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
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!!!!!
@Sam Sala The other 2 was the team from Cashflow Savvy in Indianapolis and Engelo Rumora (Real Estate Dingo) in Ohio (Ohio Cashflow).
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
I would be weary of 50k turnkey properties, you might have better luck in the stock market. However in Columbus Ive seen $150k turnkey multifamily meeting the 1% rule and better.
@Sam Sala The other 2 was the team from Cashflow Savvy in Indianapolis and Engelo Rumora (Real Estate Dingo) in Ohio (Ohio Cashflow).
Never heard of those? curious to know how you found them
@Sam Sala Keep in mind this research was done during 2015-2017. Found them through Podcasts (I have Listened to every single Bigger Pockets Podcast) and a few others related to Property investments. At that stage Engelo already made it clear that he is "selecting" investors and Cashflow Savvy have a Podcast - "Epic Real Estate Investing"
@Sam Sala Keep in mind this research was done during 2015-2017. Found them through Podcasts (I have Listened to every single Bigger Pockets Podcast) and a few others related to Property investments. At that stage Engelo already made it clear that he is "selecting" investors and Cashflow Savvy have a Podcast - "Epic Real Estate Investing"
Much have changed since 2017, the market is going bananas and demand is through the roof while people are on endless wait lists. The big question is turnkey still worth going with? Do you plan on buying more via turnkey, are you happy with the outcome and returns?
@Sam Sala Yes, things have changed and I had to re-evaluate and adapt. I am still buying Turnkey. Midsouth Home Buyers hat set the bar extremely high. There is a waiting list BUT you know exactly what you are in for, no twists and turns. I managed to get a 30 year mortgage pre-approval and therefore moved to another waiting list - I will start getting properties to choose from in the next 40 to 60 days. My target therefore moved up to above $130k. I only had one turn-over since I started inverting with Midsouth. I am very happy with the returns. ** These 3 properties are all on 10 Year bonds and therefore my "real" return will be once they are paid-off. They do cashflow every month and as they say "Equity happens"
I have also signed a contract on another property in Texas from OmniKey.
(First one from them and very different price tag >$200k).
Since I am thousands of miles away in a different time zone (South Africa) Turnkey is the best option for me. I also had my time self-managing etc. and the time has come for me to be less active. Turnkey is working for me and I will keep doing it with some adjustments as the time / markets dictate.
@Sam Sala Yes, things have changed and I had to re-evaluate and adapt. I am still buying Turnkey. Midsouth Home Buyers hat set the bar extremely high. There is a waiting list BUT you know exactly what you are in for, no twists and turns. I managed to get a 30 year mortgage pre-approval and therefore moved to another waiting list - I will start getting properties to choose from in the next 40 to 60 days. My target therefore moved up to above $130k. I only had one turn-over since I started inverting with Midsouth. I am very happy with the returns. ** These 3 properties are all on 10 Year bonds and therefore my "real" return will be once they are paid-off. They do cashflow every month and as they say "Equity happens"
I have also signed a contract on another property in Texas from OmniKey.
(First one from them and very different price tag >$200k).
Since I am thousands of miles away in a different time zone (South Africa) Turnkey is the best option for me. I also had my time self-managing etc. and the time has come for me to be less active. Turnkey is working for me and I will keep doing it with some adjustments as the time / markets dictate.
Thats awesome! so you purchased 3 properties through midsouth? why did you have to go back on the wait list if you are an existing client?
@Sam Sala - Once you purchase you stipulate of you want to be added to the list for the "next round" - But I changed from inhouse finance (40% down / 10 Year bond) to Conventional Finance - There is a separate list for the different finance option you use. The initial 3 properties also took a while - roughly 6 to 8 months between them to reach the "top" of the list again.
@Sam Sala - Once you purchase you stipulate of you want to be added to the list for the "next round" - But I changed from inhouse finance (40% down / 10 Year bond) to Conventional Finance - There is a separate list for the different finance option you use. The initial 3 properties also took a while - roughly 6 to 8 months between them to reach the "top" of the list again.
So once you buy a property, you go through another waiting cycle of 6-8 months wait to get back on top of the list? regardless of how you're paying whether its finance, cash or bonds ec..
Yes that is correct.
@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!!!
Hey @Sachin Amin thanks for the details, it is really helpful to be able to see and hear your experience. Any learnings over the last few months?
@So Da right now the RE market is hot and i just sold one of my unit becuase they offered me a price i could not refuse :) - cash out when you can :-)
@Sanchin Amin thanks for sharing your real world experience. I am currently considering TK and trying to determine both a trustworthy company as well as how to evaluate investments opportunities. The experience you posted is valuable insight. I would be happy to connect with you in another format to get your recommendations for TK companies and investment evaluation. Thanks again for sharing.
@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.
Appreciate your sharing real-world experience. I'm currently looking at TK with a specific company. I am interested in how you evaluate an investment property for cash flow, appreciation, etc. Do you trust the proforma from the TK company, or have other processes. From what I've seen properties get snatched up quickly, so when the opportunity is presented a very quick (and reliable) evaluation is necessary.
@Joe Maris I do believe it is extremely important to have a TK provider that give an accurate and true reflection in the proforma. I can confirm that MSHB proforma matched the real cashflow with minimal difference. Keep in mind you need to look at and calculate vacancy / turnover and maintenance as well. Some TK include these costs and others don't. This is a long-term investment and the cashflow is merely a "bonus" in my opinion. We were incredibly lucky the past year or two regarding appreciation but can't (and I didn't) have any expectation for appreciation.
I have fine-tuned my criteria over months and have a few simple steps to do before committing to the deal (Remember this is AFTER you after 100% comfortable with you TK Provider) - I check my ZIP Code "Accepted" List, Crime Info, Confirm ROI / Cashflow is within my criteria - Initiate / commit.
@Joe Maris I agree with what @Willem Botha stated about appreciation. Taking cash flow as a bonus is a matter of your gals. A lot of people,l who contact me want to actually develop a passive income portfolio. For that to work, the cash flow is initially one source of fundings for down payments on future properties and will ultimately become the actual passive income that replaces your active income when you reach what I call the "Time freedom Number". That's the amount in passive cash flow you determine you need to no longer have to exchange time for money and have a regular job.
I have written about it and gone through it the last 10 years and used TK providers all the way. It does work - maybe with a little extra luck the last few years due to amazing value and cash flow increases - but the system works and I still keep adding each year.
Make sure you have clarity - especially as this new year starts - what your goal for investing is and then be laser-focused in pursuing it. If that is with TK investments, I am happy to help in case you have questions.
@Joe Maris I do believe it is extremely important to have a TK provider that give an accurate and true reflection in the proforma. I can confirm that MSHB proforma matched the real cashflow with minimal difference. Keep in mind you need to look at and calculate vacancy / turnover and maintenance as well. Some TK include these costs and others don't. This is a long-term investment and the cashflow is merely a "bonus" in my opinion. We were incredibly lucky the past year or two regarding appreciation but can't (and I didn't) have any expectation for appreciation.
I have fine-tuned my criteria over months and have a few simple steps to do before committing to the deal (Remember this is AFTER you after 100% comfortable with you TK Provider) - I check my ZIP Code "Accepted" List, Crime Info, Confirm ROI / Cashflow is within my criteria - Initiate / commit.
Thanks for your reply and the additional info. Just a couple easy questions about your criteria for selecting a property. What is a zip code "accepted" list? Does that mean the property is within one of the zip codes you accept, or something else? Also where do you get crime rate info for specific areas? For example, I can easily find crime rates for Dallas, TX, but what about specific neighborhoods or areas of town? Thanks again for your comments. I enjoy learning from more experienced investors.
@Joe Maris I agree with what @Willem Botha stated about appreciation. Taking cash flow as a bonus is a matter of your gals. A lot of people,l who contact me want to actually develop a passive income portfolio. For that to work, the cash flow is initially one source of fundings for down payments on future properties and will ultimately become the actual passive income that replaces your active income when you reach what I call the "Time freedom Number". That's the amount in passive cash flow you determine you need to no longer have to exchange time for money and have a regular job.
I have written about it and gone through it the last 10 years and used TK providers all the way. It does work - maybe with a little extra luck the last few years due to amazing value and cash flow increases - but the system works and I still keep adding each year.
Make sure you have clarity - especially as this new year starts - what your goal for investing is and then be laser-focused in pursuing it. If that is with TK investments, I am happy to help in case you have questions.
Thanks for sharing your expertise. Yes, @Willem Botha has been very helpful. I won't go into a lot of details, but I'll give some background for clarification. I will be 60 in a few months. The large majority of my retirement is tied to the stock market. That's been good for many years. As I near retirement, though, I want to divest into another area to create an additional income stream not directly effected by market volatility. I don't have years of time learn multiple strategies, and I cannot risk my retirement on mistakes while learning. That's why I think TK investing is the best (and quickest) path forward. If I can partner with a trusted TK company, I hope to create an income stream with RE investing.
For me cash flow is king. Yes, I want appreciation, too, but I don't have decades of time to solely rely on appreciation. I plan to retire early if possible, and the expected cash flow portfolio will be a big part of my retirement income. I believe the following factors are critical to this plan - 1) A trusted TK company doing quality work, 2) financing with rates and terms that won't damage cash flow potential, 3) finding and understanding good rental markets, and 4) learning to analyze TK deals for cash flow and acceptability within my criteria. I know there are many other factors that will influence success, but I think these 4 factors are most important.
I'm certainly interested in your thoughts and appreciate any insight you can offer. If you have input on any of the 4 factors for success (i.e., recommend specific TK companies, know of good financing sources, have methods for evaluating proformas and deals, etc.) I am very appreciative of your guidance. I don't expect you to post sensitive info in this format. I will gladly connect with you directly off this page if you want to share or discuss specific info. If you prefer to comment in general, that is appreciated as well. TIA
@Joe Maris my zip code "list" is build up from months (eventually years) of podcasts, forums, and "self" education. Once you "pick" your TK provider and by default the location you need to do A LOT of due diligence about the area - the nice thing is - once the area is identified you now have something specific to concentrate on and gather information. I use crime stats / information from trulia.com - might not be the best but I only continue if the property is in a "lower" light blue crime area. Again, all these form part of a big picture to try and be as safe and prepared as possible.