuss what items should be addressed before the sale moves forward to close. What items should I expect to be addressed with no questions asked?

     If this property is being sold to you as turnkey, if it were me, I would want to make sure the mechanicals will survive for another 5-7 years, that everything is up to code for that city/county/state, basically try to minimize huge capex in your first few years of ownership. There will always be repair items you just want to limit them :)

  • Investor 路 Dallas, TX 路 Member since 2013 路 619 posts 路 128 votes
    9y
    Originally posted by @Chris A.:

    @Gautam Venkatesan

    PM fee: 9% of monthly rent

    Lease Up fee: 1st months rent (they only sign 2 yr contracts)

    Same Tenant Renew: $500

    They didnt list a eviction fee in their agreement. Maybe @Clayton Mobley can weigh in? 

     If it isn't specified in your PM agreement you may want to reach out and find out about other fees when things go bad. Like if rent is late who pockets the late fees? What is the process to evict and which party is responsible for what, what are the typical costs/timelines, etc. Ideally it is a passive investment for the most part but you need to be prepared financially/mentally for those hard times. Good luck on your journey! 

  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y
  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    Considering they bought the foreclosed property at $34K and I am buying it for $82K - no clue how much they spent on the renovations (maybe around 20K?), but seems like Spartan was able to make a pretty nice profit? 

    Cash flows work for me so I guess good deal for both parties.

    Would love to hear peoples thoughts

  • Investor 路 Fairhaven, MA 路 Member since 2016 路 100 posts 路 88 votes
    9y
    Thanks for sharing, Chris. Hoping you have found a great long-term partner for investing in real estate.
  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    @Kenneth Dai I think I have - Spartan thus far has been great and I truly believe in their message of acquiring clients through a reputation of quality. Time will tell but I trust in Spartan's ability to deliver quality service and investments. 

  • Los Angeles, Cali 路 Member since 2017 路 53 posts 路 54 votes
    9y

    05-18-2017

    Got off a call with the PM today. 

    They have a tenant on a 2 month lease and 1st month was collected and distributed. 

    From getting a property under contract to this point everything has been very smooth and I couldn't be happier. I will update time and time again to keep everyone up to date with how the property is doing. Hopefully this was helpful for anyone considering getting into turnkey and provided a look into the process. 

    If anyone has any questions feel free to ask in the thread or DM. I've received so much help in getting to this point and looking forward to contributing in any way I can.

    Cheers! Happy Investing!

  • Investor/RE Broker 路 Eugene, OR 路 Member since 2014 路 3k+ posts 路 968 votes
    9y

    @Chris A. Did you mean to say a 2 year lease?

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