looking to get my first turnkey rental need advise?

19 Replies

I am new to real estate investing and been taking training but have not yet got my hands in real estate. I live in the northern Virginia area and prices are going up. I ran into couple of turnkey rental properties companies (norada realestate, Memphis investments) I saw the numbers as it will be suitable to invest out of state but wanted to see if anyone had any experience dealing with those companies. Or recommend an area in Virginia to buy rental properties. Any suggestion will help me get through the paralysis by analysis phase. 

Thanks

@Muneef Alfadli , I've been looking for the same thing and based on my research so far those are two very solid options you have listed.

Make sure to check out David Greens long distance re investing book, and as many of the podcast on this site as you can.  

Originally posted by @Chris Bodden :

@Muneef Alfadli, I've been looking for the same thing and based on my research so far those are two very solid options you have listed.

Make sure to check out David Greens long distance re investing book, and as many of the podcast on this site as you can.  

thanks Chris, 

Any experience or recommendations between any of the turnkey companies. Not sure which one to seek as there are many options and narrowed down to rootstock Memphis invest and norada real estate. If anyone knows or have done business with them in the past can provide feedback or recommendations that would be great.

one company is a actual turnkey company and the other is a marketing company affilited with many different tk companies. Memphis has several providers you could check into. 

Good luck! 

@Muneef Alfadli buying turnkey will not get you a deal but is a great way to start with your limited experience and access to deals around you that will cashflow.

Try to get a property that will rent for 900 or more a month to don’t get stuck with a low end asset.

My suggestion is to buy rentals near a military base. Virginia is a great place to get cashflowing assets that you can sell to those with VA Loans, for every one military member that leaves one of equal or greater rank will replace them and most of the time they will pick the homes that is the most updated and offers the most convenience to base amenities. Bases are typically built in neighborhoods that have cheap housing, but you may encounter higher pricing at the moment, it's all about your timeline.

Originally posted by @Muneef Alfadli :

I am new to real estate investing and been taking training but have not yet got my hands in real estate. I live in the northern Virginia area and prices are going up. I ran into couple of turnkey rental properties companies (norada realestate, Memphis investments) I saw the numbers as it will be suitable to invest out of state but wanted to see if anyone had any experience dealing with those companies. Or recommend an area in Virginia to buy rental properties. Any suggestion will help me get through the paralysis by analysis phase. 

Thanks

Turnkey investments can be a great way to earn a decent ROI in another market. Just make sure you go with a true Turnkey Provider, and not just some real estate agent.

Ideally, they should own, renovate, and manage the property in house. If they push you off on some other property manager after the transaction, then they are just agents earing commission.

Try  looking at:

What to Ask When Working With a Turnkey Provider

and

The Best Types of Markets for Profitable Turnkey Properties

@marco santarelli

@Muneef Alfadli.   I just purchased a property from Norada. It took a little longer than expected because appraisal came back lower than the purchase price. The seller was able to lower the price and I closed in April. Everyone was very helpful and on top of things. I thought the process was easy and hassle free. Melissa from Norada was very quick to respond to any of my questions and guided me through this process.. So far it's been very good. 

Roofstock is an online marketplace for investor properties, not a seller and not turnkey.  Norada is primarily a marketing company that works with on the ground affiliates.  Just be sure to get to know and vet the actual seller & rehabber.

You’ve listed 3 different types of companies as @Larry Fried has just said. Roofstock is a marketplace, norada is a turnkey promoter and connects you with the actual turnkey companies and Memphis invest is an actual turnkey company.

Each very different

What kinds of things are you thinking about that have you in analysis paralysis? Is it the different company options to work with, different markets, numbers....?

Ali Boone

Yes being a new investor and deciding which company to go with and what market? Also I want to see if I can later on move the title to an LLC so I am doing more of reading And analysis than taking action and learning as I go. Any suggestions will definitely help

Thanks

Well I'd say worry about LLCs and all that later stuff...later. Stick with what is immediately in front of you.

What's your take on what companies you've seen so far? Do you understand the numbers and market factors that go into what they offer?

Originally posted by @Muneef Alfadli :

Ali Boone

Yes being a new investor and deciding which company to go with and what market? Also I want to see if I can later on move the title to an LLC so I am doing more of reading And analysis than taking action and learning as I go. Any suggestions will definitely help

Thanks

Muneef,

One piece of advice as you make plans to invest in real estate.  Be patient!  

There is a difference between being paralyzed with constant questioning and analyzing and being prudent in your decision making. There are thing you need to focus on and then there are things that are distractions as you get started. Worrying about an LLC and planning for the use of them may very well be a distraction if you have not thought about other things first.

A few suggestions for getting started would be:

1.  What are your expectations for your investments?  Are you in need of monthly cash flow to meet your income needs? Are you looking to build a portfolio and allow your rental income to reduce principal and own the properties outright as quickly as possible?  Do you have an expected outcome such as a specific portfolio value you want to own or a specific amount of rental income you want?

 2.  Are you looking to invest as a means of supplementing your retirement income?  When will you actually retire?  Do you have children?  Are your investments a means to funding their education or are they meant as a future legacy to leave your children?

3.  Are you comfortable investing completely passively?  That means you need to consider how much communication you want from a team you put together or hire.  You need to consider how you are going to feel when your property across the country goes vacant or has an extended vacancy.  How are you going to feel when you have an unexpected maintenance bill?  Do you trust that the team you are working with has your best interest in mind?  Do you trust the level and amount of communication you are going to get when those things occur?

You really need to get crystal clear with yourself that you are comfortable with your expectations.  For example, an investor simply saying they want $200 a month in cashflow is really not good enough.  Set your expectations a little more specific to mindset and get comfortable not being in control.  An example may be that you expect and average $200-$300 in cash flow monthly over an entire year when your properties are performing and a minimum of break even over a year when your properties have a down year.  This is a broad range and allows for your properties to be judged over a period of time and not monthly.  When you invest with a Turnkey company you are investing passively and allowing for fluctuations is going to be important.  This is real estate and the nature of our investments means they may not be consistent month to month but should be over a period of time.  If you cannot get comfortable with that, then do not invest passively.  

I really caution new investors to go slow and not just jump into Turnkey real estate because it sounds easy.  After many years in this industry with my family, in our opinion, Turnkey real estate can be a very good investment, especially for experienced investors diversifying their investments.  New investors can also have great success, but they need to be cautious, patient and clear on their expectations.  It usually takes a bit of experience to develop those three abilities, but that doesn't mean new investors cannot get there.  

We think our greatest responsibility at this point is to deliberately educate investors on those three things.  To encourage investors to focus on the right things such as the quality of the investments and communication as well as patiently answering the right questions and not get bogged down nor too excited by focusing on the wrong things.  Quality matters.  Consistency with your investments matter.  Proper expectations matter!  

You don't need to answer any of these questions here, but you need to answer them for yourself.  How you actually structure your investments are things you can address later through finding a local mentor and asking them how they would suggest you hold your properties.  You will find a question like that is really secondary to why you are actually investing in the first place and how comfortable you are doing it passively.

Best to you as you move forward.

Chris

Originally posted by @Muneef Alfadli :

I am new to real estate investing and been taking training but have not yet got my hands in real estate. I live in the northern Virginia area and prices are going up. I ran into couple of turnkey rental properties companies (norada realestate, Memphis investments) I saw the numbers as it will be suitable to invest out of state but wanted to see if anyone had any experience dealing with those companies. Or recommend an area in Virginia to buy rental properties. Any suggestion will help me get through the paralysis by analysis phase. 

Thanks

 To my knowledge both companies have good reputations & are well respected in the space. Memphis Invest having the entire operation under one roof with Norada being more of a marketing broker who connects you with management teams on the ground that they have referral arraignments with. 

So odds are good you'll have a good experience investing with either. Ya see, it's not really that complicated to buy out of state. It only becomes complicated when investors try to over complicate or over think everything. Whenever you are buying a property out of state you should do a few things to ensure it's as smooth as possible.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

I’d stick in your local area and master a section of town etc. before going out of state. I bought some properties from people listed and they are mostly trouble especially Memphis for all they hype it to be.
If they were such good properties they would hold them in their portfolio.