Turnkey - If you had to choose - who would you prefer and why?

58 Replies

I have been narrowing the field of potential organizations for my 4th property and beyond. I have had calls and emails with Memphis Invest, Spartan Invest, Norada, and Metropolitan

I know there are many more out there but if you only had those 4 and had to select one, which one would it be and why?

Your comments will help me decide who to do the next deal with

Thanks for your help and comments

Axel

well hard to pick favorites..  although I am not familar with metropolitan 

MI works many markets so I would think it would depend on the market you want to invest in I think Spartan is only in b  ham.... and Norada I think is mainly a broker referring you to turn key flippers... 

have you picked a market.. then the best provider in said market.

I have been to MI's offices pretty impressive Frankly... 

and I sure like Chris's motto of  " we are in the customer service business and just happen to sell residential rentals"

I think Spartan is also quite keen on customer service you see the owner on BP all the time and he does not duck the tough questions.

At the end of the day all real estate investing is a risk.. and NO company can live with the tenant 24/7.. so your always at risk there.. but starting with an honest product up front sure helps.

Unlike the disaster we have seen in Indy with Morris/Oceanpointe that is how not to do it.

Thakns Jay

I agree about MI but really had the impression that they have gotten very selective and higher priced. I agree on the principles but when I am asked to have a better chance if I can swing 2 properties in short order and look at the prices being more and more in the $130k - $200K area, it pretty much eliminates me and I also see issues with reaching the 1% rule at those levels. I would love to be able to work with them.

You are right about markets and I am impressed with Alabama, TN and, due to much easier accessibility for me from CA, I got in touch with Metropolitan. They are in the larger Phoenix area

just out of shear curiosity have you checked out Vegas.. its close and I do believe there could be some upside..

I do a lot in B ham personally and while I would not say its easy to get to.. NO direct flights.

its got some decent housing stock.. I started investing there in 2004... and out of just sheer coincidence we are selling a big wad of our homes to a hedge fund and it closes this Friday.

so i know the hedge funds are still poking around there. 

Good luck with your purchase..  and do remember in mid west rental homes % return is a direct correlation to risk.. much more so than coastal markets in general.

Originally posted by @Dr. Axel Meierhoefer :

I have been narrowing the field of potential organizations for my 4th property and beyond. I have had calls and emails with Memphis Invest, Spartan Invest, Norada, and Metropolitan

I know there are many more out there but if you only had those 4 and had to select one, which one would it be and why?

Your comments will help me decide who to do the next deal with

Thanks for your help and comments

Axel

 I do not really know much about any of these, but I have heard of them. I always suggest just making sure they do actual Turnkey work and they operate in good areas where you can see a good return. Make sure it is not a city people have been investing in for YEARS, you want to make sure you are not last to the party.

I would suggest looking at:

The Best Types of Markets for Profitable Turnkey Properties

and

What to Ask When Working With a Turnkey Provider

Thanks @Tom Ott  

That's a little the impression I have for Memphis Invest, at least in their Memphis market. I reviewed the research for markets, which actually made me aware of Alabama. I have to admit I did not have it on my radar till I read the research.

Good point about the actual turnkey. I realized Norada is not really that kind of company so I am probably going to take them off and go direct to the teams tat do the work on the ground.

@Jay Hinrichs Yes, I considered Vegas but I have to say I am a little scared about it based on boom/bust in the past and I have not really seen any provider that operates like Spartan or MI. I am pretty sure they exist.

Interestingly I have not seen Vegas mentioned much in the economic outlook research I have done. Maybe its because the entertainment world appears to have long term cycles regarding what people are into.

Phx. Boomed and busted just as hard as vegas and in some areas far harder. 

I am in Hong Kong. Getting ready to cross the pond.  Real estate is hot here !!   And Japan has a nice tk rental play 

@Dr. Axel Meierhoefer I haven’t interacted with any of those companies besides MI but have bought a couple of turnkey properties in Memphis so far. I really like that market.

Cleveland is also good and if you want to go turnkey there I’d recommend checking out smartland, which @Tom Ott works for.

Going back to Memphis, have you looked at any of the other providers there? There are several. Mid south Home buyers, Memphis turnkey, Memphis investment properties, just to name a few. They each have slightly different investment criteria and work best for different investors.

Feel free to PM me if you want to talk more. I went to Memphis twice last year and plan on going again later this summer.

Thanks Caleb

Yes, I am looking at a few others but also try to remain focused. As you probably know there is a huge amount of info out there

@Dr. Axel Meierhoefer I agree there is a lot of info out there. When j started I picked a market I liked (Memphis) and picked 3 providers in that market that from my “eye in the sky” view of researching looked good. Then I talked with each, and went and visited each. I then picked one. This was last spring and I’m up to 3 properties now and should be continuing with a couple more this year and another couple next year.

@Mehul Parekh I try not to specifically favor one company or another on the forums as everyone is different and what works for me may not work best for someone else.

You are welcome to PM me and I will answer any questions you have that I can help with

Hi @Dr. Axel Meierhoefer  

The key is to find a great team! Ideally, you would find a company that has everything under one roof. Acquisitions team, renovation crews (fully licensed and insured), Property Management, and a Real Estate Investment Brokerage in case you ever decide to sell.

By teaming up with a solid firm you can mitigate your risk and have some "boots on the ground" that have your best interest in mind. 

Thanks @Mark Hart

I agree and I believe Memphis invest is such a team (as is Spartan and ROI). Now the issues becomes deals that work for my goals and the market. Some people say Memphis it topping out after many years of steady increases and success

As @Mark Hart mentioned above, MI provides the PM along with providing the Turnkey properties. This was one of our main reasons why we chose to go with them and we've been very happy so far.

We bought two Memphis properties through Memphis Invest.  They offer a truly turnkey experience and I can recommend them.  We bought our properties a few years ago, so I am not sure what the current selling prices are.  I suspect that all of the turnkey providers are getting more pricey, since the real estate market seems overly expensive right now. 

@Chris Ono  It's  been a pleasure working with you and your wife this last year and I wish you could have visited with Rose! We are having an event for Memphis in May (World Famous BBQ Festival) which would be a great time for you to come down and visit if you have time. 

@Dr. Axel Meierhoefer I would start by defining your goals for investing, reasons why, etc and most importantly set your buy box. This will include Asset Type A, B, C, Desired Returns, Desired Monthly Cash Flow, Desired property condition etc. 

@Dr. Axel Meierhoefer - I hate to pop-in on a forum where you are asking for opinions on companies including mine.  But I wanted to make two points that I thought were important for anyone reading your forum.  

Don't be fooled when companies comment on forums where you are asking about their competitors especially the comments about Memphis being over-heated, over-bought or being a market that has been picked over.  Memphis as a metro-plex has over 550,000 single-family homes.  You can find companies that work in different parts of town and some over-lap, but the fact remains that only a small fraction of the homes have been purchased by Turnkey companies.

It is a narrative that is definitely pushed by commentators who have a vested interest in steering investors toward other markets (preferably ones they make money in) and it is not simply TK companies.  You often see the same thing from promoters and individuals here on BP who get paid referrals to push investors in certain directions.  Memphis, like many top 25 markets by MSA size, is a big city and its demise as an investment city is greatly exaggerated.

Now, the real issue in Memphis, Dallas, Houston, St. Louis, Oklahoma City, Little Rock - and I am sure in every other major, secondary and tertiary market in the country, is that everything is more expensive.

The cost of housing is way up.  The cost of labor and materials continues to go up.  Even when factoring in the efficiency and buying power of spending millions of dollars annually, the costs of everything continues to go up.  

Many investors miss the warning signs of this increase in pricing.  Rents are not appreciating as fast as the price of housing.  Rent ratios are being squeezed.  As an investor, this is where you really, really have to be sharp and pay attention.

The same property you could have purchased for $60,000 - $70,000 a few years ago, and you would have been investing in the lower end of a Turnkey property value range, and in what I believe would be a higher-risk property, you are paying closer to $100,000 for today.  

So, investors see a higher price and they equate that with a lower-risk better value, but the property is still the same property that carries the same risk for you as it did when an investor paid $60,000.  It just costs a lot more risk now.

The properties you see being advertised for $50, $60, $70,000 today are the properties that would not have even been considered a few years ago.  Partly because they are in such low end areas, but also because of an abundance of lower prices and better located homes a few years ago for investors to choose from. 

There are fewer properties to choose from today so what looks like a good deal today is actually a very, very risky investment that, in some cases, would not have been considered nor available to investors a few years ago.

You have to keep that in mind.  Not just in Memphis, but any city you are considering.  Today, as an investor, you have to define the value you are receiving very differently than simply price.  Price is what you pay and value is what you get as Benjamin Graham so eloquently put it.  

You have to make sure you are investing for a return "of" capital first.  So you need to buy the best asset you can find regardless of price.  It will be significantly higher than it was a few years ago.  And once you have identified the best assets, you look for the best way to earn a return "on" your capital.

Return of capital first.  Return on capital second.  It doesn't matter which city you are investing or who you choose to work with.  The better the assets and the better the systems, processes and experience of the company, the lower your risk goes and the higher the likelihood that you will earn both a return on and a return of your capital when you need it.

If you patiently follow that simple mantra right now, I am sure you will find a great partner with the opportunities that fits your needs.

Originally posted by @Chris Ono :

As @Mark Hart mentioned above, MI provides the PM along with providing the Turnkey properties. This was one of our main reasons why we chose to go with them and we've been very happy so far.

from the answer below, you sound like you are working with MIP (Memphis investment properties), not MI (Memphis invest)

aloha

steve

Originally posted by @Chris Clothier :

@Dr. Axel Meierhoefer - I hate to pop-in on a forum where you are asking for opinions on companies including mine.  But I wanted to make two points that I thought were important for anyone reading your forum.  

Don't be fooled when companies comment on forums where you are asking about their competitors especially the comments about Memphis being over-heated, over-bought or being a market that has been picked over.  Memphis as a metro-plex has over 550,000 single-family homes.  You can find companies that work in different parts of town and some over-lap, but the fact remains that only a small fraction of the homes have been purchased by Turnkey companies.

It is a narrative that is definitely pushed by commentators who have a vested interest in steering investors toward other markets (preferably ones they make money in) and it is not simply TK companies.  You often see the same thing from promoters and individuals here on BP who get paid referrals to push investors in certain directions.  Memphis, like many top 25 markets by MSA size, is a big city and its demise as an investment city is greatly exaggerated.

Now, the real issue in Memphis, Dallas, Houston, St. Louis, Oklahoma City, Little Rock - and I am sure in every other major, secondary and tertiary market in the country, is that everything is more expensive.

The cost of housing is way up.  The cost of labor and materials continues to go up.  Even when factoring in the efficiency and buying power of spending millions of dollars annually, the costs of everything continues to go up.  

Many investors miss the warning signs of this increase in pricing.  Rents are not appreciating as fast as the price of housing.  Rent ratios are being squeezed.  As an investor, this is where you really, really have to be sharp and pay attention.

The same property you could have purchased for $60,000 - $70,000 a few years ago, and you would have been investing in the lower end of a Turnkey property value range, and in what I believe would be a higher-risk property, you are paying closer to $100,000 for today.  

So, investors see a higher price and they equate that with a lower-risk better value, but the property is still the same property that carries the same risk for you as it did when an investor paid $60,000.  It just costs a lot more risk now.

The properties you see being advertised for $50, $60, $70,000 today are the properties that would not have even been considered a few years ago.  Partly because they are in such low end areas, but also because of an abundance of lower prices and better located homes a few years ago for investors to choose from. 

There are fewer properties to choose from today so what looks like a good deal today is actually a very, very risky investment that, in some cases, would not have been considered nor available to investors a few years ago.

You have to keep that in mind.  Not just in Memphis, but any city you are considering.  Today, as an investor, you have to define the value you are receiving very differently than simply price.  Price is what you pay and value is what you get as Benjamin Graham so eloquently put it.  

You have to make sure you are investing for a return "of" capital first.  So you need to buy the best asset you can find regardless of price.  It will be significantly higher than it was a few years ago.  And once you have identified the best assets, you look for the best way to earn a return "on" your capital.

Return of capital first.  Return on capital second.  It doesn't matter which city you are investing or who you choose to work with.  The better the assets and the better the systems, processes and experience of the company, the lower your risk goes and the higher the likelihood that you will earn both a return on and a return of your capital when you need it.

If you patiently follow that simple mantra right now, I am sure you will find a great partner with the opportunities that fits your needs.

"You have to keep that in mind. Not just in Memphis, but any city you are considering. Today, as an investor, you have to define the value you are receiving very differently than simply price. Price is what you pay and value is what you get as Benjamin Graham so eloquently put it."

Yes. But obviously you generate a higher return by buying at an attractive price.  And in most markets, because property prices rise at a higher rate than rental rates there is a threshold at which once a property price surpasses it, it is very difficult if not impossible to cash flow.  That's generally ~$140/150K range.

You define the "value" as a return that you're able to generate by adding specific value for a given level of risk.  If people are looking to generate cash flow / income, then "total value" isn't / should not be their focus, it should be however how to increase income by acquiring properties at a discount, that need significant work or they have some unique strategy of increasing income (ex. modernizing the house, adding a room, etc.).  I may be incorrect because I do not buy them, but I would expect that most people buying turnkey properties are looking for income. 

Buying a property and simply sitting on it hoping for it to increase in value without improving it is a very risky and not a wise strategy.

Thanks @Chris Clothier . You are right. I also have to look at what I can swing. My income is not that high that I can go to the more recent levels. AT the same time I still don't want to go into C-class areas either. It's, like many people say, harder to find good deals and also more challenging to find good deals I can afford.

@Steve K. I was actually talking about Memphis invest, not Memphis properties

Originally posted by @Dr. Axel Meierhoefer :

Thanks @Chris Clothier . You are right. I also have to look at what I can swing. My income is not that high that I can go to the more recent levels. AT the same time I still don't want to go into C-class areas either. It's, like many people say, harder to find good deals and also more challenging to find good deals I can afford.

@Steve K. I was actually talking about Memphis invest, not Memphis properties

I was referring to a different poster, dr meierhoefer

aloha

steve

Originally posted by @Dr. Axel Meierhoefer :

Thanks @Chris Clothier. You are right. I also have to look at what I can swing. My income is not that high that I can go to the more recent levels. AT the same time I still don't want to go into C-class areas either. It's, like many people say, harder to find good deals and also more challenging to find good deals I can afford.

@Steve K. I was actually talking about Memphis invest, not Memphis properties

I will be the first to tell you, that based on what your specific desires and needs are, buying Turnkey right now may not be the best alternative.  I don't know without the specifics, but there are other ways to earn passive income.    I want you to get really good advice even if that advice is that this option is not the best option.  

You have not mentioned this word, so by no means am I saying you would do this, but it is very important that investors never "settle" for an investment.  That is what I mean by defining value.  If you have money that you would like to put to work and you want to do it passively, I am a big proponent of acquiring assets that produce income and have the opportunity to increase in value.  At the same time, I want assets that have some demand behind them as well.  Right now, those three things mean a higher price.  That is not the case everywhere and that does not mean you cannot find good companies providing good values at lower price points.  

It just means you have to be patient and honest with yourself about exactly what you are getting for the price you are paying and the likelihood of your getting it consistently.  Hopefully that made sense.   

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