The Perfect Turn Key Company

Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes

Hello BP member,

I hope your well.

After contributing to the forum over the last 8 months with my own comments and feedback I thought I would compose a post and get you guys give me some comments and feedback lol

I would very much appreciate responses from all investors that have bought turn key , looking at buying turn key and also from the actual turn key operators themselves.

In your experience what are some components that "The Perfect Turn Key Company" would or should have???

For example: prompt at communicating, above average returns, great locations, in house property management, etc....

Thanks for reading my post and your time is much appreciated.

Have a great day.

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Curt DavisBusiness Member

Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes

12y

My word of advice for investors who buy out of state: If you are listening to podcasts/radio shows or on some semi well known wanna be guru's email list and you see they sell homes all over the country, learn what you can and then go seek out the actual companies in that specific market.

If you do this you might get a discount or better pricing. If you dont do this and the guru people with a site slinging deals all over help you out, it is 100% they are making a killing of the turnkey provider.

You will get better service if you find a solid company in a market and do repeat business with them giving them your loyalty. It works both ways.

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Brie SchmidtBusiness Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
12y
Sure! If I am dealing with a turn key company I expect the numbers you tell me to be the same on the rent roll, income and expense reports, leases, ect. I also expect timely communication. If I am requesting a rent roll or lease I think 24 hours is a reasonable time to produce it.

We are buying a portfolio and they include 6 months on repairs, PM, and will pay rent if a tenant doesn't. Being out of state on this one that does help give us time to really get into the flow of it.
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
12y
This is a great post. I'm looking forward to seeing the responses also.
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Engelo RumoraBusiness Member
OP
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Originally posted by @Brie Schmidt:
Sure! If I am dealing with a turn key company I expect the numbers you tell me to be the same on the rent roll, income and expense reports, leases, ect. I also expect timely communication. If I am requesting a rent roll or lease I think 24 hours is a reasonable time to produce it.

We are buying a portfolio and they include 6 months on repairs, PM, and will pay rent if a tenant doesn't. Being out of state on this one that does help give us time to really get into the flow of it.

Thanks Brianna,

Sounds great. I believe the mentioned is very reasonable.

Do you think maintenance and rental guarantee's are a good idea?

I know many investors start doubting things and think the turn key operator is making so much $$$ and that's the only reason why they can provide the guarantees.

Thanks
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Engelo RumoraBusiness Member
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Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Originally posted by @Mike D'Arrigo:
This is a great post. I'm looking forward to seeing the responses also.

Thanks Mike,

I thought it would be a good topic just to get everyone's perceptions.

Have a great day.
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Paul Wurster
Investor · San Antonio, TX · Member since 2014 · 129 posts · 79 votes
12y
You can make the guarantees for only the first year. I originally thought my first turn key was too good to be true.

Add to the list: should be able to bring all necessary parties to the client. (ie. insurance, mortgage, property manager, and potentially legal.)
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Engelo RumoraBusiness Member
OP
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
@Paul Wurster

Thanks Paul,

I could ask you the same question as Brianna.

Wouldn't you be worried if they offer a 1 year guarantee?

I mean if someone is making a huge profit margin they could offer even more.

I have heard of outfits offering 2 years on maintenance and rent in Detroit lollol

What would be the cut off before you can feel comfortable that the guarantee is genuine without thinking your getting ripped off on purchase price?

Thanks
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Daniel Guillermo
Investor · Long Island, NY · Member since 2010 · 99 posts · 23 votes
12y
I don't think turnkey companies could ever be perfect because there is always items that may be out of their control that could potentially reflect on them. However, I think turnkey companies should sell properties with some equity built in instead of trying to squeeze every last cent out of the deal. They are selling to investors so the investor should feel like they are getting a good deal which also helps with any market shifts. They should also be honest about condition of the property. Their property description should include what is new and what isn't. This gives the investor a better idea of what they are getting into.
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Engelo RumoraBusiness Member
OP
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Originally posted by @Daniel Guillermo:
I don't think turnkey companies could ever be perfect because there is always items that may be out of their control that could potentially reflect on them. However, I think turnkey companies should sell properties with some equity built in instead of trying to squeeze every last cent out of the deal. They are selling to investors so the investor should feel like they are getting a good deal which also helps with any market shifts. They should also be honest about condition of the property. Their property description should include what is new and what isn't. This gives the investor a better idea of what they are getting into.

Thanks Daniel,

So offer the properties at a rate that even if an independent appraisal is conducted it would come in at below the turn key providers asking price.

Awesome.

Thanks
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Brie SchmidtBusiness Member
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Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
12y
After this deal closes in early May we would have purchased $880k in property from rehabbers/turn key providers. I know they are making money off me. In fact, we might become investors with the last one. I know he bought it for $85k put $50k in and sold it to me for $229k

The way I see it, that money is well spent. I don't have to find tenants, I don't have to do or pay for major repairs for a long time, I just get to collect checks.

My personal situation is that I work a very demanding but very high income job. My husband and I both travel and we stay in corporate america (soul sucking world that it is) because getting loans and credit with our work history/income is so easy. That then allows us to buy and buy until the day where our cash flow is enough to replace our income.

I don't doubt the people with guarantees (this is the fist time we are getting one) so long as the appraisals come in on point and the cash flow meets our requirements.
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Paul Wurster
Investor · San Antonio, TX · Member since 2014 · 129 posts · 79 votes
12y
It doesn't cause me to worry, but it did make us think that it was an over promise. We tip toed into it.

The company that I went with was in Memphis and I heard them advertise and get interviewed on a national real estate radio show. The numbers were not so huge as to be unbelievable, and they have delivered on everything so far. I would say that all of the ancillary management fees were the only thing I didn't plan on. (to be fair, they are not crazy expensive or out of the ordinary) Their customer service is great, and I can get a response from any part of their organization within the day.

However, it was much easier to pull the trigger when I talked to a friend who happened to own 9 houses with them. Word of mouth, reputation, and recommendations are always the most important thing.
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Engelo RumoraBusiness Member
OP
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Thanks @Brie Schmidt

Your are one of very few investors with that mindset.

Before I moved to the US I bought many turn key properties knowing the sellers margins but I was still happy to proceed.

Even if your paying a "margin" but can still buy at a discount to market value with a good after service it is a winner IMO

Even now a days we know the margins of every wholesaler before I purchase from them but it doesn't bother me as long as the numbers work for what we want to do with that particular property.

Thanks for your posts.
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Engelo RumoraBusiness Member
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Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Originally posted by @Paul Wurster:
It doesn't cause me to worry, but it did make us think that it was an over promise. We tip toed into it.

The company that I went with was in Memphis and I heard them advertise and get interviewed on a national real estate radio show. The numbers were not so huge as to be unbelievable, and they have delivered on everything so far. I would say that all of the ancillary management fees were the only thing I didn't plan on. (to be fair, they are not crazy expensive or out of the ordinary) Their customer service is great, and I can get a response from any part of their organization within the day.

However, it was much easier to pull the trigger when I talked to a friend who happened to own 9 houses with them. Word of mouth, reputation, and recommendations are always the most important thing.

Thanks Paul,

Love your ending paragraph.

Some good stuff in there :)
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Paul Wurster
Investor · San Antonio, TX · Member since 2014 · 129 posts · 79 votes
12y
Originally posted by @Brie Schmidt:

The way I see it, that money is well spent. I don't have to find tenants, I don't have to do or pay for major repairs for a long time, I just get to collect checks.

That then allows us to buy and buy until the day where our cash flow is enough to replace our income.

I agree with Brianna. If you worry about what other people are making, you die bitter and poor. If it is good for you, go for it.
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Brie SchmidtBusiness Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
12y
@Engelo Rumora - That 85k property with $50k rehab was sold to me for $230k - so he made $95k on it. It was just appraised for $380k. I knew an area redevelopment plan was pending when I bought it and when it was approved our value jumped. So he won and I won.

The one with the guarantee is out of state. I don't care what he up charges me because those rents are about double what I get in my market.
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David Hutson
Rental Property Investor · Tampa, FL · Member since 2013 · 404 posts · 421 votes
12y
I have recently purchased a turn key home for the first time. I flew out to Memphis, visited several different providers over a week and decided to purchase one. (I didn't find many that I liked and had good numbers.) The process and experience have been good with the company but you shouldn't have expectations of getting a great deal pricewise, but you should get a good experience.

I think that if you are purchasing outside of your area or are new this could be a good way to go. Expect to pay full price or receive an overall lower return though.

Since that trip I have purchased one more home and expect to purchase another in the next month, both in Memphis, without a turnkey company. I have found that visiting the area and building a team yourself can easily save you 10-20k or more if you are patient and don't just choose anyone to be on your team. I know enough to get quality people with good referrals/references and that have reasonable fees.
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Engelo RumoraBusiness Member
OP
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Originally posted by @Brie Schmidt:
@Engelo Rumora - That 85k property with $50k rehab was sold to me for $230k - so he made $95k on it. It was just appraised for $380k. I knew an area redevelopment plan was pending when I bought it and when it was approved our value jumped. So he won and I won.

The one with the guarantee is out of state. I don't care what he up charges me because those rents are about double what I get in my market.

Win/Win for everyone is how it should be.

Well done ;)
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Engelo RumoraBusiness Member
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Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Originally posted by @David Hutson:
I have recently purchased a turn key home for the first time. I flew out to Memphis, visited several different providers over a week and decided to purchase one. (I didn't find many that I liked and had good numbers.) The process and experience have been good with the company but you shouldn't have expectations of getting a great deal pricewise, but you should get a good experience.

I think that if you are purchasing outside of your area or are new this could be a good way to go. Expect to pay full price or receive an overall lower return though.

Since that trip I have purchased one more home and expect to purchase another in the next month, both in Memphis, without a turnkey company. I have found that visiting the area and building a team yourself can easily save you 10-20k or more if you are patient and don't just choose anyone to be on your team. I know enough to get quality people with good referrals/references and that have reasonable fees.

Thanks David,

Your approach sounds great.

Buying 1 or 2 from turn key providers and that gets your foot in the door in that particular market where you can then start to buy and fix yourself.

Well done.

Thanks
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
12y
David, understand that most turnkey companies have to pay huge affiliate fees to the companies that refer them the business. If you were referred to a turnkey company then they had to pay out big when they maybe could have given you a better deal normally. You do save a little doing this on your own but eventually everyone who thinks this way comes back to the turnkey providers in the end, mostly for help with their investments where they thought they were saving.
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Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
12y
@Brianna S. I am in a similar situation to you. I am working in a very demanding career, and don't necessarily have the time to rehab, find tenants, and manage, but still wanted to get into real estate.

There aren't really any turn key companies in the area I am looking, and I am pretty focused on multifamily, so what I am doing is looking for properties that are recently rehabbed/remodeled, fully occupied, and have good cash flow. I then just hire a property manager to take care of the other things.
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Engelo RumoraBusiness Member
OP
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
Originally posted by @Anthony Gayden:
@Brianna S. I am in a similar situation to you. I am working in a very demanding career, and don't necessarily have the time to rehab, find tenants, and manage, but still wanted to get into real estate.

There aren't really any turn key companies in the area I am looking, and I am pretty focused on multifamily, so what I am doing is looking for properties that are recently rehabbed/remodeled, fully occupied, and have good cash flow. I then just hire a property manager to take care of the other things.

Hey Tony,

Property management is vital when investing out of state or nation.

Make sure they are good at communicating as Brianna has on as a trait on the things she would look for.

Responses should be received within 24hrs.

If they are too busy to reply.

Well that's awesome. Its means they have enough cashflow coming in they can employ another person to take care of all calls lollol

No excuses.

Thanks
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Brie SchmidtBusiness Member
Moderator
Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
12y
Exactly @Anthony Gayden

As @Engelo Rumora said, communication is key. Especially with out of state.
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Kiran R.
San Jose, CA · Member since 2014 · 43 posts · 15 votes
12y
@Engelo Rumora , this is exactly the post I was looking for !!

I am yet to make my first investment, have been talking to a couple of TurnKey Providers, one of them a well known name, and the other a relatively small player.

After talking to them both I feel confident enough to pull the trigger, but as @Paul Wurster said it would be easier if I know some one who used their services.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@Brie Schmidt

@Curt Davis

@Mike D'Arrigo

Aaron Mazzillo

I think what we all have to realize is there is some in the bizz that get the deals hot off the press... Unless that is your vocation you will never get those deals.. Then as the properties move up the chain you have another level of investment and that creates a return on investment for this layer of the onion. then you keep moving out layers of the onion to the ultimate retail buyer whether it be local off shore or CA based. and they pay top dollar I think we all know that's the case... But its all done for them..

So playing devils advocate.. How is someone from out of area going to compete against local investors. Answer they are not... So then you move to rehab ( how can you rehab a house from a afar) well not very well in most cases but in some you can and if you can you count yourself lucky but you don't know your lucky because you don't know what you don't know)

I think what investors could do for SURE is cut out the marketing company and go direct.. Why buy from some person who is just hawking properties. seek out locations you want to invest in and then find the turn key guys in that market. If your buying from some national marketing company that does not own the property and is just taking a fee off the top then your paying one more layer than you need to pay..

Each market if you search hard enough will have locals that will give you TK deals. after all they are going to watch after them after you buy them the national marketers only make a commish and have no interest in the company or on going success of the property.
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Benjamin Hauser
Northfield, MN · Member since 2014 · 14 posts · 5 votes
12y
As a newbie and out of state REI, this post has been very informative and helpful. My business partner and I have been narrowing our focus and strategy towards turn key properties.

Thank you all!
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
12y
My word of advice for investors who buy out of state: If you are listening to podcasts/radio shows or on some semi well known wanna be guru's email list and you see they sell homes all over the country, learn what you can and then go seek out the actual companies in that specific market.

If you do this you might get a discount or better pricing. If you dont do this and the guru people with a site slinging deals all over help you out, it is 100% they are making a killing of the turnkey provider.

You will get better service if you find a solid company in a market and do repeat business with them giving them your loyalty. It works both ways.
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