Turn Key Type 1 vs Turn Key Type 2 - Be sure you know the Diff

5 Replies

There are a lot of people asking questions about Turnkey recently because acquisition costs are so high in CA IL NY WA OR and parts of TX. The key to making money by buying a Turnkey is knowing your costs and knowing the market. Most Turnkey buyers I've spoken to tell me they were surprised that the rehab costs were so high and that it took so long to get a tenant. Generally, I'm told they are making about $100 to $150 a door. Anything under $500 a door is a questionable investment in my opinion. So, I put together a spreadsheet comparing what I've been told that others buy and a couple I've done. The spreadsheet allows you to see how over time, there are substantial things to be aware of that you might not have considered. I do Type 2 Investing. I wrote this comparison for a California investor who wanted to see the numbers. If you look at the very bottom line, the results are remarkably different.

Turn Key Type 1 vs Turn Key Type 2

1) Assumption: Turn Key – Type 1 Company Name Invests Mostly Passive Investment

2) Assumption: Turn Key - Type 2 Taking Property Subject To Mostly Passive Investment
Assumption: Investor has to get financing from a bank or from Turn Key company Or Invests $80,000 cash Requires $16,000 cash plus closing costs


Assumption: Investor takes over seller’s loan (Subject To or Wrap) and does not have to get financing from a bank or from Turn Key company. No Bank, No Credit Needed

Requires $50,000 cash


Assumption: Turn Key company has found and rehabbed property and found renter to install



Assumption: Turn Key company has found property with equity and taken over loan with Subject To or Wrap. And found Tenant Buyer who puts $20,000 down, pays a premium lease and does all maintenance and repairs
Assumption: Goal Is Cash Flow with Eventual Property Appreciation


Assumption:

Goal Is Cash Flow, captured equity with Eventual Property Appreciation


Assumption:

Investment Amount $80,000



Assumption: Investment Amount $50,000
Location: Columbus Ohio

Location: Phoenix Arizona
2,373 miles from Los Angeles

373 miles from Los Angeles





Investor 100% Profits (No Back End Equity)

Investor 100% Cash Flow & Back End Equity $$





Investor's Total 10 Year Return (Plus (Does Not include Tax Write Off's) $75,240
Investor's Total 10 Year Return (Does Not include Tax Write Off's) $249,971
Investor Funds LLC $80,000
Investor Funds LLC $50,000
Investor Profits $75,240
Investor Profits $249,971
Less Cap Ex (Roof, AC Unit, Landscaping, Water Heater, etc) -$$$
No Cap Ex (Tenant Buyer does All Maintenance and Repairs) $0
Investor sets up LLC

Investor sets up LLC
Investor Funds LLC $80k or applies to bank and hopes to qualify

Investor Funds LLC $50k
Turn Key locates & acquires property

Turn Key locates & acquires property



Turn Key teaches Investor Subject To, Wrap, Lease Options
Investor 100% Ownership

Investor 100% Ownership
Investor 100% Cash Flow

Investor 100% Cash Flow & Back End Equity
Investor makes management decisions

Investor makes management decisions
Investor collects rents, disburses

Investor collects rents, disburses





Property ARV $80,000
Property ARV $225,000
Purchase Amount $80,000
Purchase Amount $180,000
Cash Out - to Seller $0,000
(Cash Out - to Seller) $15,000
Seller Carry Back $0,000
(Seller Carry Back) $20,000
Bank Financing $64,000


Amount Cash Have To Put Down $16000
(Underlying Note Subject To) $145,000
Monthly Payment Out $419
Monthly Payment Out $995
Repairs & Maintenance $5,000
No Repairs or Maintenance $0





Sell Amount to Tenant Buyer $0
Sell Amount - New Tenant Buyer $245,000
Seller Carry Back (Paid when Tenant Buyer Refinances) $0
Seller Carry Back (Paid when Tenant Buyer Refinances) $20,000
Underlying Note Subject To (Paid when Tenant Buyer Refinances) $0
Underlying Note Subject To (Paid when Tenant Buyer Refinances) $145,000
Cash In – From New Tenant Buyer $0
Cash In - From New Tenant Buyer $20,000
Monthly Payment In – From Renter $550
Monthly Payment In – From Tenant Buyer $1,650
Investor Does Repairs & Maintenance $$$
Tenant Buyer Does Repairs & Maintenance (No Cap Ex) $0
Amount Tenant Buyer Owes Investor $0
Amount Tenant Buyer Owes Investor ($245k - $20K) $225,000





Monthly Payment In $550
Monthly Payment In $1,650
Monthly Payment Out $419
Monthly Payment Out $995
Monthly Cash Flow Investor Total $135
Monthly Cash Flow Investor Total $655





Vacancy Rate 80%

Vacancy Rate – None
Renters Occasionally Need To Be Evicted -$1,000
Note: Tenant Buyer puts down $20,000 Non Refundable – If the Tenant Buyer vacates the property – another Tenant Buyer is found with an additional $20,000 Non refundable down $20,000
Year 01 Cash Flow Investor - $135 monthly $1,620
Year 01 Cash Flow Investor - $655 monthly $7,860
Year 02 Cash Flow Investor - $135 monthly $1,620
Year 02 Cash Flow Investor - $655 monthly $7,860
Year 03 Cash Flow Investor - $135 monthly $1,620
Year 03 Cash Flow Investor - $655 monthly $7,860
Year 04 Cash Flow Investor - $135 monthly $1,620
Year 04 Cash Flow Investor - $655 monthly $7,860
Year 05 Cash Flow Investor - $135 monthly $1,620
Year 05 Cash Flow Investor - $655 monthly $7,860
Year 06 Cash Flow Investor - $135 monthly $1,620
Year 06 Cash Flow Investor - $655 monthly $7,860
Year 07 Cash Flow Investor - $135 monthly $1,620
Year 07 Cash Flow Investor - $655 monthly $7,860
Year 08 Cash Flow Investor - $135 monthly $1,620
Year 08 Cash Flow Investor - $655 monthly $7,860
Year 09 Cash Flow Investor - $135 monthly $1,620
Year 09 Cash Flow Investor - $655 monthly $6,000
Year 10 Cash Flow Investor - $135 monthly $1,620
Year 10 Cash Flow Investor - $655 monthly $7,860
Cash Flow To Investor $16,200
Cash Flow To Investor $78,600
Repairs & Maintenance (Roof, AC Unit, Water Heater, Painting, Appliances, Landscaping, etc) -$$$
No Repairs or Maintenance (No CapEx) Tenant Buyer Does All Maintenance & Repairs $0
10 Year Principal Pay down by Renter $11,940
10 Year Principal Pay down by Tenant Buyer $28,871





Cash Down - From Tenant Buyer $0
Cash Down - From Tenant Buyer – Goes into Investor’s Pocket $20,000





Tax Write Offs For Investors $$$
Tax Write Offs For Investors $$$
Appreciation Is Investor's -10 Year $40,000
Appreciation Is Investor's -10 Year $112,500
Note: Appreciation on a $80,000 property in Indiana at 5% per year is $4,000 per year $4,000 Year
Note: Appreciation on a $225,000 property in Arizona at 5% per year is $11,250 per year $11,250 Year
Investor Borrows From Bank$80k to acquire property $80,000
Investor Funds LLC $50k (From Cash IRA 401(k) for Property $50,000





Sell Amount to Tenant Buyer $0
Sell Amount to Tenant Buyer $245,000
Payoff Amount for Investor $64,000
Payoff Amount for Investor $180,000
Creates “Back End Equity” $16,000
Creates “Back End Equity” $65,000





Original Down – From Tenant Buyer $0
Original Down – From Tenant Buyer $20,000
Tenant Buyer – Pay Off Amount $0
Tenant Buyer – Pay Off Amount $225,000





Tenant Buyer Eventually Refinances $0
Tenant Buyer Eventually Refinances $225,000
Underlying Note Paid Off $64,000
Underlying Note Paid Off $145,000
Seller Carry Back Paid Off $0
Seller Carry Back Paid Off $20,000
Remaining Equity $16,000
Remaining Equity $60,000





10 Year Cash Flow To Investor $39,300
10 Year Cash Flow To Investor $78,600
Backend Equity – Investor 100% $0
Backend Equity – Investor 100% $60,000
Total $39,300
Total $138,600
Investor’s Amount Invested Investor's Total Return
From Tenant Buyer

10 Year Cash Flow

Principal Pay Down

Appreciation

Back End Equity

Total


Minus Repairs, Maintenance,

AC Units, Roof, Water Heater, Landscaping and other Cap Ex

$80,000 $75,240

$0

$39,300

$11,940

$40,000

$16,000

$75,240

-$$$


Investor’s Amount Invested Investor's Total Return
From Tenant Buyer

10 Year Cash Flow

Principal Pay Down

Appreciation

Back End Equity

Total


Minus Repairs, Maintenance,

AC Units, Roof, Water Heater, Landscaping and other Cap Ex

$50,000 $299,971

$20,000

$78,600

$28,871

$112,500

$60,000

$299,971

$0

Additional Investor Funds to buy Another Property in Year 1 $0
Additional Investor Funds to buy Another Property in Year 1 $20,000 (From New TenantBuyer’s DownPayment)
Investor's Net Return Profit $75,240
Investor's Net Return Profit $249,971
10 Year ROI 9.40%
10 Year ROI 49.90%
1st Year ROI Cash Flow 2.03%
1st Year ROI Cash Flow 15.72%
1st Year ROI Including Down Payment 2.03%
1st Year ROI Including Down Payment 55.72%





Originally posted by Account Closed:

There are a lot of people asking questions about Turnkey recently because acquisition costs are so high in CA IL NY WA OR and parts of TX. The key to making money by buying a Turnkey is knowing your costs and knowing the market. Most Turnkey buyers I've spoken to tell me they were surprised that the rehab costs were so high and that it took so long to get a tenant. Generally, I'm told they are making about $100 to $150 a door. Anything under $500 a door is a questionable investment in my opinion. So, I put together a spreadsheet comparing what I've been told that others buy and a couple I've done. The spreadsheet allows you to see how over time, there are substantial things to be aware of that you might not have considered. I do Type 2 Investing. I wrote this comparison for a California investor who wanted to see the numbers. If you look at the very bottom line, the results are remarkably different.

Turn Key Type 1 vs Turn Key Type 2

1) Assumption: Turn Key – Type 1 Company Name Invests Mostly Passive Investment

2) Assumption: Turn Key - Type 2 Taking Property Subject To Mostly Passive Investment
Assumption: Investor has to get financing from a bank or from Turn Key company Or Invests $80,000 cash Requires $16,000 cash plus closing costs


Assumption: Investor takes over seller’s loan (Subject To or Wrap) and does not have to get financing from a bank or from Turn Key company. No Bank, No Credit Needed

Requires $50,000 cash


Assumption: Turn Key company has found and rehabbed property and found renter to install



Assumption: Turn Key company has found property with equity and taken over loan with Subject To or Wrap. And found Tenant Buyer who puts $20,000 down, pays a premium lease and does all maintenance and repairs
Assumption: Goal Is Cash Flow with Eventual Property Appreciation


Assumption:

Goal Is Cash Flow, captured equity with Eventual Property Appreciation


Assumption:

Investment Amount $80,000



Assumption: Investment Amount $50,000
Location: Columbus Ohio

Location: Phoenix Arizona
2,373 miles from Los Angeles

373 miles from Los Angeles





Investor 100% Profits (No Back End Equity)

Investor 100% Cash Flow & Back End Equity $$





Investor's Total 10 Year Return (Plus (Does Not include Tax Write Off's) $75,240
Investor's Total 10 Year Return (Does Not include Tax Write Off's) $249,971
Investor Funds LLC $80,000
Investor Funds LLC $50,000
Investor Profits $75,240
Investor Profits $249,971
Less Cap Ex (Roof, AC Unit, Landscaping, Water Heater, etc) -$$$
No Cap Ex (Tenant Buyer does All Maintenance and Repairs) $0
Investor sets up LLC

Investor sets up LLC
Investor Funds LLC $80k or applies to bank and hopes to qualify

Investor Funds LLC $50k
Turn Key locates & acquires property

Turn Key locates & acquires property



Turn Key teaches Investor Subject To, Wrap, Lease Options
Investor 100% Ownership

Investor 100% Ownership
Investor 100% Cash Flow

Investor 100% Cash Flow & Back End Equity
Investor makes management decisions

Investor makes management decisions
Investor collects rents, disburses

Investor collects rents, disburses





Property ARV $80,000
Property ARV $225,000
Purchase Amount $80,000
Purchase Amount $180,000
Cash Out - to Seller $0,000
(Cash Out - to Seller) $15,000
Seller Carry Back $0,000
(Seller Carry Back) $20,000
Bank Financing $64,000


Amount Cash Have To Put Down $16000
(Underlying Note Subject To) $145,000
Monthly Payment Out $419
Monthly Payment Out $995
Repairs & Maintenance $5,000
No Repairs or Maintenance $0





Sell Amount to Tenant Buyer $0
Sell Amount - New Tenant Buyer $245,000
Seller Carry Back (Paid when Tenant Buyer Refinances) $0
Seller Carry Back (Paid when Tenant Buyer Refinances) $20,000
Underlying Note Subject To (Paid when Tenant Buyer Refinances) $0
Underlying Note Subject To (Paid when Tenant Buyer Refinances) $145,000
Cash In – From New Tenant Buyer $0
Cash In - From New Tenant Buyer $20,000
Monthly Payment In – From Renter $550
Monthly Payment In – From Tenant Buyer $1,650
Investor Does Repairs & Maintenance $$$
Tenant Buyer Does Repairs & Maintenance (No Cap Ex) $0
Amount Tenant Buyer Owes Investor $0
Amount Tenant Buyer Owes Investor ($245k - $20K) $225,000





Monthly Payment In $550
Monthly Payment In $1,650
Monthly Payment Out $419
Monthly Payment Out $995
Monthly Cash Flow Investor Total $135
Monthly Cash Flow Investor Total $655





Vacancy Rate 80%

Vacancy Rate – None
Renters Occasionally Need To Be Evicted -$1,000
Note: Tenant Buyer puts down $20,000 Non Refundable – If the Tenant Buyer vacates the property – another Tenant Buyer is found with an additional $20,000 Non refundable down $20,000
Year 01 Cash Flow Investor - $135 monthly $1,620
Year 01 Cash Flow Investor - $655 monthly $7,860
Year 02 Cash Flow Investor - $135 monthly $1,620
Year 02 Cash Flow Investor - $655 monthly $7,860
Year 03 Cash Flow Investor - $135 monthly $1,620
Year 03 Cash Flow Investor - $655 monthly $7,860
Year 04 Cash Flow Investor - $135 monthly $1,620
Year 04 Cash Flow Investor - $655 monthly $7,860
Year 05 Cash Flow Investor - $135 monthly $1,620
Year 05 Cash Flow Investor - $655 monthly $7,860
Year 06 Cash Flow Investor - $135 monthly $1,620
Year 06 Cash Flow Investor - $655 monthly $7,860
Year 07 Cash Flow Investor - $135 monthly $1,620
Year 07 Cash Flow Investor - $655 monthly $7,860
Year 08 Cash Flow Investor - $135 monthly $1,620
Year 08 Cash Flow Investor - $655 monthly $7,860
Year 09 Cash Flow Investor - $135 monthly $1,620
Year 09 Cash Flow Investor - $655 monthly $6,000
Year 10 Cash Flow Investor - $135 monthly $1,620
Year 10 Cash Flow Investor - $655 monthly $7,860
Cash Flow To Investor $16,200
Cash Flow To Investor $78,600
Repairs & Maintenance (Roof, AC Unit, Water Heater, Painting, Appliances, Landscaping, etc) -$$$
No Repairs or Maintenance (No CapEx) Tenant Buyer Does All Maintenance & Repairs $0
10 Year Principal Pay down by Renter $11,940
10 Year Principal Pay down by Tenant Buyer $28,871





Cash Down - From Tenant Buyer $0
Cash Down - From Tenant Buyer – Goes into Investor’s Pocket $20,000





Tax Write Offs For Investors $$$
Tax Write Offs For Investors $$$
Appreciation Is Investor's -10 Year $40,000
Appreciation Is Investor's -10 Year $112,500
Note: Appreciation on a $80,000 property in Indiana at 5% per year is $4,000 per year $4,000 Year
Note: Appreciation on a $225,000 property in Arizona at 5% per year is $11,250 per year $11,250 Year
Investor Borrows From Bank$80k to acquire property $80,000
Investor Funds LLC $50k (From Cash IRA 401(k) for Property $50,000





Sell Amount to Tenant Buyer $0
Sell Amount to Tenant Buyer $245,000
Payoff Amount for Investor $64,000
Payoff Amount for Investor $180,000
Creates “Back End Equity” $16,000
Creates “Back End Equity” $65,000





Original Down – From Tenant Buyer $0
Original Down – From Tenant Buyer $20,000
Tenant Buyer – Pay Off Amount $0
Tenant Buyer – Pay Off Amount $225,000





Tenant Buyer Eventually Refinances $0
Tenant Buyer Eventually Refinances $225,000
Underlying Note Paid Off $64,000
Underlying Note Paid Off $145,000
Seller Carry Back Paid Off $0
Seller Carry Back Paid Off $20,000
Remaining Equity $16,000
Remaining Equity $60,000





10 Year Cash Flow To Investor $39,300
10 Year Cash Flow To Investor $78,600
Backend Equity – Investor 100% $0
Backend Equity – Investor 100% $60,000
Total $39,300
Total $138,600
Investor’s Amount Invested Investor's Total Return
From Tenant Buyer

10 Year Cash Flow

Principal Pay Down

Appreciation

Back End Equity

Total


Minus Repairs, Maintenance,

AC Units, Roof, Water Heater, Landscaping and other Cap Ex

$80,000 $75,240

$0

$39,300

$11,940

$40,000

$16,000

$75,240

-$$$


Investor’s Amount Invested Investor's Total Return
From Tenant Buyer

10 Year Cash Flow

Principal Pay Down

Appreciation

Back End Equity

Total


Minus Repairs, Maintenance,

AC Units, Roof, Water Heater, Landscaping and other Cap Ex

$50,000 $299,971

$20,000

$78,600

$28,871

$112,500

$60,000

$299,971

$0

Additional Investor Funds to buy Another Property in Year 1 $0
Additional Investor Funds to buy Another Property in Year 1 $20,000 (From New TenantBuyer’s DownPayment)
Investor's Net Return Profit $75,240
Investor's Net Return Profit $249,971
10 Year ROI 9.40%
10 Year ROI 49.90%
1st Year ROI Cash Flow 2.03%
1st Year ROI Cash Flow 15.72%
1st Year ROI Including Down Payment 2.03%
1st Year ROI Including Down Payment 55.72%





 I'm not sure where you get your rent but no one i know would ever buy a house that rents for $550 for $70k or $80k. I like your modeling but the assumptions are off for columbus. 

Originally posted by @Robert Ellis :
Originally posted by @Mike M.:

There are a lot of people asking questions about Turnkey recently because acquisition costs are so high in CA IL NY WA OR and parts of TX. The key to making money by buying a Turnkey is knowing your costs and knowing the market. Most Turnkey buyers I've spoken to tell me they were surprised that the rehab costs were so high and that it took so long to get a tenant. Generally, I'm told they are making about $100 to $150 a door. Anything under $500 a door is a questionable investment in my opinion. So, I put together a spreadsheet comparing what I've been told that others buy and a couple I've done. The spreadsheet allows you to see how over time, there are substantial things to be aware of that you might not have considered. I do Type 2 Investing. I wrote this comparison for a California investor who wanted to see the numbers. If you look at the very bottom line, the results are remarkably different.

Turn Key Type 1 vs Turn Key Type 2

1) Assumption: Turn Key – Type 1 Company Name Invests Mostly Passive Investment

2) Assumption: Turn Key - Type 2 Taking Property Subject To Mostly Passive Investment
Assumption: Investor has to get financing from a bank or from Turn Key company Or Invests $80,000 cash Requires $16,000 cash plus closing costs


Assumption: Investor takes over seller’s loan (Subject To or Wrap) and does not have to get financing from a bank or from Turn Key company. No Bank, No Credit Needed

Requires $50,000 cash


Assumption: Turn Key company has found and rehabbed property and found renter to install



Assumption: Turn Key company has found property with equity and taken over loan with Subject To or Wrap. And found Tenant Buyer who puts $20,000 down, pays a premium lease and does all maintenance and repairs
Assumption: Goal Is Cash Flow with Eventual Property Appreciation


Assumption:

Goal Is Cash Flow, captured equity with Eventual Property Appreciation


Assumption:

Investment Amount $80,000



Assumption: Investment Amount $50,000
Location: Columbus Ohio

Location: Phoenix Arizona
2,373 miles from Los Angeles

373 miles from Los Angeles





Investor 100% Profits (No Back End Equity)

Investor 100% Cash Flow & Back End Equity $$





Investor's Total 10 Year Return (Plus (Does Not include Tax Write Off's) $75,240
Investor's Total 10 Year Return (Does Not include Tax Write Off's) $249,971
Investor Funds LLC $80,000
Investor Funds LLC $50,000
Investor Profits $75,240
Investor Profits $249,971
Less Cap Ex (Roof, AC Unit, Landscaping, Water Heater, etc) -$$$
No Cap Ex (Tenant Buyer does All Maintenance and Repairs) $0
Investor sets up LLC

Investor sets up LLC
Investor Funds LLC $80k or applies to bank and hopes to qualify

Investor Funds LLC $50k
Turn Key locates & acquires property

Turn Key locates & acquires property



Turn Key teaches Investor Subject To, Wrap, Lease Options
Investor 100% Ownership

Investor 100% Ownership
Investor 100% Cash Flow

Investor 100% Cash Flow & Back End Equity
Investor makes management decisions

Investor makes management decisions
Investor collects rents, disburses

Investor collects rents, disburses





Property ARV $80,000
Property ARV $225,000
Purchase Amount $80,000
Purchase Amount $180,000
Cash Out - to Seller $0,000
(Cash Out - to Seller) $15,000
Seller Carry Back $0,000
(Seller Carry Back) $20,000
Bank Financing $64,000


Amount Cash Have To Put Down $16000
(Underlying Note Subject To) $145,000
Monthly Payment Out $419
Monthly Payment Out $995
Repairs & Maintenance $5,000
No Repairs or Maintenance $0





Sell Amount to Tenant Buyer $0
Sell Amount - New Tenant Buyer $245,000
Seller Carry Back (Paid when Tenant Buyer Refinances) $0
Seller Carry Back (Paid when Tenant Buyer Refinances) $20,000
Underlying Note Subject To (Paid when Tenant Buyer Refinances) $0
Underlying Note Subject To (Paid when Tenant Buyer Refinances) $145,000
Cash In – From New Tenant Buyer $0
Cash In - From New Tenant Buyer $20,000
Monthly Payment In – From Renter $550
Monthly Payment In – From Tenant Buyer $1,650
Investor Does Repairs & Maintenance $$$
Tenant Buyer Does Repairs & Maintenance (No Cap Ex) $0
Amount Tenant Buyer Owes Investor $0
Amount Tenant Buyer Owes Investor ($245k - $20K) $225,000





Monthly Payment In $550
Monthly Payment In $1,650
Monthly Payment Out $419
Monthly Payment Out $995
Monthly Cash Flow Investor Total $135
Monthly Cash Flow Investor Total $655





Vacancy Rate 80%

Vacancy Rate – None
Renters Occasionally Need To Be Evicted -$1,000
Note: Tenant Buyer puts down $20,000 Non Refundable – If the Tenant Buyer vacates the property – another Tenant Buyer is found with an additional $20,000 Non refundable down $20,000
Year 01 Cash Flow Investor - $135 monthly $1,620
Year 01 Cash Flow Investor - $655 monthly $7,860
Year 02 Cash Flow Investor - $135 monthly $1,620
Year 02 Cash Flow Investor - $655 monthly $7,860
Year 03 Cash Flow Investor - $135 monthly $1,620
Year 03 Cash Flow Investor - $655 monthly $7,860
Year 04 Cash Flow Investor - $135 monthly $1,620
Year 04 Cash Flow Investor - $655 monthly $7,860
Year 05 Cash Flow Investor - $135 monthly $1,620
Year 05 Cash Flow Investor - $655 monthly $7,860
Year 06 Cash Flow Investor - $135 monthly $1,620
Year 06 Cash Flow Investor - $655 monthly $7,860
Year 07 Cash Flow Investor - $135 monthly $1,620
Year 07 Cash Flow Investor - $655 monthly $7,860
Year 08 Cash Flow Investor - $135 monthly $1,620
Year 08 Cash Flow Investor - $655 monthly $7,860
Year 09 Cash Flow Investor - $135 monthly $1,620
Year 09 Cash Flow Investor - $655 monthly $6,000
Year 10 Cash Flow Investor - $135 monthly $1,620
Year 10 Cash Flow Investor - $655 monthly $7,860
Cash Flow To Investor $16,200
Cash Flow To Investor $78,600
Repairs & Maintenance (Roof, AC Unit, Water Heater, Painting, Appliances, Landscaping, etc) -$$$
No Repairs or Maintenance (No CapEx) Tenant Buyer Does All Maintenance & Repairs $0
10 Year Principal Pay down by Renter $11,940
10 Year Principal Pay down by Tenant Buyer $28,871





Cash Down - From Tenant Buyer $0
Cash Down - From Tenant Buyer – Goes into Investor’s Pocket $20,000





Tax Write Offs For Investors $$$
Tax Write Offs For Investors $$$
Appreciation Is Investor's -10 Year $40,000
Appreciation Is Investor's -10 Year $112,500
Note: Appreciation on a $80,000 property in Indiana at 5% per year is $4,000 per year $4,000 Year
Note: Appreciation on a $225,000 property in Arizona at 5% per year is $11,250 per year $11,250 Year
Investor Borrows From Bank$80k to acquire property $80,000
Investor Funds LLC $50k (From Cash IRA 401(k) for Property $50,000





Sell Amount to Tenant Buyer $0
Sell Amount to Tenant Buyer $245,000
Payoff Amount for Investor $64,000
Payoff Amount for Investor $180,000
Creates “Back End Equity” $16,000
Creates “Back End Equity” $65,000





Original Down – From Tenant Buyer $0
Original Down – From Tenant Buyer $20,000
Tenant Buyer – Pay Off Amount $0
Tenant Buyer – Pay Off Amount $225,000





Tenant Buyer Eventually Refinances $0
Tenant Buyer Eventually Refinances $225,000
Underlying Note Paid Off $64,000
Underlying Note Paid Off $145,000
Seller Carry Back Paid Off $0
Seller Carry Back Paid Off $20,000
Remaining Equity $16,000
Remaining Equity $60,000





10 Year Cash Flow To Investor $39,300
10 Year Cash Flow To Investor $78,600
Backend Equity – Investor 100% $0
Backend Equity – Investor 100% $60,000
Total $39,300
Total $138,600
Investor’s Amount Invested Investor's Total Return
From Tenant Buyer

10 Year Cash Flow

Principal Pay Down

Appreciation

Back End Equity

Total


Minus Repairs, Maintenance,

AC Units, Roof, Water Heater, Landscaping and other Cap Ex

$80,000 $75,240

$0

$39,300

$11,940

$40,000

$16,000

$75,240

-$$$


Investor’s Amount Invested Investor's Total Return
From Tenant Buyer

10 Year Cash Flow

Principal Pay Down

Appreciation

Back End Equity

Total


Minus Repairs, Maintenance,

AC Units, Roof, Water Heater, Landscaping and other Cap Ex

$50,000 $299,971

$20,000

$78,600

$28,871

$112,500

$60,000

$299,971

$0

Additional Investor Funds to buy Another Property in Year 1 $0
Additional Investor Funds to buy Another Property in Year 1 $20,000 (From New TenantBuyer’s DownPayment)
Investor's Net Return Profit $75,240
Investor's Net Return Profit $249,971
10 Year ROI 9.40%
10 Year ROI 49.90%
1st Year ROI Cash Flow 2.03%
1st Year ROI Cash Flow 15.72%
1st Year ROI Including Down Payment 2.03%
1st Year ROI Including Down Payment 55.72%





 I'm not sure where you get your rent but no one i know would ever buy a house that rents for $550 for $70k or $80k. I like your modeling but the assumptions are off for columbus. 

 I'd welcome your input. I'll try to find the post where the investor was quoted those numbers.

Account Closed i'd get at least 2 prop managers in your phone. Text them and they will get you quick answers like this. A turnkey provider and I were having a conversation about this last night but for a remodeled single family 2 bedroom home even in an area like hilltop in columbus they are getting $695 a month in rent.