Turnkey Success Story

Buying & Selling Real Estate
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Turnkey Success Story

Irina C.
Investor · Member since 2019 · 30 posts · 72 votes

Hey y'all ;) I wanted to share my first success story here that relates to turnkey investments. I had a lot of trouble finding positive posts about turnkey investment and thought I will share this here. 

For some background, I have been investing in CA and decided to branch out this year into Florida (Jacksonville). I'm not a full-time investor (I wish!) but have a pretty busy C-level exec job in a start-up. Nevertheless, I wanted to invest more and was super excited to try the BRRRR strategy.

When I started out in January this year with "out of state" investments and wanted to find an opportunity to do a BRRRR I realized that there is no way I can combine my busy job with the time investment needed to successfully apply this strategy. Despite of having built an amazing team in Jacksonville, it was still not realistic for me.


Hence I looked into turnkey investments. My first thought was to go on the websites of turnkey providers and see if I can find anything that would work with my numbers and it was far from that, so I told my realtor that I want to find a turnkey property with my specific numbers. Aaaaand I did ;) Here are the details:

- asking $109k USD

- purchase price: $88k USD

- downpayment 20%

- rented out for $1300 thanks to my amazing Property Manager @Elenis Camargo

- monthly P&I $322 (3.65% interest)

- monthly cash flow: $550

- ROI (CoC) 23,5%

- REO 37%

While it was not as complicated as a BRRRR, this deal was not uncomplicated, I have a ton of respect for everyone who is doing BRRRR. I ran into issues like a huge delay in financing (COVID related) and almost lost this deal, someone broke into my property right after I closed, a new AC broke down and the story goes on. Definitely got my feet wet with this one.

But nevertheless, I'm hoping to be able to repeat this and while I have to put in more money than in a BRRRR deal, I believe that it is an amazing strategy for investors who can't devote the time needed to be successful with the "less money down" strategies.

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Account Closed
Rental Property Investor · Usa · Member since 2020 · 74 posts · 80 votes
6y

Great job! I hope you continue to have success. Also, @Caleb Heimsoth no one knows if a tenant is going to leave or stay. She made a choice and took a chance. It’s real estate investing and she’s connected with what looks to be a decent property manager. Relax brother and encourage her without being judgmental 

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  • Elenis Camargo
    Property Manager · Jacksonville, FL · Member since 2018 · 514 posts · 470 votes
    6y

    Congratulations on your first Jax rental!! It's been great working with you so far. On to many more in the near future :)

    8Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    Thanks, Irina, for sharing your initial numbers and story.  I tend to be a skeptic but will admit to being wrong when I am proven wrong.  What I find missing in all of these debates over turnkey are hard numbers over time - numbers tell the real story.  I hope you are open to sharing your numbers on BP after you have held the property for 12 months, 24 months, etc.  

    4Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    6y

    Hmmm....  Those numbers look suspiciously good!  haha. 

    @Elenis Camargo I'm sending a pm.

    @Irina C. Congrats.  Looks awesome.

    2Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    6y

    @Irina Seals your numbers leave out a lot of expenses. How is that cash flow calculated? As a high earning individual, you can likely earn more money in less risky ways than long distance rentals in bad areas

    0Reply
  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    6y

    @Irina C.

    Jacksonville is a great market to be in. I picked up 2 houses in the past month. 

    It looks like you have a good investment on your hands. congrats!

    [email protected]917-280-8544
    Basit Siddiqi CPA4.979 Reviews
    View Page
    1Reply
  • Anthony Jasmine
    Member since 2020 · 33 posts · 24 votes
    6y

    @Irina Seals

    That’s awesome. What turnkey provider did you use?

    0Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Anthony Jasmine I would not recommend using a provider but to look by yourself on the MLS. I looked into different providers and my numbers never worked. I basically found this place on the MLS, figured out at what price my numbers work and had my agent negotiate with the sellers agent.

    5Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Darius Ogloza thanks, yes I'm happy to do that. I'm tracking all cost over time and will be sharing it here. Feel free to remind me as well

    2Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Caleb Heimsoth thanks for your feedback. The cash flow is calculated regularly with the rent minus monthly expenses and minus P&I. In my monthly expenses included are 5% vacancy, taxes, insurance, 8% property management cost and 8% R&M, P&I is as mentioned $322

    5Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @David Abbate not sure what you are trying to say

    0Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Basit Siddiqi thank you

    0Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    6y

    @Irina Seals that won’t be enough when your tenant leaves and costs you 5k. C neighborhood investing long distance is a bad idea.

    Neighborhood grades are almost always inflated for long distance investors.

    1Reply
  • Account Closed
    Rental Property Investor · Usa · Member since 2020 · 74 posts · 80 votes
    6y

    Great job! I hope you continue to have success. Also, @Caleb Heimsoth no one knows if a tenant is going to leave or stay. She made a choice and took a chance. It’s real estate investing and she’s connected with what looks to be a decent property manager. Relax brother and encourage her without being judgmental 

    27Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Caleb Heimsoth sorry to hear that you had a bad experience investing long distance and thanks for sharing your thoughts.

    1Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Derrick Walston thank you!!

    0Reply
  • Tyler Weaver
    Investor · Cincinnati, OH · Member since 2008 · 319 posts · 243 votes
    6y

    The $550 cashflow is prior to any capex, vacancy, and repair reserves? 

    Jacksonville seems like a pretty good cashflow market from what I have seen from other investors.

    1Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    6y

    @Irina C.

    It's great to hear that you got this on MLS. I assumed that you got it from a turnkey provider which is probably what made me more suspicious (just that they'd leave so much meat on the bone for you. Having said that, I don't have a lot of experience with turnkey providers, but the deals I've seen from them aren't that lucrative). I definitely believe the story (and love the numbers!), but am nervous to branch out into other areas without my trusted "network".

    I will ask how you went about negotiating though.  I'm not afraid to negotiate, but the price drop from asking seems savage!  I'll definitely be holding my wallet if I'm ever negotiating a sale with you or @Elenis Camargo.  Seriously though, I'd love to hear that part of the story if you're willing to share it.

    Thanks

    2Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Chris John i look at my numbers and I have specific KPIs a property needs to meet e.g. At least 15% ROI and at least $400 cash flow per door. Then I reserse engineer my numbers and come up with a purchase price that works for me. Usually the numbers that work for me are way below asking. If I like the property I do a very thorough due diligence even before bidding and understand what the soft spots are where I can negotiate. This property was a flip, flippers often don't have a lot of time on hand to get a property sold that is my advantage. So I look for properties that are flips and where the seller is very motivated to sell asap as holding means losing opportunities and money. Additionally, many flipped houses are remodeled without always pulling permits which is another soft point for me to push the price. Here for example I realized that it used to be a 3BR and they made it a 4BR without a permit and there were other things similar to it. So I went in pretty aggressive with all the details and we settled at 88k. I had pretty similar results with the other properties that I got under contract and have most of the time succeeded with my strategy. It could also be that at this time sellers are even more motivated as no one knows how the market will behave and then agree to a lower price than originally desired.

    8Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Tyler Weaver it includes everything other than capex. As I'm holding this property long term I'm planning on refinancing all my properties at some point in the future and use that capital for all capex needs per property. My calculations are about $200 capex per month per property as it is a long term investment. Even if I would put that into my numbers now I would still have a very good return and cash flow. For this property the ARV is $110k I paid only $88k. So this equity will help me pay the capex without any issues. Given that I'm attempting to replace some of my W2 income with this strategy I decided to keep this long term view. Doesn't mean it is wrong or right just my plan.

    6Reply
  • Nathaniel Booth
    Real Estate Agent · Fayetteville, NC · Member since 2020 · 7 posts · 6 votes
    6y

    @Irina Seals thanks for sharing your turnkey success story! Great numbers!

    I agree it is very hard to find positive experiences of turn keys on here so thanks for stepping up with yours.

    2Reply
  • Chris John
    Member since 2020 · 671 posts · 937 votes
    6y

    @Irina C.

    Awesome.  Makes a LOT of sense and I appreciate you sharing.

    2Reply
  • Caroline C.
    Investor · Jacksonville Beach, FL | NYC | Tamarindo Costa Rica · Member since 2014 · 182 posts · 130 votes
    6y

    @Irina C. Congrats, and given you could negotiate the sales price down, the raw cash flow numbers look great! And a great experience having to dealing with the issues, especially a break-in. Did you come to Jax to look at properties firsthand with your realtor?

    Given the rent to purchase price, just wondering if it is a duplex? If so, and given you already had a break-in, you might be on the lower end of the rental scale, so you'll definitely need to reserve funds, separate from capex, for eventual turnover costs (most all of my lower end places have had higher than expected turnover costs when the tenant left), and there is also potential for tenants that stop paying rent. 

    What I thought was my best cash flow deal ended up with a huge turnover cost when the 2nd tenant left, and then with the couple of months of no rent, and tenant finders fee to the pm, it wiped away a lot of the previous 3 years cash flow - deferred maintenance had became a problem and also there was a major flooring issue. So now the overall deal doesn't look so great. But we have better property management in place now, so hopefully that particular place is turned around for me and doesn't get out of control again...

    Good luck with it!

    5Reply
  • Jonathan Paul Shortt
    Rental Property Investor · Dallas, TX · Member since 2017 · 64 posts · 73 votes
    6y

    @Irina Seals congratulations!!! Strong numbers, and as you have pointed out, your money was made on the buy.

    The only thing that might be confusing for some is I would not describe this as a turnkey purchase. You hustled on your own to find and negotiate a property that works for you. You did not use a firm that finds the property for you, rehabs the property and then manages the property, which I think most consider turnkey.

    Again congratulations!

    Jonathan

    5Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Caroline C. Thanks for your message. What you are describing is something that can happen with any property in any area and that's the risk we have when being in this business. My property is not a duplex it is a SFH and it will be a Sec8 tenant moving in. I'm focusing on Sec8 right now as it decreases the problem of someone moving out too quickly and not paying rent not saying it can't bring issues. Again not paying rent and high turnover can also very much happen in an area with higher income. The tenant moving in is a mom with 4 kids on Sec8. She has been on the program for a while with good behavior and the likelihood that she will stay a longer time and take care of the property is higher but obviously not given. The property is not in a warzone nor is it in a high crime area in fact during the whole time I was closing it nothing ever happened. It was a neighbor's kid who saw the for rent sign and had some fun with it, we warned him and moved on. There was no damage in the property other than getting a new lock. Again this same situation happened to my agent with a lot of damage caused in a much nicer area. So all of this is a risk we are always taking. I'm definitely staying away from warzones or high crime areas but that is not always bullet proof. I have never been in FL and am buying all of my properties through my strong team I have built in Jax. In one of my other posts I describe what I'm planning on doing to count for capex expenses.

    2Reply
  • Irina C.
    OP
    Investor · Member since 2019 · 30 posts · 72 votes
    6y

    @Jonathan Paul Shortt thanks for sharing this perspective you are right it can be confusing I didn't think that turnkey means you have someone also do the buying and placing the tenant my turnkey is directed towards buying a property where no or very minimal repair is needed. Hence I decided it in comparison with the BRRRR strategy which I originally intended to focus on

    0Reply
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