Multiple Turnkeys - Diversify or Centralize?

Question

I am looking into buying my first turnkey property. I intend to have multiple properties in the long run. Would it be better to have them all with the same provider? Or would it be smarter to diversify among multiple turnkey providers? I look forward to hearing your views.

Mark

Jay Hinrichs · Answer

from my point of view turn key is basically interchangeable.. since the mantra is there is little to no appreciation and if you get it its icing on the cake.. so its cash flow driven.. how do you get cash flow . you buy the best rentals possible and put them with the best PM you can get. Of course having the home Truly renovated is a must as well IE new roof mechanicals plumbing electrical windows and waste line.. if you have those you have a unit that will not eat you alive.

so if does not matter if you buy then all in one market. and its probably eaiser .. if you need to go there its one trip.. one tax return etc etc.

David Hutson · Answer

I like Ali's response.  I do think it's good not to keep all of your eggs in one basket.  I have a handful of homes here in CA and have purchased 12 in Memphis.  I have several providers that manage my homes for two reasons.  1, to get a comparison from different companies. 2, To ensure I have another provider to switch to if one goes bad.

As for different markets, my opinion is that it's not good to have too many homes in one location, in case Hurricane Matthew stops by or any other disaster.  Not that it will happen but it is a possibility.  I've been looking for other locations to purchase homes in but haven't found anything that really looks great to me yet.

Buying in TN does have a good advantage in regards to taxes.  They don't tax rental income.  If you don't live there you don't have to file state taxes.  That saves you the hassle of filing a return there.  It's a sizable savings in taxes and less of a headache since you don't have to file there.

Good luck, David

Mark Senecal · Answer

Ali - I am leaning toward Memphis.  Memphis Invest in particular.  I have traveled there on business The company I work for (J&J) has a big warehouse there.  Looks like a good solid working class community.

Ali Boone · Answer

It's completely up to you. There's not necessarily a wrong way to do it. I've been working with turnkey buyers for a few years now and everyone is different.

If it were me personally, based on what I've seen and learned about turnkeys over the years, I would first stick to a provider I really like. Great providers are hard to come by and if one is treating you well and your properties are really working, I'd stick with that to start. Then, inevitably, markets will shift. Once that market becomes less desirable (returns lessen, the appreciation wave is over and done with, inventory drops, etc.), start looking into getting in with a different provider in a different market.

That's how I think I would do it to maximize the niceness of a great provider + capitalizing on the best market all the time. Then it's also a nice mix of diversifying but not having a crazy amount of properties in so many different markets with so many different PMs that it gets annoying.

But either way still...there's no wrong way to do it! Or if you're like me too and fall in love with different properties in different markets, well, go with that love :)

What markets are you thinking about?

Mark Senecal · Answer

Keith Anderson - Thanks for your detailed answer.  You made things clearer for me.

@Jay Hinrichs - Your information was very helpful (as usual).

Lane Kawaoka - Good advice.  Thank you.

Mark

Multiple Turnkeys - Diversify or Centralize?

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