Flipper/Rehabber · New York City, NY · Member since 2020 · 18 posts · 10 votes
Hi everyone! I'm looking to begin my real estate investing within the next few months and I've been doing as much self-educating as I can with all my free time. I've read a lot about BRRRR but haven't seen much discussion about purchasing turnkey properties to make rental properties. Are there any big disadvantages to doing this that I'm not aware of? I'd greatly appreciate any input on this.
Rental Property Investor · Washington, DC · Member since 2020 · 16 posts · 29 votes
5y
@Javier Kaufmann My first property is a turnkey single family. It works for me because I have a very busy job and I live in a very expensive market so doing something locally doesn’t work for me right now.
I qualified for 20% down but put down a little less than 30% down - my loan to value is 71% so when I want to buy another property I will refinance & pull out that equity for the next property.
As others mentioned there are pros and cons - turnkey only works for long term buy & hold because you’re purchasing at market value. I’m bringing in $350/mo in cash flow which isn’t a bad start in my opinion.
Hi everyone! I'm looking to begin my real estate investing within the next few months and I've been doing as much self-educating as I can with all my free time. I've read a lot about BRRRR but haven't seen much discussion about purchasing turnkey properties to make rental properties. Are there any big disadvantages to doing this that I'm not aware of? I'd greatly appreciate any input on this.
Thank you all in advance!
Hi, first of all welcome to the club. Wish you lots of good luck.
as you can see all of those comments saying that brrr is the only way, are coming from people not in the New York area. But in fact if you wanna stay within about an hour - meaning you'll purchase in New Jersey, to be realistic there's almost no chance to buy something in a quarter decent area and being able to take out your money. The market is so crazy for the last 2 years that whenever I did the numbers I realized I'm not gaining ANYTHING by buying a fixer upper etc.
bottom line just be realistic and know what type coc return you're looking for and get such deals, and Yes you can find deals where you can earn 10-12+% return! (obviously it would be a gain if you can find something below market price so you'll be able to refinance with some more equity.)
Rental Property Investor · Atlanta, GA · Member since 2015 · 36 posts · 44 votes
5y
@Javier Kaufmann. I think some of the responses here are a bit too black-or-white. Yes, your returns MAY not be as good with turn-key, but your hassle-factor and invested time are also much lower. And keep in mind that ALL re-habs don’t go smoothly. SOME re-habs go over budget. You MIGHT even have a re-hab that becomes an all-out nightmare. We’re re-plumbing an entire house now, unexpectedly. We planned a purely cosmetic re-hab, and whoops. Things do happen.
We’ve bought one turn-key and it was ok - not a huge money maker, but we got a great tenant out of the deal and it will make good money long term. We’ve also sold a turn-key (not really our business but it just made sense) that was delivering 14% cash on cash return.
Bottom line, it really depends on the deal you find and the resources you have on the ground to manage a re-hab. Personally, I’d take less return on a turn-key over managing a re-hab remotely, but that’s just me.