Experience with turn key

12 Replies

@Paul Latendresse I have great experience with turnkey single-family rentals.  From my experience, I believe there are several key things that are necessary:

1. Find a good turnkey operator who has plenty of experience, knows their markets very well, and treats you extremely well as a client investor.  Research, check reviews, and interview a handful of turnkey companies before settling on one to work with.  If you plan on purchasing multiple properties over time, go with someone whom you are confident you can build a relationship.  Like any other investment, invest in the people first and the deal second.

2. Do your own homework on the market and the pricing.  When purchasing a turnkey rental, it is essential to do your own market analysis and know the general range of comparables in the area in which you’re buying. Don’t simply assume that the turnkey company’s price is a good purchase price for the property.

3. In general, stay away from the very low end of the turnkey market.  Of course you don't want to overpay.  But going too far on the cheap end of the market is simply asking for tenant turnover and unexpected repairs, all of which cost money, and negate one of the main benefits turnkey property in the first place, which is to be more passive in the investment’s management.

4. Make sure you enlist very good property management. Property management can make or break your investment. I prefer turnkey companies that have their own in-house property management team. But if not, make sure the turnkey company has a highly regarded and long-standing relationship with the property manager whom they refer. And don't just take their word for it. Do your own homework, check reviews, get other referrals, and make sure you're comfortable with the property manager's reputation.

Originally posted by @Paul Latendresse :

How do you feel about it?

Turnkeys can be a great investment if you go with a TRUE Turnkey provider. Ideally, they should own the property first, renovate it in-house, place a tenant prior to closing, and then manage it for you after the purchase. 

Try looking at:

5 Keys to Turnkey Real Estate Investing

Assessing the Risk of a Turnkey Real Estate Company

It can be a great way to get started. However majority of the "deals" you see nowadays is from distressed properties that are fixed up. That is where you really score big in the real estate game. Turn key properties will be at a much higher price as it is ready to go.

@Paul Latendresse it depends on everyone's individual circumstances. Turn key is a good way and maybe the only way for a new out of state investor that has a demanding job and busy life and doesn't have the time, skills or inclination to do it on their own. We work with lots of people like that and it helps them get in to real estate investment that they otherwise wouldn't be able to. It is by far, the quickest and least risky way to go for these people however, you have to vet the turn key company well. Below are some of the key things to look out for and avoid with any turn key company. 

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

I will put in a good word for @Ali Boone , she is very helpful in educating people on turnkey properties. She has a lot of good articles on BP published as well. Definitely join her turnkey rental properties group on Facebook if you have interest in that type of investing, I've learned a ton and for free!

Originally posted by @Kyle Nelson :

I will put in a good word for @Ali Boone, she is very helpful in educating people on turnkey properties. She has a lot of good articles on BP published as well. Definitely join her turnkey rental properties group on Facebook if you have interest in that type of investing, I've learned a ton and for free!

Ahhh, thanks!! Appreciate the shout-out and super glad to hear it's all been helpful. Thanks for sharing!