Turnkey Best Practices

2 Replies

Hi BP,

For those of you that have experience with turnkey investments (good or bad), what are come best practices when finding a provider that you know you could or can trust?

More specifically:

What are the types of questions that you asked that yielded valuable information while building trust within the relationship?

What is something you could have done differently in hindsight after completing a purchase?

Do you recommend meeting a POC of theirs physically before engaging in business?

Anything else would be beneficial as well. I just want a solid grasp on small ways to mitigate the risk of investing remotely.

Thanks in advance!

@John Singer

Me and my wife bought 4 turnkeys in the last year and been happy with the process and their performance.

Best sources of information as far as researching providers are, in my opinion, other investors who used their services or your own interview with them (in-person is better, but over the phone could work too). I wouldn't trust much anything else, like reviews or their sales copy on the website.

Here are some questions that will help you move in the right direction:

  • How long have you been in business? I would avoid all new companies (maybe less than 2-3 years of experience).
  • Can you provide 2-3 referrals to investors who bought turnkey properties from you in the past? This is so you can reach out to those investors directly and talk to them.
  • Why should I pick you instead of other turnkey companies in the area? Help start the conversation about their process and what they do better than others.
  • Which specific areas do you operate in? How do you select which neighborhoods to operate in?
  • What does a typical rehab scope of work include?
  • What are some of the things you do not repair/replace when rehabbing properties? This one is an important one because some companies will not touch plumbing or electrical, or whatever. Ideally they would rehab everything, or at least do a full inspection to make sure it's in working order.
  • Can you provide a detailed scope of work for each turnkey property you are selling? Can you provide purchase receipts and/or warranties on all new appliances you purchase? Red flag if they say no to either.
  • Can you provide a full set of before and after pictures and/or videos for each property? Again, this should be no problem.
  • Can you provide comps/appraisals for property price and rent?
  • Do you offer a full maintenance/repair warranty on the properties you sell? If yes, how long is it good for? Not a deal breaker, but nice if they offer this, especially on older homes.
  • Will you be willing to correct all of the discrepancies found by a third-party home inspector? This should always be a YES.
  • Do you lease your properties before selling them? Who manages the leasing process? How are the tenants screened?
  • Do you offer in-house property management? If no, can you provide a list of local property managers you recommend? I personally like when they offer in-house property managers, other investors do not. In either case, you don't have to use their services, you can find your own if you'd like.

I'll leave you with my biggest piece of advice - always run your own numbers when evaluating properties. Find a good calculator, get familiar with it, understand how the numbers work, etc. Most all pro forma you'll see advertised on their websites is inflated, misleading or both. So doing your own cash flow analysis is essential to know what you'll be getting.

Feel free to PM if you have any other specific questions.

I think Anton gave a great answer and I ditto it. He gives great questions to ask, and then for me looking back on all of my turnkey purchases and the lessons learned....hmmm....I'd say I was a bit quick to trust everything. Nothing horrible bit me from it, but I did get stuck with one property that fell into the famous story of the tenants in there were paying higher rents than would be later attainable (not such a famous story with turnkey providers today, but definitely was back in the day) so I should have double-checked on all the numbers that were pitched to me. Another property I bought ended up being in a hard-to-rent area. It's the nicest turnkey I bought, but it ended up being too nice. There aren't many renters in that area. So vacancy periods have gone for a while. Then the main thing has just been with the property management. I wouldn't just assume you are going to love the PM that comes with the property, I would interview a few, just like you would if you were buying non-turnkey, and choose which one sounds the best. You can use any PM you want, you don't have to use theirs. 

I've written a few articles with random learnings from my turnkeys, if they are of any help (including one about the turnkey that was too nice)-




With all of that said, I still only buy turnkeys. I love them. I've definitely learned to tweak how I do due diligence on them over the years, and questions to ask, but they still are the best fit for what I want, which is to put in next to zero time on my properties and just collect the checks :)

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