Turn key rental properties under 100k

Investor · Fort Lauderdale, FL · Member since 2015 · 2 posts · 32 votes

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

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Sachin Amin

Columbus, OH · Member since 2018 · 164 posts · 126 votes

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!!!!!

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Sachin Amin
Columbus, OH · Member since 2018 · 164 posts · 126 votes
5y
@Christopher B.Sure different folks have different criteria's which ever works best for you...as long as + $$ are made
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Sachin Amin
Columbus, OH · Member since 2018 · 164 posts · 126 votes
5y
@Axel Meierhoefer - I am with you!!!! but my personal experience has taught me strong diversification (dont have all the eggs in one basket) - but i like the idea if i make millions in stocks in next 10 years - may be then i can afford multiple TKs in A neighborhood with REI nation aka memphis invest :)
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Axel MeierhoeferPro Member
Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
5y
@Sachin Amin Yes, that's one idea. Or you could do it like I am and just have 3 TK's in three markets.
1 Reply
Adrienne Green
Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes
5y
@Sachin Amin I'm sorry to hear that! I would be very frustrated to have that happen.
0 Reply
Stephen E.
Rental Property Investor · Member since 2020 · 172 posts · 110 votes
5y
@Sachin Amin You have a lot of solid information and it's really appreciated. This is a good thread.

I read a lot on here about horror scenarios when you purchase property under $50,000. So far that hasn't been my experience. After purchasing 3 properties under $50k with a turnkey operator I was able to do a loan against the portfolio and get all of my money out. The houses are profitable after paying down the loan and expenses.
It's only been 6 months so I'll have a better idea down the road.

1 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
5y
You can't make broad statments on what to buy at what price, without including the corresponding risk in the discussion.
Remember the Great Recession 2008-2010? Mainly caused by the mortgage-backed securitues (MBS) market bubble popping.
What caused the bubble? Investors, many institutional, not understanding the real risk of what they were buying. Happens all the time when investors chase returns without properly factoring in risk. In fact, it's probably happening right now in the stock market.
It's also happening in the real estate market where newbie investors are buying Class C and D properties - thinking they are Class B or A. They are often deliberately misled by "con men", but many are just in over their heads and don't know it.
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Neal Shue
Mooresville, NC · Member since 2019 · 20 posts · 14 votes
5y
Thoughts on Turnkey

Posters on Bigger Pockets notoriously lean away from turnkeys or supporting turnkeys. Generally, when someone who has a good experience with Turnkey is no longer on BP after that to talk about it or offer support for the model. People get on BP to learn and figure out strategies, so when they figure it out and it all works out, they may not be on here anymore. Particularly turnkey investors because they're not trying to make a career out of real estate investing, they're just trying to do something smart with their money on the side. They're not on BP to yabber about it after. Another thing I've seen on here as far as the naysayers are 1. Most people who leave reviews are the ones who have had a negative experience (because of the aforementioned reason about the positive experiences) and 2. there are a lot of people on here who respond to turnkey forums who have absolutely no experience with turnkeys, so I really don't know why they feel inclined to knock it when they don't actually know. I think turnkeys are just the thing people love to hate.
Turnkeys aren't a flawless strategy, and the people who can devote hours of time in renovation, management and ongoing repairs can make more money than the passive Turnkey investor.

A fellow BP poster Dan DiFilippo wrote…

It's important to keep in mind the population here on Bigger Pockets. I've always described this forum as being full of guys I like to call "The Bro Investor". The archetype being a young guy (25-35) tired of the 9-5 and wanting to achieve financial freedom. But if you come to the table with less than $50,000 in the bank, there isn't much that's available in REI that's immediately profitable and throws off cash. Especially not given the contractionary economic undercurrents we find ourselves in over the last decade or so. As a result, there's this gripping need to squeeze every last drop of return out of the capital.

But if you have serious money, it becomes a little different. There are only so many investment opportunities out there that don't require a tremendous time investment. And even if you could get a linear return in dollars for your time invested, not all dollars are equal. Your bottom dollar is more valuable to you than your most recent dollar. And your most recent dollar is more valuable to you than your next dollar.

This isn't to say that you're absurdly rich or that everyone else here is extremely broke. But it is to say that real estate investing is expensive and a family that is even able to save $20-25k/year is going to probably feel like turn-key properties (or even just vacant rent-ready properties) don't advance their capital position at a fast enough pace to feel like it's worth it.
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Account Closed
Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
5y
Originally posted by @Peter Pettersson:
@Chelsea Ziss would you mind sharing a few of the local turn key companies from that are (Toledo)? Thank you in advance!

Peter in Toledo I am only aware of Ohio Cashflow @Engelo Rumora providing turnkey properties, and LaPlante Real Estate @Mike Mocek also has turnkey inventory. I have purchased from both of them in the past and they are both solid. Both are under 100k as per the title of this discussion.
2 Reply
Sachin Amin
Columbus, OH · Member since 2018 · 164 posts · 126 votes
5y
@Axel Meierhoefer I actually am in multiple markets, and by may 2021 I would have completed full 1 year so I could share with community how each market performed
Hoping my other units out perform🤞
1 Reply
Sachin Amin
Columbus, OH · Member since 2018 · 164 posts · 126 votes
5y
@Stephen E. Yep learning new things every day..would share more in few months on how my other markets are doing
1 Reply
Sachin Amin
Columbus, OH · Member since 2018 · 164 posts · 126 votes
5y
@Neal Shue
TKs are a fantastic vehicle to make wealth and generate consistent income in long run. We are just sharing numbers from year 1. Which was expected to be -ve, what folks are discussing is providing minute details which we never got when we were researching 5 yrs ago. So new members have facts from other investors and will make help them decide what works for them.
Happy investing!!
0 Reply
Neal Shue
Mooresville, NC · Member since 2019 · 20 posts · 14 votes
5y
Originally posted by @Sachin Amin:
@Neal Shue

I appreciate your insight as to the unforseen or unspoken additional costs the providers don't talk about.
0 Reply
Jeff Piscioniere
Investor · Shelton, CT · Member since 2016 · 218 posts · 225 votes
5y
@Chelsea Ziss I hope my partner @Diana T. Sees your comment about Toledo. Thank you! We are considering that market.
0 Reply
Diana T.
Rental Property Investor · Shelton, CT · Member since 2012 · 92 posts · 176 votes
5y
@Jeff Piscioniere
Yup! Love this! Great insight
1 Reply
Stephen E.
Rental Property Investor · Member since 2020 · 172 posts · 110 votes
5y
One thing missing from these discussions is that rents generally go up, but the price you paid remains static. I think about that sometimes with capex hits. When I purchase a property, after doing whatever work I think needs to be done with the purchase I don't expect to have a big expense, like a new roof, for a number of years. By the time I do get those bills I hope my numbers have improved due to rent increases.
Similarly, when there is turnover it costs money, but that is also the moment you usually increase the rent, if possible.
1 Reply
Sunny S.
Rental Property Investor · Bentonville, AR · Member since 2020 · 86 posts · 15 votes
5y
@Chelsea Ziss Do you mean Toledo in OH ?
0 Reply
David Flores
Rental Property Investor · Morgantown, WV · Member since 2016 · 235 posts · 135 votes
5y
@Matthew Smith
Morgantown WV. I have 30+ units there and you can 100% find properties under 100k or around that price range and make a fantastic return. I invest in mainly college rentals, where a lot of students are from out of state creating inflated rental prices relative to WV. But importantly, the WV home prices remain constant in morgantown compared to rest of WV, even by the campus. This creates a rental property investor gem. We are talking 12%+ cap rates being the norm. Yes managing college rentals does require more maintenance/attention, but that is why successful property management would be 10x as important for your success in this area.
DM if you want more information about it.
3 Reply
Brian Ploszay
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
5y
Be cautious in buying turnkey properties in general. Let's focus on the cheaper product. Many of these are located in class C neighborhoods. Or they are in areas that look okay, but the region might be in decline. Everyone who buys these properties should do as much research as possible, get an independent inspector, find your own financing / appraiser.
What can go wrong? Expenses might be excessive, especially the turnover when you have a vacancy. And liquidating the investment one day might be tricky. Pay too much - you might sell your beat up rental 5 years down the road at a loss.
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Chris ClothierBusiness Member
Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
5y
Originally posted by @Stephen E.:
One thing missing from these discussions is that rents generally go up, but the price you paid remains static. I think about that sometimes with capex hits. When I purchase a property, after doing whatever work I think needs to be done with the purchase I don't expect to have a big expense, like a new roof, for a number of years. By the time I do get those bills I hope my numbers have improved due to rent increases.
Similarly, when there is turnover it costs money, but that is also the moment you usually increase the rent, if possible.

Great point Stephen. Provided you have a resident that stays longer than two years, which a good landlord or management company can accomplish, these move out expenses that appear to wipe out one-year, could also be viewed as distributed over each year of occupancy. In that case, a property with a high move-out but 4-5 years of occupancy with low maintenance may look really bad in that move-out year, but over-performing expectation in the other years. Coupled with rent increases, even small increases through those leases and it may mitigate the hit.
There is always talk about how Turnkey companies "forget" to tell investors about costs. I am sure there are plenty of bad actors out there who give the rosiest picture possible in their pitch and in their numbers. But, each investor is responsible for their investment and there has been some very good back and forth on here. Some great reminders about what can be the reality and frankly what many of know to be the reality a majority of the time with low-cost, passive investments. But it is always the responsibility of the investor to know the numbers and to absolutely know how they are going to achieve those numbers. Things never go as smoothly as percentages on a piece of paper. Most years the number can look much better, but on that year of the move-out they can look much worse!
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Steven Davis
Rental Property Investor · Jonesboro, AR · Member since 2014 · 34 posts · 13 votes
5y
@Colton Taylor I agree and disagree to an extent. As with anything real estate, you have bad neighborhoods and bad tenants.
My area in Central Arkansas has rentals in the 60-70k range that rent for 700-1,000$. B class tenants, 2 bed 1 bath 1,000 sqft homes, overall a great niche to be in and I really like it.
You can have a bad tenant in an A property or a great one in a C property. If you vet properly and stick to a good area, you can make a lot of money in the 50-100k range with little headache.
2 Reply
Axel MeierhoeferPro Member
Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
5y
@Chris Clothier Totally agree and I wish more people writing about real estate investing or opining about what approach they prefer would first always ask what the long-term goal of the investor is.
In my case I use TK investing because I want great performance (1% rule) focused on passive income based on high-quality renovation by a company that finds, renovated, sells and manage the deal all under one roof, so I have very little to do except comms and reports 1x/month. That's how I get to my TFP (Time Freedom Point) by the end of this year and then continue to enjoy cash flow that will only increase as more and more of the properties are paid off.
Other people look for equity or for appreciation or longevity (build to rent), etc. The long-term goal is really essential to decide what to do.
That's why I love to challenge the BRRR fans about the hourly rate for the time they invest in combination with the performance of the asset when (hopefully) everything they hoped would occur and they can actually refi and get any cash-out. I am not so sure that many of the inexperienced investors trying BRRR can really pull it off. The folks on HGTV seem to have the hardest tie to stay in budget. :-)
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James B.Pro Member
Investor · Monterey Area, CA · Member since 2011 · 150 posts · 81 votes
5y
@Matthew Smith @Chris Clothier @Jay Hinrichs

Any TK company that has been in business for 5+ years is probably doing something right
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
5y
Originally posted by @Axel Meierhoefer:
@Chris Clothier Totally agree and I wish more people writing about real estate investing or opining about what approach they prefer would first always ask what the long-term goal of the investor is.
In my case I use TK investing because I want great performance (1% rule) focused on passive income based on high-quality renovation by a company that finds, renovated, sells and manage the deal all under one roof, so I have very little to do except comms and reports 1x/month. That's how I get to my TFP (Time Freedom Point) by the end of this year and then continue to enjoy cash flow that will only increase as more and more of the properties are paid off.
Other people look for equity or for appreciation or longevity (build to rent), etc. The long-term goal is really essential to decide what to do.
That's why I love to challenge the BRRR fans about the hourly rate for the time they invest in combination with the performance of the asset when (hopefully) everything they hoped would occur and they can actually refi and get any cash-out. I am not so sure that many of the inexperienced investors trying BRRR can really pull it off. The folks on HGTV seem to have the hardest tie to stay in budget. :-)
Yup i suspect the over glamorization of BRRR has left many an investor in trouble.. while any thing is feasible. there simply is nothing more risky than how BRRR is described for out of state investors.. there are 30 ways to leave your lover there are 50 ways to lose your money doing an out of state BRRR. There should be a massive disclosure in the opening of the bp book on the subject.

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Axel MeierhoeferPro Member
Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
5y
@Jay Hinrichs wow, Jay. Can I use that one? Love that. Please give permission to quote you for that :-)
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Allen L.
Rental Property Investor · Chicago and mainly invests in KS remotely · Member since 2018 · 360 posts · 314 votes
5y
@Jay Hinrichs lol that was my mistake! luckily that first BRRRR I did had so much forced equity I still ended up making money despite spending more than 50% over budget and bitterly fired the contractor.
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