Turnkey Success Story

Rental Property Investor · Dallas, TX · Member since 2017 · 64 posts · 73 votes

6y

@Irina Seals what you found is a stabilized rental, basically a BRRRR without the rehab, that cash flows. Arguably even harder to do with built in equity. Well done!

2 Reply

Irina C.

OP

Investor · Member since 2019 · 30 posts · 72 votes

6y

@Jonathan Paul Shortt I like that perspective! So I'm one R short. 😊

0 Reply

Tyler Weaver

Investor · Cincinnati, OH · Member since 2008 · 319 posts · 243 votes

6y

@Irina Seals kind of makes sense. One thing to watch for is that you will likely have to wait until after the capex to refinance. If you have a property that needs new HVAC, roof, and kitchen is out of date it will probably suffer on the appraisal process.

The reason I asked was just for consistency. If someone were to look at your numbers and compare to a deal they are considering when they had reserves in their underwriting they will be left wondering why they can never find a deal.

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Syed H.

Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes

6y

No offense, but this isn't a "successful" deal story. This is just a "deal story". You aren't experienced enough to know if it is. You will know if it's successful 12, 24, 36 months later.

You are just starting out. Just know that there is plenty you don't know and projections are just that: projections. Wait until u get hit with a water heater for $1k, bed bugs for $500, random water leak in the ceiling for $500, or god forbid a roof for $10k. You should def calculate a Capex $$ that is market and property specific. Percentages on low rent markets is never accurate.

It is always a newer person who thinks "hey I'm cash flowing $XXX", until they get some time under their belt and it is half of that. I see it in my own markets everyday. I've seen people bid 15-20% more than me and than say they analyzed the deal to cash flow $XXX, when that is impossible at the price they paid. Everything looks good in an excel sheet.

Good luck, just remember you have a lot of learn, and there's nothing wrong with your projections being wrong. Unfortunately, you won't know what things costs you until it actually costs you $. You pay a different price to maintain a property than me. You pay a different price to manage your property than me. You manage your property differently than me. (not saying your better or worse, just that everyone is different). Projections/Assumptions become more accurate and tailored to your own experience. You just have to adjust and adapt.

4 Reply

Syed H.

Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes

6y

I won't say OP isn't cash flowing what she said she is, I don't know her market, but I will say it is rare for anyone to cash flow $500/month with a proper analysis. Usually those are people who are very hopeful in their "projections".

My best deal of the year, I cash flow $386/month after a 100% cashout. I would be around $500/month if I had 20% in the deal. BUT, this was not an MLS, not through any wholesalers, not turnkey, required me to do a full Reno, direct to seller and was rare as hell. I stole the building basically for way under market. This is not the norm.

Most "good" deals cash flow between $175-$225/unit with 20% down.

1 Reply

Michael Barnhart

Rental Property Investor · Cambridge, UK · Member since 2020 · 203 posts · 95 votes

6y

@Irina Seals this is great, congrats! Did you have any other cosmetic repairs?

1 Reply

Greg O'BrienBusiness Member

Accountant · Boston, MA · Member since 2019 · 386 posts · 336 votes

6y

@Caleb Heimsoth that’s your opinion but I disagree. $5k really? Not in my experiences. I’d look to the positives here and what a great deal this is!

2 Reply

John MorganPro Member

Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes

6y

@Irina Seals

Well done..congrats! Thanks for sharing your story. I love hearing success stories like yours. And wow, lots of negative people piling on you about this for not being a great deal. Sounds like you have a great out of state agent which helps. And I love how you used leverage with the lack of permit on that extra room. And knowing this flipper needed to sell soon to save a lot of money with their loan holding costs etc. Even if something big breaks, you crushed it. You’ve got pretty much a new house that probably won’t need much in repair for years to come. And a sec 8 tenant that will pay on time and could be a lifer. My favorite tenants!

I bought two flipped SFRs three years ago off the MLS like you and they've worked out GREAT as a turnkeys for me. The first one cost 100k and I have a sec 8 tenant who takes great care of it renting it for $1,150/mo. The other one I paid 126k and have a great family in for $1,300/mo who take great care of them. And both families seem like lifers too. And both of these have given me hardly any maintenance problems since they were just rehabbed. So for all those haters of turnkeys, they do work out for some of us. And our COC does great! They are easy to buy, and easy to rent out with zero headaches. To some of us, that's appealing. And the returns are still great!

I've also BRRRR'd a few properties. Those work too, but a lot of moving parts at first. And you really should live close by to those to help oversee everything so you're not getting ripped off. My turnkeys were the easiest to deal with all in all and for out of state or local investors, I highly recommend them. And enjoy your tenants paying off those mortgages for you while you cash flow good $ each month!

3 Reply

Josiah Cooper

Real Estate Agent · Huntsville, AL · Member since 2015 · 60 posts · 17 votes

6y

@Irina Seals I love those numbers! Congratulations on a job well done!

1 Reply

Shiloh LundahlPro Member

Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes

6y

@Irina C. Good for you getting into the game. It sounds like this may be a really good deal according to the numbers you ran when you bought it. But I agree with what others have said that you won’t really know until you have had the property a few years through a couple of turn overs. But if you bought it in an appreciating location then your tenants can pay off your mortgage and you can get tax benefits while you use the cash flow as a hedge against the costs of running the property, and you can experience the value of your asset increase as time goes on. Also, since there is so much cash flow, you should come out on top.

As for the comments made by @Caleb Heimsoth, it seems like he had a bad experience with some turn key properties himself. He used to be really positive about them in his posts but then turned negative about them. So that is my guess. When I had less experience, I too bought some out of state properties in Indianapolis and I had them for 4 years. A couple of my properties did well while others did not. Over the 4 years that I had them, I think that I had a negative cash flow and I sold them at a loss. My total loss was probably around 20k - 30k over the 4 years. So I can see where Caleb is coming from. However, we have started investing out of state again but this time in North Carolina and we are having a much better time with these properties. But that come from knowledge and experience which I don’t believe Caleb or I had at the time we invested out of state.

What I would suggest is have at least 3 units in an area. That will give you a better perspective than just having 1. Also, we like to self manage our out of state properties through assistants because my assistants are part of my team and they watch over my properties better than I believe a property manager would. A property manager usually doesn’t go to your properties anyway, they have people do that for them. So it is just more efficient for my assistant to do what a property manager does by getting a list of handymen, and others that it takes to run, manage, and take care of a property. Pretty much everything can be done and taken care of over the phone anyway.

This is a less passive and a more active approach but you have more control over the situation, you gain more knowledge, and you put yourself in a better position to scale in my opinion because you develop your own team and you get more familiar with the area.

480-206-1209 Podcast Guest on Show #287

3 Reply

Caroline C.

Investor · Jacksonville Beach, FL | NYC | Tamarindo Costa Rica · Member since 2014 · 182 posts · 130 votes

6y

@Irina C. nice - sounds like an amazing deal. It was just hard to really evaluate when some of the detail is missing. Getting a SFH in Jax that rents for $1300 for only $88k is really amazing.

Congrats!

2 Reply

Darius Ogloza

Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes

6y

HUD website reports that Fair Market rent for Jacksonville is $1,248 for 3 bedrooms. Under their formula (if I understand it correctly) max rent payment should be about $1,372 (110%).

0 Reply

Chris John

Member since 2020 · 671 posts · 937 votes

6y

I'm fairly new to biggerpockets, but is it normal to see so much resistance to a good deal? I don't get it...

I'd buy that deal 10/10 times. In the event that it didn't work out, I'd chalk it up to bad luck and buy it again.

3 Reply

Pablo Ponce

Rental Property Investor · Miami, FL · Member since 2019 · 3 posts · 0 votes

6y

@Irina Seals congratulations on this property and thank you for sharing the numbers and details with the BP community. While as one member mentioned it may be early to gauge the level of success of this property, in reading all your responses to questions in which you include the analysis you performed and rational dos the numbers you came up with, I have no doubt in my mind that this will be a true succeeds. In one of your responses you mentioned that the flipper has done the work, including the addition of an extra bedroom without the necessary permits. I was wondering how you, as the new owner would go about this new bedroom in terms of getting it documented/recorded. Would this have an Impact given that you intend to use it for section-8 for which I would assume some sort of due diligence by the government is completed? Once again congratulations on this property!

@Elenis Camargo after reading what Irina (and others) had to say about you believe me I will be getting in touch with you.

0 Reply

Kevin Marte

Member since 2020 · 1 post · 1 vote

6y

Congrats!

1 Reply

Greg TodrankPro Member

Rental Property Investor · Bloomfield Hills, MI · Member since 2020 · 88 posts · 35 votes

6y

@Caleb HeimsothJust to clarify. She said she has a C-level job. I didn't see that she was investing in a C-level property anywhere.

@Irina C. -- Good luck!

1 Reply

Felipe Stefanoni

Investor · MD FL WV · Member since 2020 · 38 posts · 21 votes

6y

@Irina C. Congratz in this deal.

as @Darius Ogloza said "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"

I would love to hear more from you later on!

1 Reply

Basit SiddiqiBusiness Member

Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes

6y

Originally posted by @Jonathan Paul Shortt:

@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

I don't think there is anything wrong with calling this a turn-key property.
People all over BP have different definitions of turnkey.

1/2 the people describe turn-key just as what you described - A company that manages the purchase, renovations and managing of the property.
1/2 the people describe turn-key as a property that you can rent out to a tenant as easy as turning a key.
She appears to have purchased a property that did not need any work and is able to rent it out.

I call that turnkey.

Even on the BP podcast when someone mentions turnkey - they ask the guest what they mean by it.

[email protected]917-280-8544

Basit Siddiqi CPA4.979 Reviews

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1 Reply

Tony Kim

Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes

6y

Originally posted by @Irina C.:

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.

Congratulations on finding and closing on such a great deal!! And I'm a bit dismayed at some of the responses here. Based on your background, I'm sure these types of comments just bounce right off you though.

I think you've really touched on something here.....and this has been my experience as well. In order to find a really good deal that makes sense like the one you just closed on, it's much better to find it yourself with the help of a local agent that you can trust. You will not get anything close to these types of numbers with an entity that's in the business of providing 'turnkey' properties.

Congrats again and happy hunting for additional properties!

2 Reply

Irina C.

OP

Investor · Member since 2019 · 30 posts · 72 votes

6y

@Tyler Weaver the property is completely undated with a new roof, windows, water heater, floors, AC, plumbing, electric etc. Hence I didn't count a huge CAPEX for it and believe that I can refi it easily in a couple of years to keep that for reserves. In a deal that I'm currently working on where I know that in a couple of years I might need to get a new roof, a new AC etc. I'm calculating my CAPEX in there but that is also reflected in the purchase price which is going to me much lower.

@Darius Ogloza yeah the voucher from the lady that is moving is was for $1335 but as we marketed it for $1300 we kept the price for her the same to be fair and not take advantage of the tenant.

@Pablo Ponce thank you! I discussed this issue with my agent and she mentioned that there is nothing for me to do here as it wasn't me who put the extra BR in the property and even if the state would have marked this as an issue I have it documented that the previous owner did the addition and not me. As far as I know, what can happen is that my taxes might go up because of the extra BR.

Thanks @Kevin Marte and @Greg Todrank. @Felipe Stefanoni I will make sure to share my numbers after 12 months for sure as I'm curious to see what happens and I'm sharing this as a success case but will be open with the community if it turns out to be a failure. We are all here to learn and grow.

@Tony Kim Thank you. I think even the negative reviews are very valuable to me as I can learn from them to see what other people have experienced and what I should be mindful of. Yeah, I agree with you that you have to put in your own hustle in order to see results. It is actually kind of shocking to me HOW MUCH work it has been even though I have invested in a "turnkey". I'm happy I started out this way because I'm sure I would have given up if I would have started with a BRRRR that holds even more work and uncertainty. I'm definitely on the hunt for more properties and realized how passionate I am about this topic ;)

@Shiloh Lundahl Thank you!! After lots of back and forth, I decided to not use the LO for this property even though I really enjoyed your article and have done extensive research. I actually even got applicants who wanted to do that which shows me that it is absolutely possible and I shouldn't have listened to all the "naysayers". I will for sure try it out with some of my next properties. I really like the idea of managing it yourself as well and might consider it once I reduce the time spent with my W2 job which should happen in the next 4-5 years. Until then I will be happy to stabilize the properties and make sure I continue building a strong team in Jax.

0 Reply

Dan SlaughterPro Member

Developer · GA · Member since 2019 · 74 posts · 42 votes

6y

Thanks for sharing your success story. I'm looking at a couple of different options as well and my first will likely be turnkey.

0 Reply

Pretty Khare

Investor · Austin, TX · Member since 2021 · 83 posts · 80 votes

5y

@Irina Seals This looks like a great deal, specially how it was sourced leveraging the weak points (flipper/permits). Congrats for your success so far! A lot of things to learn from this for beginner investors. Not sure if you still hangout in BP forums, but if you do can you please answer a couple of questions:

1. How did you zero in on Jacksonville market and how long did it take you to build your team there?

2. How do you find houses for Sale by flippers. Is something that went off-market a few months ago and has been recently rehabbed a sign of flipper selling house?

3. Now that you are a year into this deal, how has it worked out for you in terms of numbers? Did you meet or exceed your projections after taking into account the reserves?

4. You mentioned other deals you were working on. Did you close on them? If ye, how have they been performing?

Thanks!

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Turnkey Success Story

Turnkey Success Story

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