So I am a fairly new real estate investor in the St. Louis area and I've noticed some turn-key companies in the St. Louis and Kansas City area. Many of these turn-key homes do not have the ROI/Cash on Cash return I'm looking for but since these companies are still in business I guess someone is buying them. I assume their niche is probably someone with a larger cash pool who is just looking to diversify their portfolio. So do you think as a newbie something to look into might be buying SFH placing a tenant and property manager then just selling the property for say $10,000 more. To me it almost seems kinda like a wholesale deal but even if I end up holding the property for longer than I want it's no skin of my back because the property will be cash flowing. The main reason I would want to do this would to just increase my cash pool so I can invest in larger complexes with better returns. Some hypothetically numbers with a home I'm looking at would be buy a home for $55,000 or $60,000 which could rent for $850-$900. I then turn around and sell it when I place a tenant and property manager for around $65,000 or $70,000. Taxes are low, area is fine, and the new owner would still cash flow a couple hundred with a pretty good return. Definitely returns equivalent to other Turn-key company homes that I've seen.
This is me kind of just rambling about this idea so feel free to just let me know what you think or if you know much about turn key companies.
I totally think there is a niche for this. I have seen semi-turnkey places claiming 15% ROI and they show their numbers. However they have no savings for repairs, capex, vacancy, or management.
I think if you can find homes in that price range in a decent neighborhood, basically BRRRR them without the refinance, and sell at a price which yields >10% ROI after accounting for all expenses, I would imagine you could sell it quite quickly.
I doubt you would even need to go as far as finding a tenant or management company. If you could show conservative numbers yielding >10%, you would definitely have something there.
Just my thoughts on what I have seen in this market.
Completely agree with @Kyle Eckert . If you can rent for that high on those priced homes, then I think it sounds like a great niche. Good play in markets that are still low priced and can cash flow VERY well.
I agree, I hate when places claim high ROI and I'm over her like how are they getting those numbers but then I see they dont account for the most basic stuff. Maybe I'll start my own turn-key company lol
I actually live in Kansas City and work as a property manager as well as an active investor. We manage SFH and apartment complexes. We currently manage two complexes. One has a 50 unit and the other a 32. I would love to talk to you more about my management company and see if I could help you out. Also in that price point you are looking for I would look in Raytown, Mo 64133. That area has a good tenant pool to draw from. Those house are around $65k for a 2/2 or sometime a 3/2 going for $1,100 in rent. Hit me up sometime and let me know if there is anything I can do to help you out. 816_944_9696
Look forward to talking with you.
@Drew Kimminau I would stay away from under 70k homes. They are in war zones in this sellers market.
Not where I live. They are great ROI
Hey @Drew Kimminau , that is an interesting idea. Some things to consider--
If you weren't able to sell would you be okay holding it?
Are you planning on fixing up the property?
What are your holding costs?
Your observation that that specific TKP is niche is probably correct. If you interview a few others you might see a property that fits your needs.