Just Sold my Memphis Turn-Key Rental!
I just sold my Memphis turnkey rental! Since buying rentals from turnkey providers is a hot topic, I decided to post about my experience. Hopefully this post can help a few people in their real estate journeys!
I purchased this single family home for $90,000 in late 2015 from Curt David (BuyMemphisNow). I put 20% down ($18,000 down). It had a tenant in place before we closed on a 2 year lease. The tenant resigned another 2 year lease back in 2017. So there has been no vacancy in the three years we held it. There were two repairs. We had to remove a rotting tree and fix a plumbing issue. Other than that, things could not have been any smoother.
Our actual monthly cashflow over the three years was about $250 ($3,000 per year). This is an annual cash on cash return of 16% ($3,000 / $18,000). I’m ignoring closing costs in this post due to immateriality.
In addition to the cashflow, about $100 of each mortgage payment went toward reducing my debt, and increasing my equity. This adds up to $1,200 a year for a 6% annual return.
A couple months ago I realized I had to sell the property for health reasons. I needed the cash. I was a little worried about what I’d be able to sell it for since I’ve heard horror stories about people not being able to sell for what they purchased the property for. I knew I bought it a good area, so I was hoping I’d be able to get out without losing too much.
I ended up selling the house for $110,000! That’s $20,000 MORE than I purchased it for! I did have to pay commissions and closing costs of around $7,000, so my net gain from appreciation was $13,000. That’s around $4,800 per year ($13,000 / 2.7 years) for an annual return of 27%!
My total annual return on this investment was 49% ANNUALLY (16% COC + 6% debt paydown + 27% appreciation).
My advice for anyone who is considering to buy from a turnkey provider is to first, make sure you go with someone who is very reputable. Second, buy a NICE property in a NICE area! Houses that sell for $50K are likely not going to do well. The house I bought from Curt did NOT have the absolute best numbers when looking at the COC calculations. But I'm so glad I went with the nicer house in a more desirable area because I got VERY RELIABLE tenants who never missed a payment and my property went up in value a pretty nice amount!
Overall, I’m very happy with my turnkey experience. I know that making a 49% return without doing much work is not the norm, but I wanted to post this to show that you CAN make good money from turnkey if you are wise in what you buy and who you buy the property from. You’ll likely make more doing it yourself, but there’s a learning curve and WILL take a significant amount of time to catch on to things. For those people who make good money at their day jobs and can’t afford to put time into real estate, I think turnkey is a great option. At least it was for me!
Great post David! I am glad it worked out for you guys. I hope to do the same very soon.
David Hodge thanks for posting. I hope you get well soon. I’ve bought a couple turnkey properties in Memphis over the last year or so and so I appreciate your perspective of selling.
I don’t plan on selling anytime soon, but it’s clear the memphks market has appreciated some since 2015. I think my first one I bought last summer has even appreciated some, albeit it at a small amount. I know turnkey can get a bad reputation but there are several reputable providers there and if you hold them long term they can be good investments.
I’ve done the DIY method and so far turnkey is better for me in my opinion anyways.
@David Hodge That is awesome! thank you for taking the time to share that!
Not to correct your spelling, but I'm sure that Curt Davis (not Curt David) would want to know about your success!
Also I hope that your health issues are better!
Great post @David Hodge! I remember when you were just starting on this adventure in 2015. I'm glad everything worked out so well for you.
Best wishes to you going forward!
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You will probably have a few thousand to pay Uncle Sam in depreciation recapture?
Best wishes...
@Chris Clothier thank you for tagging curt. Typo :)
Thanks for the positive feedback!! Was great to help you through this whole process!!
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take away is you bought a top end rental like Curt and @Chris Clothier recommend not a bottom end MOrris thing.. which none of us recommend..
contrats.. little recapture but appreciation is an important part of the equation and maybe now we can say markets are not flat like we used to say a few years back.. cash flow and appreciation.
Nice one.
Thanks for sharing @David Hodge! Not too often do I read about personal experiences re-selling turnkey, so I value your post immensely.
Could you provide details on how you sold your turnkey property? Did you just work with an agent and sold it as an investment property?
Nonetheless, I am glad this investment went well for you and hope you're feeling better!
Originally posted by @Peter Cung:
Thanks for sharing @David Hodge! Not too often do I read about personal experiences re-selling turnkey, so I value your post immensely.
Could you provide details on how you sold your turnkey property? Did you just work with an agent and sold it as an investment property?
Nonetheless, I am glad this investment went well for you and hope you're feeling better!
I helped him sell it by acting as his Realtor. Brought a buyer quickly.
David Hodge congrats. I just two of my ten. It’s like buying a boat you are happy when it’s gone.
Let’s connect.
@Lane Kawaoka I was very happy with it but just needed the cash for personal reasons.
@Peter Cung Curt found a buyer within 24 hours! Actually I think he found 3 or 4 haha
Yayy for a positive turnkey post! Thanks for sharing this. So many more posts are more based on the front-end of buying them that not many people get to here of the successes with them. I haven't sold my turnkeys but since I bought them in 2011-2012 (perfect times to buy), they have all doubled or tripled in value (true, in Atlanta) and lots of cash flow along the way. So people can say what they want about turnkeys, but they can certainly work. Congrats again! And thanks again for sharing this for folks to read :)
Ali Boone have you not been buying Turnkey properties recently or since 2012?
Thanks for this post @David Hodge. It furthered my thoughts that turnkey is the right way for me to start investing.
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@David Hodge Thanks for sharing your story! Glad you were able to sell and get the cash you needed.
That’s awesome David. I have been considering turnkey investing so it’s nice yours worked out so well. Hope you are feeling better! Thanks
Originally posted by @Ryan E.:
Ali Boone have you not been buying Turnkey properties recently or since 2012?
Not lately, no. I just bought a duplex in CA so my recent funds went that way. But I still work with people buying turnkeys and turnkey sellers on the daily because I help people through the process. So I'm still up on everything going on with them, while I hold my own as well.
Hi @David Hodge! I am so glad to hear that this turnkey worked out for you and Sara so well. May you recover fully and speedily from whatever ails you.
I bought one from Curt last year and had really good experiences with him as well. He is a good man and has really good knowledges about Memphis market.