New OOS investor looking for Turnkey. Help deciding company

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New OOS investor looking for Turnkey. Help deciding company

Wei Jie Yang
New York City · Member since 2018 · 161 posts · 75 votes

Hi guys, I'm a new investor trying to find the  and am trying to find the right turnkey company to work  with. 

I think the most important thing about finding the right turnkey company is finding a great property management team and worry about the area later. I came with a list (with commentary):

Memphis Invest - The golden standard. Property might be a tad more expensive but if turnover and repairs are minimal then I'm fine with that. Another plus is that they are in five markets going to seven. They also seem to have thrown out their requirement of buying two houses initially with them as well, which works great for me. I did the initial consultation with them and got preapproved by two of their lenders already but haven't pulled the trigger for part 2 since I wanted to research other companies first. Currently my top pick. Can anyone share their experience with them and help me decide which market I should invest in with them?

Smartlands(Ohio) - Interested in the Cleavland Market. The only "full" turnkey company I know of in the Cleavland area. Had an initial consultation with them where they promised to send me a list of their approved vendors as well as any current deals they have open for me to look at. It's been almost two weeks and I haven't heard back from them. I tried emailing the rep I talked to a few times and no response. I'll just chalk it up to me giving them too long a time frame for my purchase(I told them 3-6 months at the time. Now I've made up my mind to 1-3 months though) during my initial phone call more then anything else, as there customer service reputation on these forums seems to be pretty stellar.

Holton Wise(Ohio) - The whole reason I am interested in the Cleavland market thanks to @Jameswise blog and his youtube videos. Holton-Wise does not seem to be a "Full" turnkey company however. They seem more like a realtor with a PM and renovation arm. They seem more like a company I want to work with for my third or fourth deal, not my first or second. 

JWB (Florida) - Great reputation, sample of properties given is by far the more expensive out of any companies I've seen. Cash flow seems really poor. Expenses seem really high. It seems that the only real play is Appreciation for these Florida houses? Or maybe just an alternative to investing in Treasury/Fixed income interest rate products if an investor is paying for everything in cash. Am I missing anything?

Spartan Investment(Alabama) - Their biggerpocket presence seems good. Alot of people on this forums  vouched for @Clayton mobley and Spartan invest which makes me feel great about possibly investing with them. I just have two issues with them. The issue I have is it seems that Birmingham in general seems to be declining. Population is decreasing and has been for DECADES.  Also there is a recent thread about several Spartan investor not being able to evict their tenants due to "sheriff backlog". I believe one guy has had this issue since June and it still hasn't been resolved yet. That being said, that sounds more like an area issue rather than a Spartan Invest issue, but still, it's in the area that Spartan invest are in. Anyone has any local knowledge of the Birmingham area know where the Sheriff department has such a terrible backlog of evictions as of late?

Turnkey Investment Properties(Memphis and Little Rock) - @Alex Criag seems to come highly recommended on this Biggerpockets. I've even seen @Chris Clothier recommended his him on several occasions! @Alex Criag's company seems to work in a rougher part of Memphis than Memphis invest. Does anyone have any experience working with him and his team? I know some of their investors had weird experiences. Was that due to the area that @Alex Criag invest in being rougher  or was it more bad luck more than anything?

Buy memphis Now! - Comes highly recommended again by the BP forums. From what I can gather either uses @Chris Clothier PM company or @Alex Criags. Seems to be in the same neighborhood as @alex Criag as well. Any benefit of using @Curt Davis over @Alex Criag or vice versa? Well, other than wanting to invest in multifamilies and in Little rock that @alex Criag offers?

Can anyone throw in their suggestions, experiences, and critiques on my though process?

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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
7y

@Dean Letfus I agree with a lot of what you are saying, but disagree with the 2 bathrooms are always easier to rent.  In some areas, it is a must such as Barlett, Hickroy Hill, 38125, 38119 and a few others, But in 38117, 38118 and 38111, it doesn't make a difference. We rent houses in those zips all day that are 2/1, 3/1 and 3/1.5 all day and quickly. My best rental is a 2/1 in Colonial Acres that I have rented twice within 2 days of being vacant for $1,025. Off the top of my head, I would guess 1/2 of my portfolio is 2/1 and 3/1. So long as these are owned in the right area, they rent just as fast. You may disagree, but I have first hand experience as an owner of these and manager of almost 700 properties that says these do rent just as quick. Again, the key is the right area and most of the time, it is inside the 240 loop.  Another reason I love owning 2/1's and 3/1's is less wear and tear because typically less people living in the homes, less maintenance cost because of one less bathroom (plumbing is the # 1 maintenance call we get by far), roofs are smaller to replace, HVAC units are smaller, turn cost is smaller--everything about a 2/1 and 3/1 is cheaper to operate, thus why I love that 2/1 that I get over $1,000 a month for.

901-848-9028
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  • Dale Rast
    Fairfax, VA · Member since 2018 · 15 posts · 6 votes
    7y
    Originally posted by @Wei Jie Yang:

    Hi @Damon Cluck! Sorry it took so long to get back to you. Been meaning to but I forgot. 

    My first property with Memphis Invest I put down 20%. My next 4 I put down 15% + lump PMI. Saved me 10's of thousands and allows me to buy much more than I would normally be to. Only works for SFR though.

    Hi @wei Jie Yang,

    Is there a tax advantage to using lump PMI instead of a full 20% cash downpayment?


    Thanks, 

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    @Dale Rast Other than higher deductions for interest rates I don't believe PMI is deductible on investment properties.

    1Reply
  • Dale Rast
    Fairfax, VA · Member since 2018 · 15 posts · 6 votes
    7y
    Originally posted by @Wei Jie Yang:

    @Dale Rast Other than higher deductions for interest rates I don't believe PMI is deductible on investment properties.

    Thank you.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    6y

    Oh boy, the Huntsville house I just closed on is going to turnover due to the tenant buying a house of their own. I'm a bit nervous and excited. This will be my first OOS turnover. The lease the tenants signed was favorable to the landlord (they continue to pay rent until we rent the house again or the lease is up, they pay the difference if rented for below their price, they pay all cleaning and leasing fee) and my PM is enforcing it which is nice.  

    Most of the issues of the house was already fixed during the initial inspection and purchase so hopefully this won't set me back a few years in terms of cashflow.

    1Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    6y

    @Wei Jie Yang thanks for sharing your experiences! If you don't mind me asking, what type of cash flow are you seeing through your turn key investments? I've been debating Turnkey for some time now compared to a traditional BRRR but am skeptical of cash flow reward vs total amount into the deal.

    Obviously the dollars vary depending on location, market, and the home itself, but what would you say the median purchase price of the homes were compared to cash flow? 

    Again, thanks a ton for keeping this post going!

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    6y

    Hi @Patrick Bavaro! These are numbers with fixed expenses only (PM, Property tax, Insurance) and doesn't factor in variable expenses like Maintenance and Vacancy which I currently don't have a problem with yet, but are sure to come up eventually.

    20% down:

    Memphis Invest

    PP:159,900

    Rent: 1,250

    CF: $209

    15% Down:

    Bridge in KCMO:

    PP: $109,950 & $109,950

    Rent: 1,075 & 1,100

    CF: $358.48 & $405.63

    15% with Rent Ready/Min rehab

    Jared Garfield in Alabama

    PP: $125,000 & $133,000

    Rent: $1,450 & $1,495
    CF: $537.49 & 499.95

    Total CF just about 2K a month.

    I really want to do a BRRR but haven't found the right team as of yet. From the turnkey companies I've been talking to it's usually .0095 (bridge, Jared with his turnkey stuff) to .07(Memphis Invest). You get better Rent to Price ratios when you're dealing with non newly renovated rent ready properties, but those comes with caveats, like right now my tenant from the 133K home is leaving a month after purchase.

    1Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    6y

    @Wei Jie Yang Thanks for sharing the numbers! Those are actually pretty good CF numbers compared to some of the other posts on TK that I've seen. Definitely has me thinking! 

    I haven't worked with them yet, but there is a gentleman I was referred to and introduce to by a member of BP that works out in Birmingham and has hands-off BRRR strategy. From what I gathered on my phone call with him, he and his team on the ground are BRRR investors out in BHam that invest in the space, but also source properties, rehab, and provide PM to investors looking to invest in Bham as part of a BRRR strategy. If memory serves, I think they charge a premium for sourcing the property (a few thousand), but if the numbers still work, who cares. I've been evaluating them as an option but not sure if I'm ready to move to a market that is completely OOS yet or simply move my investing up the coast to Jacksonville (I am in Fort Lauderdale). It's a drive I can manage over multiple weekends as opposed to trying to find the team in a single weekend or multiple trips ($$$) OOS. I suppose I'm probably just overthinking it since at the end of the day, landlording problems that prevail in Jacksonville still prevail in OOS markets.

    Happy to put you in touch if you want to see what he has to say. I thought it was pretty interesting. 

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    6y

    @Patrick Bavaro I would love to know more! I also was recommended a team in Alabama that did something similar in Montgomery and Bham. I wonder if we're thinking of the same team. 

    As far as BRRRR teams go, I know of a few guys in Indy that does it. Alot of Property Managers do it over there too. The Manship Brothers are Wholesalers with a Project management arm. Their main business besides wholesaling deals are managing the rehab/reno that's needed for OOS investors. I went to a conference they had a month ago and it was great. Met a lot of Property Management companies that also can handle the rehab and evaluation portion but obviously can't handle the actual sourcing of properties portion.

    Jacksonville from all that I've heard is a great market for appreciation and a bit of cashflow. It's also one of the few markets where you can cashflow with new construction, or so I hear.

    0Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    6y

    @Wei Jie Yang Ha! I bet it's the same people. They work Montgomery as well. Guy by the name of Robert Booth? 

    Appreciate you sharing some intel from Indy. I'm definitely going to check them out. Have you ever discussed business with them? 

    I've heard some great things for Jacksonville too! I'm planning to take a trip up there in February with the wife to start some networking with HMLs, conventional lenders, contracts, PM, and realtors. Would love if there is a referred wholesale as well. 

    I've followed this thread so please keep the updates coming! If you ever head to Jacksonville, let me know. 

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    6y

    @Patrick Bavaro Yep! It was Robert Booth! Haven't talked or done anything with them yet though other then go on their website.

    I've talked with the Manship Brothers. They are on Biggerpockets and are really easy to get in contact of. Evan Manship and Clay Manship. They have their own Facebook group for OOS investors too, which is great and gives you up to date status on things going on around there. I didn't go thru with them initially because alot of my money is tied up with the current purchases and I am still not 100% comfortable using HML.

    0Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    6y

    @Wei Jie Yang Rob was a great guy to speak to on the phone and answered a lot of my questions. He spent about 30 minutes with me. The biggest part of me feeling comfortable with folks I want to one day do work with is them demonstrating good communication skills. Happy to send an email introducing you if you'd like. 

    I'm going to have to check them out! 

    Understood. Tying up the money is what's holding me back from wanting to move forward with Turnkey since I can't recycle it. And for HML, with no risk there's no reward! I've been doing a lot of reading on it and looking into people stories who use it. It sounds pretty fundamental with the biggest pieces being to make sure the numbers are factored into your deal, you're able to get conventional financing to refi, and that the ARV is on the money. Most, if not all, of the HMLs i've read about charge interest only so there isn't any principal being factored in to the monthly payment (someone correct me if I am wrong).

    What's holding you back from HML right now?

    1Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    6y

    @Patrick Bavaro For me it's not necessarily the HML that I'm having issues with it's the surrounding processes that I still do not have down pat if I were to go with the BRRRR method OOS.

    With a regular turnkey, all I really have to do is put something under contract and talk to my banker and be patient with my appraisals, inspections, repairs and any other issues that comes up. Everything would be dealt with and fixed before I close and if their are any issues, I could always force the issue with the seller/company. 


    If I were to go with the BRRRR/HML route there are a lot more moving pieces. I would have to be on top of the project manager, contractors, agents, and the individual HML inspection requirements and timelines for a rehab loan. I would have to trust that everyone is doing their part and make sure with just my emails and calls that they are. It's something that I am willing to do but I think I want to build a bigger buffer financially before I start.

    Also, alot of HML will only loan to entities, so the refinance portions is usually done thru a commerical loan which is fine, but brings about a lot of other complications as well.

    0Reply
  • Dave DeMarinis
    Lender · Santa Rosa, CA · Member since 2017 · 283 posts · 255 votes
    6y

    @Wei Jie Yang @Patrick Bavaro I can't think of any good reason to use HML on a turnkey purchase (and I'm a lender!) HML is great when you are buying below market or have a plan to force appreciation and ideally you are doing both.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    6y
    Originally posted by @Dave DeMarinis:

    @Wei Jie Yang @Patrick Bavaro I can't think of any good reason to use HML on a turnkey purchase (and I'm a lender!) HML is great when you are buying below market or have a plan to force appreciation and ideally you are doing both.

    That's what I mean when I say using hml. I apologize if I didn't make thst clear. For Buying something from A wholesaler/MLS and getting people to help renvoate/rehab the property. Ideally this would be a brrrr situation. Apprently deals a plenty in indy from what I hear. Maybe some in the AL cities as well.

    1Reply
  • Patrick Bavaro
    Fort Lauderdale, FL · Member since 2018 · 289 posts · 342 votes
    6y

    @Dave DeMarinis @Wei Jie Yang apologies if I wasn't clear. I was referencing HML for BRRR not TK

    0Reply
  • Richard Bonisa
    Investor · Indianapolis · Member since 2019 · 108 posts · 69 votes
    6y

    @Wei Jie Yang I'd be overly cautious on getting hard money for your BRRRR in Indianapolis. There have been some lenders have issues related to contractors completing projects and this can cause a big strain on their ability to "work with you" if you are not able to refi in the time frame they originally quoted on completion. Actually, I would recommend not working with anyone who is the same principal in a hard money lending company and is the GC. At that point you may not get the best reporting on what your money is doing and who is doing what. That's just my opinion.

    As far as deals - well, you can find some deals in the winter months that are not as easy to secure and jump on, as in the summer months.  There is actually less competition in the colder months in Indy, but generally the investors are a little more focused and serious.

    Be cautions of those who sell, rehab, and lend - all under the same roof.  Of course, this is all my opinion and just based on talking to a lot of investors in the last few years.  

    I would also look up some of the scandals and players in Indianapolis.  Due diligence is the key, and especially for someone new to Indianapolis or investing.  I actually put together some tips in my blog.  I would encourage you to give it a quick glance and also be very very tough on your due diligence process.  Due Diligence is the Key!  

    2Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    6y

    Well, it's been a while. I've been off BP since Covid hit and boy, alot of things have happened! 

    1) Experienced 2 turnovers. One with a Bridge/Voepel property and one in Huntsville.

         a) Voepel found a new tenant two weeks after we got the move out notice. No change. Turnover cost was a few hundred dollars(not including the first month fee).

          b) The one in Huntsville found someone Mid-June. The previous tenant left in Jan but paid until April due to being under contract. The PM said it was due to the showing restrictions with Covid, That and the rents we were asking for was significantly higher than the average in the market. That being said, we did find someone for that price. Turnover cost was less than $1K (not including the first month fee)

    2) A septic tank was leaking and was needed to be replaced in another Huntsville property in April. Half an acre worth of poop covered a half acre yard. Twice. Why twice? Because apparently you need permitting in order to do this type of work in Huntsville and the government closed down the permitting department (or did something where the permits we needed wasn't able to be issued) until July. Cost 5.5K overall + Lawn repair, which still needs to be done.

    3) "Partnered" (I was the money guy) on a Flip in the Michiana area of Indiana. Bought a house for 0% down (owner financed) for 41K + 10K wholesale fee. Did a 40K renovation. Have someone under contract to buy it for 140K. About a $34K profit, and 17K split between me and my partner. 

    Overall exciting year. Only regret is that with the flip, I've stopped buying rentals for fear of not having enough money to do the flip properly if something arises. Kinda wished I did the flip after I filled my 10 conventional slots, but oh well, beggers can't be choosers in this case.

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