Turn Key Companies to recommend or stay clear

25 Replies

I am looking to 1031 a SFM in California (approx $350,000) into a turnkey property out of state. I have heard there are good ones and let's just say, "Not good ones".


Before I leave my cash in a company, any advise as to the good ones or one, and one to stay away from?  You can comment here, or if you prefer to be on the down-low, pm me.  Happy Investing!

@Robin Gravlin , I have no personal experience with turnkey providers, but you're absolutely right to be asking questions. 

Once you get some recommendations, make sure to google their name + scam, their name + ripoff, and their name + lawsuit. While one person saying a provider is a scam isn't necessarily true, hundreds of people making this same declaration is something to pay attention to.

Originally posted by @Robin Gravlin :

I am looking to 1031 a SFM in California (approx $350,000) into a turnkey property out of state. I have heard there are good ones and let's just say, "Not good ones".


Before I leave my cash in a company, any advise as to the good ones or one, and one to stay away from?  You can comment here, or if you prefer to be on the down-low, pm me.  Happy Investing!

Research, research! The best way is to start looking for a market. When you find one you like, look for a Turnkey Provider in that area. Make sure they are a TRUE Provider. They should do everything in-house. The should own the property (it shouldNOT be a listing) then they should renovate it, place a tenant, and then stay on as the manager for you. Even the management needs to be done in-house. Otherwise, they are just agents selling you a property.


Good luck! 

 

@Robin Gravlin I invested in turnkeys and helped others get started as well. What I found is that while the company reputation is definitely important, you should also look around and find the best deal for you. I have seen people stick with just one provider and don't consider deals from other providers. Do your DD on each deal.

I think the first step is to determine what out of state market you want to invest in and go from there.

I have no personal experience but heard good things from Holton-Wise in Cleveland.

Also I recommend not limiting yourself to only turnkey providers.  You can also find a good condition home, sign up with a reputable property manager who will handle any minor things needed to get it rental ready and get it occupied with tenants.  Theres also the possibility of finding properties in good condition that already have an established tenant in place.  

Hi @Robin Gravlin, there are many great full-service turnkey companies to choose from, it just depends on which OOS market you would like to invest in.

In the meantime, here are a couple of blogs that may help you with your decision making process:

Kyle Myers' personal journey through REI - Part 1:

https://www.biggerpockets.com/member-blogs/8313/49711-part-1-living-the-vacation-life

Part 2:

https://www.biggerpockets.com/member-blogs/8313/49783-part-2-choosing-a-turnkey-company

I think his personal experience could give you an idea of what you should keep in mind while choosing a turnkey company.

Best of luck.

@Robin Gravlin -  I just came back from a conference where a man named Aaron Adams spoke.  He owns Alpine Capital Solutions and has over 1500 properties under management (also owns a ridiculous amount).  There were clients of his there, and they seemed extremely pleased with his companies turn key products and management.  Maybe check into them

Disclaimer:  I'm a partner in a TK company in Indianapolis.  I know (either personally or by reputation) many of the good providers.  Each one may be a little different in their approach but these are the ones that stand out with excellent reputations.  

@Clayton Mobley - Spartan Invest 

@Chris Clothier - Memphis Invest

@James Wise - Holton-Wise

Note, there are some other great "promoters" out there, but like us, these companies are actually "providers" and manage the processes from start to finish.

@Nathan Brooks   @ Bridge has really come forward from what I see.. you might want to check out his stuff too.

Every city has half a dozen folks in the same business.

it still boils down to buying quality or what looks best on paper.. this is key.. in my mind.. 

Keep in mind once you have your home.. the TK provider or PM is not living with the tenant day to day.. so you do the best you can but NO ONE can control every tenant.. they are all humans and humans all live and act individually.. so to be a landlord you have to understand that.. 

Originally posted by @Caleb Heimsoth :

@Robin Gravlin. Definitely avoid Morris invest and don’t buy anything under 75k.

I really do not understand the recommendation of not buying anything under 75k.  You can find properties in this price range that are in decent enough neighborhoods and in good condition and can have a stronger cap-rate over more expensive properties. Also its a good way to start off if you want to first limit your exposure until you get more comfortable.

 

@Robin Gravlin you aren't so much 'leaving cash in a company' as 'leaving cash in a property'. TK is just a shortcut. At the end of the day you have a property with tenants in it and property management. Due diligence on the property, such as inspection, appraisal, personal visit is key. Don't close until all these things are done. You should do this with ANY property you buy. Property management is key to a good long investment, so do a deep due diligence on that as well, don't lock yourself into a 1-year commitment, and don't hesitate to be hands-on and proactive with them, and then switch if you find it necessary.


Stay away from rentals that rent for under 900 a month if you are a high paid professional.

Originally posted by @Nathan Williams :
Originally posted by @Caleb Heimsoth:

@Robin Gravlin. Definitely avoid Morris invest and don’t buy anything under 75k.

I really do not understand the recommendation of not buying anything under 75k.  You can find properties in this price range that are in decent enough neighborhoods and in good condition and can have a stronger cap-rate over more expensive properties. Also its a good way to start off if you want to first limit your exposure until you get more comfortable.

 Nathan, it depends on what market you're talking about and what your risk tolerance is and how hands on you want to be. You can do ok in some markets under $75K but not others. In even the most affordable markets, $75K is going to put you in a C class neighborhood which can be fine. We're active in both Indianapolis and Kansas City. Indy is a little more affordable than KC and you can find good C class properties in the low $70's. You're going to be in a sketchier area at that price in Kansas City however. 

 

@Robin Gravlin Have you decided on a market? Most turn key companies are in the Midwest and Southeast so you might want to narrow down your market choice first and then choose the best TK company in that area. In general, here are the things that I recommend avoiding in a turn key company:

  • Don't allow financing or a finance contingency (it can be a good indication they are selling above market value)
  • Don't allow for your own independent property inspection
  • Are not realistic with their pro forma's (i.e. they don't include vacancy or maintenance projections or use unrealistically low vacancy factors)
  • Require you to pay for any renovation upfront
  • Sell only in cheap. low end neighborhoods
  • Don't accurately represent the neighborhood/property classification
  • Don't have consistent rehab standards for all properties
  • Don't provide a scope of work for the property
  • Can't provide references of repeat investors
  • Require you to close before a tenant is in place

Hey @Robin Gravlin

I have a few folks within my network who buy from Martel Turnkey. They are in the Cleveland, Memphis, St. Louis, and Birmingham markets. I have not personally bought from them or any turnkey provider, but from what I have heard they do a nice job. Good luck moving forward! 

Cheers,

Thanks @Jay Hinrichs ! Appreciate you my friend. there are many great TK companies out there, and there certainly are ones that don't do a great job. I know for our team we try to make it as clear and as transparent through the entire process. 

There are a lot of great reviews for our company, and many others here on BP. Also understand what kind of property you want, and what kind of provider you want to work with. We'd love to help if we can, whether it is with our team or others.

A few others that are amazing: 

- Dave Payerchin out of Cleveland 

- Shawn Wolfswinkel out of Houston 

- Missy McCall out of Dayton, OH 

Try research the BBB (Better Business Bureau) also which will have their complaints listed. If they're an LLC you can look up their records online and see the legitimacy of the company and their holdings.

Originally posted by @Lien Vuong :

Try research the BBB (Better Business Bureau) also which will have their complaints listed. If they're an LLC you can look up their records online and see the legitimacy of the company and their holdings.

 I agree withthis! Reviews are important as well. Google some of these companies, see where they stand across the board. Especially if they offer Property Management (all Turnkeys should.) You will want to see if they have happy tenants! 

Originally posted by @Nathan Brooks :

Thanks @Jay Hinrichs ! Appreciate you my friend. there are many great TK companies out there, and there certainly are ones that don't do a great job. I know for our team we try to make it as clear and as transparent through the entire process. 

There are a lot of great reviews for our company, and many others here on BP. Also understand what kind of property you want, and what kind of provider you want to work with. We'd love to help if we can, whether it is with our team or others.

A few others that are amazing: 

- Dave Payerchin out of Cleveland 

- Shawn Wolfswinkel out of Houston 

- Missy McCall out of Dayton, OH 

These are all really good people that Nathan listed and their companies operate in different markets, which gives you some homework to do! 

I've got several turnkey properties with Spartan invest. I'm actually in the process of doing a 1031 and getting a few more properties from them plus some DST's. They are a solid choice in my opinion!

Originally posted by @Nathan Williams :
Originally posted by @Caleb Heimsoth:

@Robin Gravlin. Definitely avoid Morris invest and don’t buy anything under 75k.

I really do not understand the recommendation of not buying anything under 75k.  You can find properties in this price range that are in decent enough neighborhoods and in good condition and can have a stronger cap-rate over more expensive properties. Also its a good way to start off if you want to first limit your exposure until you get more comfortable.

Tenant class bro. I made this mistake in the last year with a company I will not name, but I am paying a heavy price. 

 

Focus on finding other passive investors who have purchased properties themselves. Not only will you find TKPs but you will find PM and other service providers.

@Chris Clothier I feel like an IDIOT! Of course, Memphis Invest is the biggest in our industry and set the tone for what many of us are doing. Appreciate you sir, for all you and your company do. There are great companies out there helping lots of folks invest in real estate. 

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