Turn key rental properties under 100k

General Landlording & Rental Properties
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Turn key rental properties under 100k

Matthew Smith
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
5y

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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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Axel Meierhoefer:

    @Jay Hinrichs wow, Jay. Can I use that one? Love that. Please give permission to quote you for that :-)

    the younger investors wont know what i am talking about  LOL   or who Paul Simon is.. LOL

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    2Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
    5y

    @Jay Hinrichs Probably true. I am still building bridges over troubled waters many days of the month...

    1Reply
  • Pimwadee Limsirichai
    Contractor · Dallas, TX · Member since 2019 · 52 posts · 35 votes
    5y

    @Matthew Smith

    Most of our portfolio actually started out with these turnkey rentals mixed in. Sometimes the banks will foreclose on properties with tenants still in place, and we bought a few from the bank just like this, though not necessarily flipped.

    We mainly invest in Greenville, Mississippi, a small town 2 hours NW of Jackson, right on the MS river, famous for their Blues festivals and hot tamales! :)

    I digress. A lot of these properties can be purchased in good condition, with a tenant in place, and fully managed for 40-70k per property. We like to invest there because you can really stretch your dollar compared to some markets like Dallas, TX or Cali. We've connected some of our friends and family with turnkey properties there, and would be happy to do so for you, too.

    From my experience in that particular market, you're mainly looking at cash flow, and not necessarily appreciation. I'm not saying this is the case with ALL turnkey investments you may find. For example, a turnkey property (renovated, rented, managed) in Dallas-Ft. Worth, TX will be an appreciation play with less emphasis on cash flow (as this time of writing).

    I feel that investing in smaller cities like this can be a big win for the investor. I'm happy to answer any questions you may have on the topic, so feel free to reach out!

    3Reply
  • Chris CooperPro Member
    Realtor · Oklahoma City, OK · Member since 2019 · 28 posts · 20 votes
    5y

    @Matthew Smith

    Yes! It happens in places like Oklahoma as well.

    Happy to help. Let me know your criteria!

    0Reply
  • Bob S.
    Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes
    5y

    @Matthew Smith I have been doing business in the Cleveland markets for years and years,,, double digit net caps are to be had 100% hands off...AVG all in  PP 64k, avg rent 1k,,,,,, 

    Good Luck 

    0Reply
  • Samara HuntleyPro Member
    Investor · Charlotte, NC · Member since 2020 · 124 posts · 189 votes
    5y

    Hi Matthew! I actually do BRRRs in the Charlotte, NC submarkets and sell them to investors for under 100k that on average hit the 1% rule. 

    I primarily do them in Gastonia where the purchase prices haven't caught up with the growth. Average deal = 75-90k purchase price, 10-15k rehab and around 900-1100 in rent depending on location, size, rehab level etc. Feel free to reach out with any questions about my processes/team. 

    0Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
    5y

    @James B. Yes, and the ones that successfully navigates through the great recession demonstrated that they can handle tough times. That also prepared them for the pandemic. It will be interesting to see how investors come out of this latest crisis. I know it wasn't a bad crisis for real estate in my OOS TK residential approach, but I heard a lot of commercial investors in apartments and other commercial approaches are really hurting - and looking with some envy at us TK folks with our passive income and unexpected appreciation in 2020.

    1Reply
  • Susan Maneck
    Investor · Jackson, MS · Member since 2014 · 1k+ posts · 769 votes
    5y

    So far all the out-of state turnkeys I've seen advertised did not have enough cash flow to be worth the risk. They all seemed to be 1% properties. I'd rather invest where I know. 

    0Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    As @Jay Hinrichs wrote :

    there simply is nothing more risky than how BRRR is described for out of state investors---> yes these BRRR for OOS investors is the highest risk investment with minimum possible return. I guess one investor from Bay area CA can buy a simple 2 BR house in Sacramento and turn it into 3/4 BR and then sell rather than buying OOS BRRR. Risk is even higher if they buy wholesale for neighborhood that can only yield less than $700 rent.

    For OOS I'm convenient with turnkey, it's almost the only thing that's possible and making sense. After turnkey, perhaps syndication is better.

    0Reply
  • Kathleen Brady
    Berkeley, CA · Member since 2020 · 12 posts · 8 votes
    5y

    I love this discussion, so helpful to get these different points of view. I am new to BP but not new to rei. I have a full time career and it doesn’t involve real estate at all. After spending 17 years house hacking several duplexes in the Bay Area that needed lots of work, the idea of passive income sounds wonderful. However, OOS turn keys do seemed frowned upon here on BO. I love hearing from people who’ve had success with them. @Axel Meierhoefer, do you mind sharing which turn key companies you’ve used?

    0Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
    5y

    @Kathleen Brady Thanks for mentioning me. I had recently posted a thread about my investing, and lots of people commented and asked great questions. If you haven't seen it, maybe you like to review it:

    https://www.biggerpockets.com/...

    I also PM'ed you

    0Reply
  • Andrew Coulter
    Member since 2019 · 18 posts · 7 votes
    5y

    Excellent post! Many of the topics here I have been contemplating myself. It sounds like you need to be extremely careful when vetting Turnkey companies. There are legit ones out there but there are many more that seem shady at least. One thing in particular I have been seeing is "Turnkey" means different things to different companies. There are some companies that are truly Turnkey (purchase, renovate, sell and manage the property in house), others are just marketers for flippers (advertise, sell and provide management but not in house). Some purchase, renovate and sell the property but then turn it over to another PM company. There are others that try to be a little bit of both. All of them say they are the most successful. lol. I haven't settled on one in particular myself but I have definitely came across some things that don't add up to me. 

    Turnover is one area that I have been wondering about. So thank you @Sachin Amin for providing real life examples and numbers from personal experience. 

    I don't know all the answers but threads such as this one definitely help to paint a better picture.

    1Reply
  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    5y

    Hi @Chris Clothier it was a removed post from BP...pretty unprofessional and inappropriate by the user...not sure what his issue was, but he was on the attack.

    Take care

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  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    The problem with turnkey is almost similar to syndicator. We need to do a heavy scrutinize of the turnkey/sponsor. The last turnkey co. that I work with is trying to sell me a house with K&T wiring and labeled it as turnkey house :) LOL , the other one is selling 4 BR house while title is only having three BR.

    Some indicator of good turnkey co. : they have a process in place and did an independent inspection prior selling it to us. 

    0Reply
  • Sachin Amin
    Columbus, OH · Member since 2018 · 164 posts · 126 votes
    5y

    @Andrew Coulter - cheers!!! i will be posting a similar comparison on my other units which completes 12 month cycle in April / May 2021 - from various other markets (all turn keys) - lets see how those numbers come up...stay tuned

    Andrew Coulter

    0Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    5y

    Totally agree with @Jay Hinrichs not many investors under 500k networth have been around for more than a few years on these forums.

    Check out my article about the Cons of BRRR.

    https://www.biggerpockets.com/...

    Note this is coming from an Accredited investors POV who used to do turnkey rentals.

    I personally would not do Remote BRRR as there is just a lot of risk with 1) risk of embezzlement with contractors 2) change orders and 3) bank doing bait and switch doing a lower appraisal and/or LTV on the refinance.

    This is especially true for high paid professional or those with a net worth of over $300,000.

    Just a bit of caution... stay safe 😁

    1Reply
  • Aj Parikh
    Rental Property Investor · Centreville, VA · Member since 2019 · 1k+ posts · 799 votes
    5y

    Hi Matt, I would agree with those markets especially TN where you can get SFH turnkeys under 80k which are cash flowing above the 1% rule and also great cash on cash returns. I used Roofstock to purchase my SFH and would definitely recommend exploring that option. Also, explored Martel Turnkey and they have a good operation in Cleveland, OH. Let me know if you want to connect and chat about these 2 purchases.

    0Reply
  • Russ Merritt
    Investor · Central Arkansas · Member since 2013 · 10 posts · 22 votes
    5y

    I agree with the danger of remote BRRRs but want to mention an exception... When you have previous relationship with the people you're working with on the ground. Everything in RE is built on trust, and some of the people I've worked with remotely I trust more than myself! 

    1Reply
  • Romi Gaddy
    New to Real Estate · VA · Member since 2021 · 22 posts · 7 votes
    5y

    @David Flores a few years ago when I enrolled my youngest in college I was very interested in looking into college rentals. I didnt follow up because I had to pay her college tuition lol but now I'm ready to look into it.

    0Reply
  • Abigail Cariaga
    New to Real Estate · Concord, CA · Member since 2021 · 27 posts · 5 votes
    5y

    To follow up on turnkey companies. Has anyone used any turnkey companies in Memphis that they would recommend? Thanks in advance. I'm a newbie out-of-state investor.

    0Reply
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
    5y

    @Abigail Cariaga, Mid South Home Buyers.  Waitlist is extremely long, though.  I worked with one other Memphis group, but wouldn’t recommend them. If only I could find another group in Memphis like MSHB but a shorter/no waitlist.  

    0Reply
  • Willem Botha
    Investor · Centurion, Gauteng · Member since 2016 · 45 posts · 44 votes
    5y

    @abigail 

    @Abigail Cariaga - Working with MSHB (Midsouth Homebuyers) now for about 4 years (from South Africa) and can state without a doubt that it by far the best turnkey company. I have done researched for 3 years before starting to invest in the USA. Visited 3 companies I identified and decided to go with MSHB. - Yes the waiting list is long BUT they have a system that WORKS with structure, certainty and accuracy. Highly recommended.

    1Reply
  • Sam Sala
    Rental Property Investor · Brooklyn, NY · Member since 2020 · 113 posts · 25 votes
    5y
    Originally posted by @Willem Botha:

    @abigail 

    @Abigail Cariaga - Working with MSHB (Midsouth Homebuyers) now for about 4 years (from South Africa) and can state without a doubt that it by far the best turnkey company. I have done researched for 3 years before starting to invest in the USA. Visited 3 companies I identified and decided to go with MSHB. - Yes the waiting list is long BUT they have a system that WORKS with structure, certainty and accuracy. Highly recommended.

    Interesting! never heard of them, but I will check them out..

    1Reply
  • Sam Sala
    Rental Property Investor · Brooklyn, NY · Member since 2020 · 113 posts · 25 votes
    5y
    Originally posted by @Willem Botha:

    @abigail 

    @Abigail Cariaga - Working with MSHB (Midsouth Homebuyers) now for about 4 years (from South Africa) and can state without a doubt that it by far the best turnkey company. I have done researched for 3 years before starting to invest in the USA. Visited 3 companies I identified and decided to go with MSHB. - Yes the waiting list is long BUT they have a system that WORKS with structure, certainty and accuracy. Highly recommended.

    Curious to know who you narrowed it down to before finally going with Midsouth homebuyers? 

    0Reply
  • Willem Botha
    Investor · Centurion, Gauteng · Member since 2016 · 45 posts · 44 votes
    5y

    @Sam Sala - Will try to give a short answer for a VERY long process. - I do believe this will be different for each individual based on a number of factors. - My personal criteria was:
    1) The Turnkey company needed to be FULL Turnkey - Buy, rehab, sell, and manage afterwards - ALL under "one roof"
    2) When I started I needed something in a price range below $100,000
    3) Needed finance - Non US Citizen, Foreign Investor, Not a resident
    4) Cashflow positive
    After years of research and listening to hundreds of Podcasts I got 3 on my shortlist as mentioned.

    1Reply
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