I have done some deals with Spartan. With them and most reputable companies, your purchase price should be close to the appraisal (my first was 1500 under appraisal). I do believe that the pricing in these markets is heavily driven by these turnkey companies based on what they can rent them for. That is one limitation as an investor is that it does limit your exit options for some years as you are buying a property at a top market price. If you understand that and focus on the cashflow it could be a descent investment.
There is another turnkey provider who I was working with that has to start raising their prices in order to start purchasing more properties. They will start to raise rents in hopes of keeping cap rates the same. They also told me that because they have to raise prices and start pushing the market, appraisals will be coming in below purchase price for at least a year as they establish new comps. The investor will be left to make up the difference if financing. This is in the memphis market.
Spartan has not reached this point YET in Birmingham.
Yes you can get insurance that covers replacement value.
Anchorage, AK · Member since 2016 · 16 posts · 6 votes
9y
I have 2 houses with them. In my opinion they are doing a good job although the communication with the team is not easy as a should be.
The first house was rented 35 days after the closing but the second house is setting in the market after 85 days and September is pretty close which is when the market starts to cool.
Software Entrepreneur · Bellevue, WA · Member since 2015 · 27 posts · 14 votes
8y
Greeting Lucas: Did you rent the property? What has Spartan said to you about what is causing the big delays to rent? Any other thoughts on Spartan? Thanks!
Investor · Dallas, GA · Member since 2016 · 59 posts · 57 votes
8y
I invested in 2 houses with Spartan Invest. I closed on the first house in early summer and the second in late summer. I’m happy with experience thus far with the purchase and rehab process. It took 40 days to rent the first house and 90 days on the second house, which was not expected. I think they had a spike in growth, so it may be growing pains. Communication had not been a much as I expected particularly with a property for rent for more than 45 days. I am getting my regular monthly calls since the houses are now rented. I expect I’m going to experience the stability that led me to invest with them.
Anchorage, AK · Member since 2016 · 16 posts · 6 votes
8y
@Jaye Seay Sorry for the delay answerer. I'm satisfied with my investment so far. The second house took some months to rent but fortunately it is already rent with 2 years contract.
I believe that everything depends on the period of the year in which the housing enters the market. it is not the same if you have a house ready for rent in March or April than August.
@Chuck Van Court I believe that one of the reasons that the house has taken longer to rent is because Spartan is very strict in its rental policy and in the choice of the people who will be inside the house.
I have visited more than 15 turnk key companies in different states (TX, TN, AL, KC) and I think Spartan is one of the best in the quality of the work done.
Software Entrepreneur · Bellevue, WA · Member since 2015 · 27 posts · 14 votes
8y
Hi Lucas: Thanks for your reply and insights. What do you and other Spartan Investors think about the investor purchase price? I am concerned the pricing may be largely based on the pro-forma returns and using comps that were also based on purchases by turnkey investors. As such, is the only realistic exit to sell to another investor? If so, any thoughts on timing and pricing for re-sales? Do you know if Spartan or other good turnkey operators that get the investor in the process earlier to afford a lower price and more built-in equity? Also, are you able to get insurance that pays out replacement value? Thanks again!
I have done some deals with Spartan. With them and most reputable companies, your purchase price should be close to the appraisal (my first was 1500 under appraisal). I do believe that the pricing in these markets is heavily driven by these turnkey companies based on what they can rent them for. That is one limitation as an investor is that it does limit your exit options for some years as you are buying a property at a top market price. If you understand that and focus on the cashflow it could be a descent investment.
There is another turnkey provider who I was working with that has to start raising their prices in order to start purchasing more properties. They will start to raise rents in hopes of keeping cap rates the same. They also told me that because they have to raise prices and start pushing the market, appraisals will be coming in below purchase price for at least a year as they establish new comps. The investor will be left to make up the difference if financing. This is in the memphis market.
Spartan has not reached this point YET in Birmingham.
Yes you can get insurance that covers replacement value.