Turn key rental properties under 100k
Investor · Fort Lauderdale, FL · Member since 2015 · 2 posts · 32 votes
Turn key rental properties under 100k
Most Popular Reply
Columbus, OH · Member since 2018 · 164 posts · 126 votes
5yI live in Columbus OH, and have invested in in different states like TN , MS, MD, OH etc.. I actually like Tennessee and actually drove there to check out Memphis Turnkey properties, REI nation , Mid south home buyers and met all of them -(in waiting list since 1 and half year for Midsouth) - they all are great companies - I am invested with Memphis turnkey properties at the moment(2 properties). 50-75k range is now little tricky but yes you can get if you are lucky. what I am finding out with turkey's as I learn day to day - if a property is making $250 per door cashflow after (mortgage + escrows) that's $3000 income on that unit. However - when your lease expires or the tenant moves out after 12 months - the cost to get the property rent ready is avg $1 or 1.50$ per sqft (900 sqft unit) or something I provided in example below- so that is around $1000 to $1500 in rent ready expense. so literally I am only making $1500 on a unit in TN.
also I forgot to mention - add in couple of maintenance calls @ $100 each (labor+parts) which will eat up your income further down. so on the paper I made only $1200/year cash flow on one of the units. not trying to discourage but no one gave me this detail picture(dollar to dollar) when I started out. (REI nation, Memphis turnkey they all have fancy spreadsheets with proformas - but on the ground when rubber meets the road is little different)
if I had put in 50k-75k in S&P 500 ETF I would have made 30%+ return :) just kidding - different factors, parameters are in play here and pro's and con's on both sides :-)... but bottom line is Turnkey's are I would say still ok "ish" not great per my learning so far. Investor need to be little aggressive when it comes to demand bang for a buck - I am diversified in Stocks, real estates, 401k - all over - and all I care about is who is making me rich and creating wealth for me :-)
I started my journey couple of years ago to try out and I have learned a lot from BP community , youtube video's ,local meet ups podcasts..
Rent ready example :
$150 - carpet clean
$200 - cleaning
$100 - yard clean up
$400 - paint touch up
$150 - misc repairs - HVAC filters, batteries, door stops, etc.
Happy Investing!!!!!
124 Replies
- Member since 2020 · 7 posts · 18 votes5y
Memphis Investment and Rent to Retire both have inexpensive turn key property options. I am in the investigation stage for both so I can't give you direct experience but good luck!
- Investor · Fort Lauderdale, FL · Member since 2015 · 2 posts · 32 votes5y
Thanks Paul Stansel
- Rental Property Investor · Pleasant View, TN · Member since 2020 · 17 posts · 28 votes5y
I live in Pleasant View TN (small town outside Nashville). Happy to give perspective if you find a property in my state. Many small towns in TN would likely only rent for $500-600/mo if in a rural area.
Clarksville, Chattanooga, Memphis, Knoxville, and Jackson would be possible cities you could get decent rent.
- Rental Property Investor · Little Rock, AR · Member since 2018 · 10 posts · 20 votes5y
@Matthew Smith
I invest in the central Arkansas area. If you are finding turn key properties for under 100k, they are either in rough neighborhood’s, or very rural area’s. In both cases the rents are low, and low class tenants. I Wouldn’t advise investing turn key here if 100k is your top line.
The other area to invest in is North West Arkansas (Fayetteville, Rodgers, and surrounding areas). Finding a turn key for 100k would be rare in any neighborhood In this area.
With that being said if you’re looking to go the brrrr route in central Arkansas theres a large supply.
- Investor · Central Arkansas · Member since 2013 · 10 posts · 22 votes5y
I was going to buy a home with Memphis Invest. They have great ratings and a lot of people have good experience with them. But I dropped in on the rehab of a home they were getting ready in my area, and was surprised that they were not fixing a foundation issue, but rather covering it up better with some new flooring. I'm sure most of their homes are fine, but that scared me away from personally buying anything from them.
- 5yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Originally posted by @Russ Merritt:
I was going to buy a home with Memphis Invest. They have great ratings and a lot of people have good experience with them. But I dropped in on the rehab of a home they were getting ready in my area, and was surprised that they were not fixing a foundation issue, but rather covering it up better with some new flooring. I'm sure most of their homes are fine, but that scared me away from personally buying anything from them.
Good morning Russ. I kindly ask that you review your post for accuracy and wording. I see this is your first post so welcome to BP. I also see in our CRM where we had conversations with you in 2017, but don't show any other conversations since that time. First, there are a couple of companies that have similar names to our brand including one listed earlier, Memphis Investment properties that now operate in Little Rock. Our company began using the brand REI Nation over a year ago and we do not purchase properties in any city under the brand Memphis Invest. So, all properties are owned by REI nation and it would never say Memphis Invest. Whichever property you may have walked, it was not owned by Memphis Invest. I have a bigger issue with the rest of your comment.
As for foundation issues, I am not sure how any other companies operate, but given our fantastic reputation and what our processes are, your comments didn't sit well with me. Here is how I know your comments are incorrect. On every property we purchase, a third party engineer inspects and laser measures the property before we begin our renovation. This process is built into every renovation we do in Little Rock and surrounding areas. The engineer then directs what work needs to be done and licensed foundation companies are hired to perform the repairs. That engineer then re-inspects any work that needed to be done to give an approval and prepares a final engineer report. That report(s) is included in a final scope of work provided to every buyer of a property in Little Rock from our company.
Again, I can't speak to other companies and whose property you were walking, but if it was an REI Nation property, our process includes 3rd party direction on every property as it pertains to foundation work and there were no foundation issues ignored and covered up with new flooring.
- 5yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Originally posted by @Matthew Smith:
Hello All, I have been hearing about rental properties in states like Tennessee, Arkansas, and Michigan that are remodeled and under 100k. I've heard of some being in the 50-75k range. They are being sold by agents/companies that buy them, flip them to an investor, then manage them. Does anyone on here know of any of these groups that are doing this? Thank you in advance
Matthew,
The process you are describing is called Turnkey real estate. The topic is widely covered here on BP and you can find a lot of commentary on both the processes and best practices. Here is where I want to encourage caution and patience. If you are buying a property , fully Turnkey and paying $50-$75k, you are asking for a troublesome experience and most likely missed expectations unless you have really, really low expectations. Most investors don't. Most investors have high expectations and don't lower due to price points.
At the pricing you listed here of 50-75k, there simply is not enough spread for everything involved in a quality process. The biggest consideration is the cost of renovation, the holding costs for the company selling the property and finally a profit spread for the company selling the property. In order to sell a property at those low prices, you are looking at buying a property that someone else would have purchased from 10k-20k. In any scenario, would you consider a purchase at that price point from out of state? You have to ask why local investors are not purchasing and holding properties at that price point. Those prices make no sense for an out-of-state investor and in my two decades of experience in this niche, very few pan out to the expectations of the investor. Many, many more turn into the horror stories we read about here on BP.
A frustrating thing for me here on BP is that this price point is not really indicative of the many companies out there offering Turnkey properties that do a really quality job. My advice would be to learn a bit about how to invest passively out of state. A turnkey property may be a really good option for you, but at the price points you listed, do not expect quality, service or have high expectations of the investment. All of that advice is given from my experience in the industry and I my experiences in those price points has been very poor. Best of luck to you as you get going!
- Columbus, OH · Member since 2018 · 164 posts · 126 votes5y
I live in Columbus OH, and have invested in in different states like TN , MS, MD, OH etc.. I actually like Tennessee and actually drove there to check out Memphis Turnkey properties, REI nation , Mid south home buyers and met all of them -(in waiting list since 1 and half year for Midsouth) - they all are great companies - I am invested with Memphis turnkey properties at the moment(2 properties). 50-75k range is now little tricky but yes you can get if you are lucky. what I am finding out with turkey's as I learn day to day - if a property is making $250 per door cashflow after (mortgage + escrows) that's $3000 income on that unit. However - when your lease expires or the tenant moves out after 12 months - the cost to get the property rent ready is avg $1 or 1.50$ per sqft (900 sqft unit) or something I provided in example below- so that is around $1000 to $1500 in rent ready expense. so literally I am only making $1500 on a unit in TN.
also I forgot to mention - add in couple of maintenance calls @ $100 each (labor+parts) which will eat up your income further down. so on the paper I made only $1200/year cash flow on one of the units. not trying to discourage but no one gave me this detail picture(dollar to dollar) when I started out. (REI nation, Memphis turnkey they all have fancy spreadsheets with proformas - but on the ground when rubber meets the road is little different)
if I had put in 50k-75k in S&P 500 ETF I would have made 30%+ return :) just kidding - different factors, parameters are in play here and pro's and con's on both sides :-)... but bottom line is Turnkey's are I would say still ok "ish" not great per my learning so far. Investor need to be little aggressive when it comes to demand bang for a buck - I am diversified in Stocks, real estates, 401k - all over - and all I care about is who is making me rich and creating wealth for me :-)
I started my journey couple of years ago to try out and I have learned a lot from BP community , youtube video's ,local meet ups podcasts..Rent ready example :
$150 - carpet clean
$200 - cleaning
$100 - yard clean up
$400 - paint touch up
$150 - misc repairs - HVAC filters, batteries, door stops, etc.
Happy Investing!!!!!
- Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes5y
@Sachin Amin Thanks for sharing your experience here! What about the cost of turnaround time between tenants, too? I assume that's on top of the $1-1.50/sq. ft. you note for property repair/fixing up.
And what are you getting as your typical total length of tenant tenure? If you have tenants leaving after a year, between the costs you cite and unrented time, you could have no profit!
Thanks again for your sharing, it's always helpful to see someone else's numbers! And as you note, the pro formas can often leave these "pesky little details" out.
- Columbus, OH · Member since 2018 · 164 posts · 126 votes5y
@Adrienne Green that's a great point you brought up - one of my tenant's lease expired Jan 31 2021 - its currently being made rent ready. so yes I would drop a note when I have my new tenant with all the costing + lease up fee (another thing i forgot + half a month rent turnkeys usually charge, sometime they take up entire month) - but I would say a month. (so that's a one month rent loss ) so to my above example I would take another $250 out of the door (so I would be making only $1,250 on this unit this year(2021). (unless I have more surprises in store later this year and eats up my cashflow further).
Hope people are taking notes from my real world lessons with Dollar to Dollar accountability!!! :-)
one way I am trying to give back to the BP community is to provide each and every detail with actual numbers or as close as I can be.
Cheers!!!
- Investor · Central Arkansas · Member since 2013 · 10 posts · 22 votes5y
@Chris Clothier, Thanks for the response. As I mentioned in my post, with my research and all the positive reviews you guys have, I'm sure most your properties are wonderful, and I'm aware that most of your buyers are return customers, meaning they've had a great experience with you guys over the long haul. I looked at that property before the rehab was complete, so I wasn't aware of the name change. I'm sure you guys have a great system, but I was just surprised by what I saw at that one property, and that caused me to take a step back.
- Investor · Central Arkansas · Member since 2013 · 10 posts · 22 votes5y
@Chris Clothier After reviewing my post for wording and accuracy, I stand by that, minus my lack of awareness of the name change. I'm not a professional assessor or builder or anything of that sort, but foundation cracks just scare me off.
- 5yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
@Russ Merritt - I appreciate the response. Feel free to shoot me the address in a message and I would love to look into it. I take your comments for what they are and don't want to simply dismiss. I would love to review the property you are mentioning.
Best - Chris
- Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes5y
@Sachin Amin Here's hoping the new tenant you get is fabulous and stays a good long time!
- Investor · Central Arkansas · Member since 2013 · 10 posts · 22 votes5y
@Chris Clothier I'll send you the address in a private message. I do want to apologize though. While I do have my experience and opinion, this website isn't the place for that.
- 5yAxel MeierhoeferPro MemberRental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
I am investing in TK properties and some of the points raised here are valid. @Chris Clothier is right to warn because you have to ask yourself how a deal looks in totality. I, at least, want my tenants to stay in my properties for as long as possible. That reduces any cost for turnover but also indicates good value.
Good value comes from a quality renovation. You can actually find out from county records for any property you consider, what the sales prices were since it was first built.
If you accept that anybody who takes the risk and buys an older property and renovated it well to be able to sell it for investors as a turnkey property should be allowed to make 15-20% profit, just do some calculation.
Let's say you could find a $25K property in a neighborhood with great schools, shopping, access to roads and freeways that can bear about $800/month in rent. You claim you want to sell it for $75K and make some profit o $15K on the sale. That means you have $35k for everything, literally. New walls, new paint, new windows, new appliances, floors, new electrical, new plumbing, ceilings, possibly the roof, air conditioning, water heater, etc.
You might be tempted to say: "I am not sure that it will need all of that". Rest assured, a property you can buy between $10 - $25K needs all of that and more. (and we are not even talking foundation). The reason is that if it were even remotely usable, it wouldn't cost between $10-25K to start.
That's why Chris says that you are asking for trouble. Things will break when you don't fix them right from the start. More importantly, in my book is the fact that any fixing comes 100% out of your pocket. If, on the other hand, you buy a $115k property that was fixed properly, 80% of the cost is covered by the bank and your tenants allow you to put 15% of the rent into reserves for the first few years, so they basically build your repair fund for you.
That's one of many aspects of why I love my turnkey portfolio.
- 5yBrandon SturgillBusiness MemberReal Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
Suggestion to BP- give us the ability to vote a post down, maybe...
- Rental Property Investor · Macon, GA · Member since 2020 · 37 posts · 20 votes5y
@Sachin Amin
Thanks for insight and detail. Seems like not a good investment for me since I can find better deal in my backyard and get better returns
- 5yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Sachin Amin:
I live in Columbus OH, and have invested in in different states like TN , MS, MD, OH etc.. I actually like Tennessee and actually drove there to check out Memphis Turnkey properties, REI nation , Mid south home buyers and met all of them -(in waiting list since 1 and half year for Midsouth) - they all are great companies - I am invested with Memphis turnkey properties at the moment(2 properties). 50-75k range is now little tricky but yes you can get if you are lucky. what I am finding out with turkey's as I learn day to day - if a property is making $250 per door cashflow after (mortgage + escrows) that's $3000 income on that unit. However - when your lease expires or the tenant moves out after 12 months - the cost to get the property rent ready is avg $1 or 1.50$ per sqft (900 sqft unit) or something I provided in example below- so that is around $1000 to $1500 in rent ready expense. so literally I am only making $1500 on a unit in TN.
also I forgot to mention - add in couple of maintenance calls @ $100 each (labor+parts) which will eat up your income further down. so on the paper I made only $1200/year cash flow on one of the units. not trying to discourage but no one gave me this detail picture(dollar to dollar) when I started out. (REI nation, Memphis turnkey they all have fancy spreadsheets with proformas - but on the ground when rubber meets the road is little different)
if I had put in 50k-75k in S&P 500 ETF I would have made 30%+ return :) just kidding - different factors, parameters are in play here and pro's and con's on both sides :-)... but bottom line is Turnkey's are I would say still ok "ish" not great per my learning so far. Investor need to be little aggressive when it comes to demand bang for a buck - I am diversified in Stocks, real estates, 401k - all over - and all I care about is who is making me rich and creating wealth for me :-)
I started my journey couple of years ago to try out and I have learned a lot from BP community , youtube video's ,local meet ups podcasts..Rent ready example :
$150 - carpet clean
$200 - cleaning
$100 - yard clean up
$400 - paint touch up
$150 - misc repairs - HVAC filters, batteries, door stops, etc.
Happy Investing!!!!!
Keep in mind this is for any and all rentals.. not just so called turnkey.. however with rentals that are 50k your going to most likly have more issues just because of LOGIC your tenant base is the most insecure in the US..
- Rental Property Investor · Knoxville, TN · Member since 2011 · 701 posts · 531 votes5y
You're not going to find many rehabbed properties for $50k-75k in Knoxville. For comparison, we've got a 2/1 1003sf rehabbed property that is about to be listed for $120k. That's dirt cheap around here too.
- Flipper/Rehabber · Memphis, TN · Member since 2020 · 758 posts · 285 votes5y
You might want to check out Memphis, TN.
- Investor · IL · Member since 2019 · 151 posts · 135 votes5y
I am in rural South central Illinois. In my market you can find a 2-1 in the 50's or a 3 bedroom in the 60's,(this is the low end of the market) that will rent for $500-$600, but as mentioned above capex, and repairs can eat your lunch. It costs the same to replace a water heater or AC in a $50,000 house or a $100,000 house that is renting for $1000. And you will find a need to do some work on every new purchase unless you are very lucky. There are no turnkey operators in my market that I know of so managing or finding management is all on you.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes5y
Originally posted by @Matthew Smith:
Hello All, I have been hearing about rental properties in states like Tennessee, Arkansas, and Michigan that are remodeled and under 100k. I've heard of some being in the 50-75k range. They are being sold by agents/companies that buy them, flip them to an investor, then manage them. Does anyone on here know of any of these groups that are doing this? Thank you in advance
There are countless companies and people on BP pitching this. Setup a keyword alert for turnkey and all of the cities below and you'll be getting notifications hourly.
- Cincinnati, Ohio
- Dayton, Ohio
- Toledo, Ohio
- Youngstown, Ohio
- Cincinnati, Ohio
- Memphis, Tennessee
- Saint Louis, Missouri
- Indianapolis, Indiana
- Detroit, Michigan
- Erie, Pennsylvania
- Louisville, Kentucky
- Milwaukee, Wisconsin
- Jackson, Mississippi
In addition to the above you may want to read The Ultimate Guide to Grading Cleveland Neighborhoods as well as the other guides that are similar for Kansas City, Missouri. & Birmingham, Alabama. All three of these markets are also flush with turnkey operators like the rest above. - Investor · Maumee, OH · Member since 2015 · 48 posts · 23 votes5y
That's pretty interesting. There are a couple turnkey companies around me, but I'm not sure of their reputations - most Investors I know just use the MLS search or a realtor. I can tell you in Toledo you can pick up beautiful 50-70k homes just because that happens to be the going rate for houses in that neighborhood. They usually rent for 800-1000 depending on the school district, etc.
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