Hello, I need some recommendation if a turnkey options is the best idea. At the moment I live overseas working for a major airline. I want to invest in rental properties and this turnkey option came across my research. I have been talking to this big group that offer this option, Please I need if possible a feedback wether this is a good deal and if you would take it. It’s a SFH 3/2 located north of the Tampa area ( holiday) Their asking price is 125K which is about 6% over the market value. What they offer I really like because gives me peace of mind being far away from the property. They offer is the following: 2 year rental guarantee 1 year appliances guarantee 2 year PM cost covered The rent at the moment is 900/month Taxes are 65/month Of course I need to add extra expenses such as insurance, water n sewer, lawn maint, etc My plan is to finance it with an investment mortgage with 20% down. Do you think is a good deal ? Should I research for more options? Is it a good idea to finance it with a traditional mortgage or are there any other ways to do it ? I really appreciate any comments on this Thank you

If you are buying a property from turnkey provider who needs to offer a 2 year rental guarantee and a 2 year PM guarantee I can almost guarantee you that you're drastically overpaying for the property or dealing with a very inexperienced turnkey provider. Offering these types of guarantees are not viable from a property management perspective. Huge red flag.

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. • Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate • 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.

125k and 900 rent rate .... that’s all I needed to see Hard pass ...

@James Wise Thanks for the heads up I will really reconsider this option

@David Esteban - I'm glad the BP community is able to provide you a lot of information and ideas. Not all are consistent, but such is life :-) If you're interested in some more experience in rentals, turnkeys, and analysis - shoot me a message. In short, buying from a turnkey provider relies on the integrity and experience of the provider - and your ability to judge this. At best, the provider can handle all the work, supply the initial capitol, and get you an investment with a renter below the cost you can do it yourself. At worst, they can sell over price real estate in bad areas that will never produce a profit. My recommendation: • Determine your goals and objectives with the investment • If real estate is the answer, determine what type of RE can meet your goals and objectives • If the answer is single family homes, then determine if Turnkey is the right path for you • Evaluate several Turnkey providers. At the core, do they have experience and integrity It's not a simple path, but makes sure you're following your goals and objectives as the 'compass'. We've done many BRRRR's in the Des Moines market and have systems in place that allow us to find, rehab, and rent more properties than we have our own capitol to keep. Thus, we've decided to offer Turnkey properties to other investors. Does that help answer the "if it's a perfectly good house, why would anyone sell it?" question - at least from 1 real world perspective?

@David Esteban yes as out of state investors do not have any other choice. Also all the " perks " you are paying for with the over pricing. I just moved to that area ( 20 min SW ) in March, and my GF is an appraiser. I am more then happy to have her run the numbers for you to make sure you are getting a good deal. Also for rentals there are much higher returns to be had if you know where to look Good Luck

@David Esteban to keep it short and simple. Don’t do this deal. Do quite a bit of research and figure what you want to do in real estate and see which strategy best fits those goals for you. Once you figure out your strategy (i.e turnkey investing, flipping, etc) figure out the pros and cons. Don’t invest in areas you do not know and don’t trust a random PM or turnkey providers advice. Talk to others who have been doing what you want to do already and get some objective points of view along with your own research and make your own decision as to best route you should take. It sounds like you want to be completely hands off and that said, I don’t believe there are many, if any real estate options that will be good for you. Best of luck to you!

Is turnkey investment good idea ?

Edgar Rodriguez

Real Estate Agent · Tampa, FL · Member since 2017 · 191 posts · 98 votes

6y

@David Esteban Hey David!

I think turnkey exists because of your very situations. It is created for long distance investors who cannot buy and manage properties on their own.

However, I would do as much research as possible on the company as well as the property you are purchasing. Check out their reviews online. See what other similar homes are selling for in the area. Are their expenses and expected rent realistic?

Is turnkey investment good idea ?

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