Turnkey income producing multifamily for sale?

Question

Hi there,

Any suggestions on Turnkey income producing multifamily for sale? Or legit business that sell these type of investment properties? I am new to multifamily investing and therefore thought this would be a great way to start.

Joseph Crunkilton · Answer

@Malia Dangtayan

Malia,

Turnkey REI is a great option. Right now I know of a few multifamily turnkeys with great returns. @Zach Lemaster and his team over at Rent to Retirement have some options in good markets. He'd be happy to discuss his inventory with you to see if it would be a good fit.

A little disclosure, I invest with them as well. I just closed on an SFR that is set to be a great investment. If you want to discuss or there's anything I can help with please let me know.

Zach Lemaster · Answer

@Joseph Crunkilton Thanks for the shout out!

@Malia Dangtayan

Happy to answer any questions you have about investing in different cash flow markets throughout the US!

Zach Lemaster · Answer

Account Closed Thank you for the positive feedback.  Our average occupancy time is 4 years for tenants.  With an average turn time of 1 month for vacancy that puts our vacancy below 3% across the board.  Maybe you are in need of better property management if you have not experienced this.

Mike D'Arrigo · Answer

@Malia Dangtayan turn key is simply a means of acquiring an investment property. There is nothing inherently wrong with this method. There are advantages and disadvantages to every strategy and one size doesn't fit all. Turn key can be an excellent way to go for a new investor that doesn't have much time or experience, especially buying out of state. People will tell you that turn key is bad because you over pay and don't have any equity left. If you're working with a good turn key company, you won't pay over market value. It's only when they require cash only purchases that you may be paying over market value and that's because lenders require appraisals. Turn key companies don't make their money by They make their money by buying distressed properties and creating equity through improvement. This is no different than the BRRRR strategy that is very popular here on BP. The only difference is that they turn key company sells the property and takes their profit through the forced equity. It's also not always true that you will have built in equity if you do everything yourself. Turn key companies have big cost advantages that an individual doesn't, especially someone with no experience. Turn key companies buy further upstream at better prices, the get substantial discounts on materials and things like HVAC systems and roofing and they also have better control and leverage with their construction costs. There is no guarantee that you will have equity left by doing it yourself. If you have a buy job and busy life and no experience, turn key can be a great way to get started. Like with anything, there are good turn key companies and bad so you need to vet them well. Here are some of the things that you should avoid when evaluating a 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

Account Closed · Answer

I don't know @Zach Lemaster so I won't speak to his data. But my experience in Indy is that 4 year tenants are few and far between. C class renters (and BTW, all the 800-900 rent places that are 3/1 and around 1000 sq ft are C not B as the website states) lead inherently unstable lives. That is why they rent houses for twice what the mortgage is. They lose jobs, lose partners, get or lose children etc with regularity. They don't stay in one place. There are exceptions of course. I suppose if you rent at 20% below market you may get longer term renters. But even then I doubt it.

Account Closed · Answer

Hey @Malia Dangtayan,

Turnkey MFH are good investments if you do your due diligence. You don't have to do a BRRR for MFH.

It will depend on your team and what your goals are as an investor. From reading your post, you're wanting to be more hands-off, so you'll need to vet a team you can trust to find you deals and manage the property.

Buying turnkey, you'll experience turnkey prices and returns, as they are easier.

Good luck!

Account Closed · Answer

@Malia Dangtayan

Can you share your knowledge why turnkeys are bad idea?

David June · Answer

Turn key can be a good option but you still need to do your own due diligence. Unless I had a good relationship with the seller and had reason to trust them I would do all my own analysis. You will inevitably give up some of the returns with turn key as you are also mitigating risk. The market will ultimately determine if there is enough room for profit.

Malia Dangtayan · Answer

Hi there,

Thank you for all your replies.  I read somewhere in the forum it may be a bad idea because you are loosing $$ not buying and doing a BRRR, however, I live in CA and interested in investing OOS and do work many hours which I have limited time to learn to BRRR OOS.  Because of this, I'm interested in legit multi-family turnkey investing.  Another I would be interested in that I've already read about on BP is there are Wholesalers that also would be able to give you the BRRR cost and ARV along with a team that can do the BRRR as well as suggested a property management company that could manage the property after the BRRR?  Are there anyone out there who does this?

I'm specifically interested in multi-units ( duplex, triplex, fourplex... preferably fourplex as that's the maximum you can have on an SFR lot( correct me if I am wrong).

Tom Ott · Answer

Turnkey can be a great investment if you are looking OOS or if you work a 9-5 job. The idea is that it is meant to be passive and a long term investment.

Turnkey income producing multifamily for sale?

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