turnkey investing from out of state

18 Replies

I am looking to invest in the GA real estate market, and I am considering buying through turnkey because I live in California.  From the turnkey websites I have found, it seems like the sale prices are being set at a rental income/purchase price of ~1.0%.  Does anyone know of a turnkey that offers a better rate?  Considering the rental versus home prices in and surrounding Atlanta, I would expect a turnkey to offer a rate closer to 1.5%.  If I am going to purchase a home at full value from a turnkey, would I be better off to buy a home that doesn't need repairs with a realtor and just find a property manager to rent it out?  Any feedback and insight from the local gurus would be helpful! Thanks.

Most investor friendly realtors who own rentals  have a list of contractors/vendors /property managers at our fingertips . 

Originally posted by @Lindsey Maroun :

I am looking to invest in the GA real estate market, and I am considering buying through turnkey because I live in California.  From the turnkey websites I have found, it seems like the sale prices are being set at a rental income/purchase price of ~1.0%.  Does anyone know of a turnkey that offers a better rate?  Considering the rental versus home prices in and surrounding Atlanta, I would expect a turnkey to offer a rate closer to 1.5%.  If I am going to purchase a home at full value from a turnkey, would I be better off to buy a home that doesn't need repairs with a realtor and just find a property manager to rent it out?  Any feedback and insight from the local gurus would be helpful! Thanks.

Hello Lindsey,

Turnkey investments when you live out of state is a great idea. Many times it is too difficult to manage a property you never get to see. I recommend doing research into whatever company you think about using. Make sure they are an actual turnkey, sometimes people stretch the truth. 

Let me know if you have any questions.

Hello Lindsey,

I'm from the Atlanta area and I purchased two rental properties last year with my RE agent.

However, as far as I know, my RE agent makes a lot of purchases for international investors that have never seen their rentals. She also takes care of renting them out and finding property manager. I can check with her and connect between you too.
Even if she's too busy, there are also two other RE agents that I didn't work personally but I've got very good recommendations on them from very reliable sources. I'm pretty sure that they can help you too.

Let me know.

It's not a direct linear relation of rent vs acquisition is 1%. Lower properties have higher advertised ratios because they are more pain in the butt than more expensive properties. 60k property rents for 900 and a 100k property rents for 1100.

You can find cash flowing properties all day long in Bakersfield. With the money you'd save locally by rolling up your sleeves to manage acquisitions, renovation, and tenants, and not having to hop on a plane to visit your investments, you'd smoke the return you'd get out of state with a turnkey, and with less risk since you'd be in full control of your own destiny.  Why look out of state?

Hi Lindsey-

Good start, looks like you are asking the right questions. Its not only about the asset and the means you get to it, its the global experience, its the culture of the group you elect to couple yourself with. 

Checkout: A Simple Guide for Buying Out of State Turnkey Investment Property

Keeping it super simple and simply defining value, you want a strategy, you want accountability, you want someone who will be equally vested as you are, this is a culture parameter, make sure you are diligent, do not fear to ask tough questions that garner tough answers.

Much luck!

David, I'm looking in Bakersfield too. I currently work in the oil industry, which can be very volatile, and a lot of the economics seems to be dependant on oil. I'd also like to move to Atlanta. Thanks for the encouragement to look more into Bakersfield though!

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David, I'm looking in Bakersfield too. I currently work in the oil industry, which can be very volatile, and a lot of the economics seems to be dependant on oil. I'd like to move to Atlanta too. Thanks for the encouragement to look more into Bakersfield though. It's 

@Lindsey Maroun Interesting situation... I just bought 2 SFR's in Bakersfield. While I am aware that the town is dependent on the oil industry, I do also know that dependency to be cyclical. The question is, how many years apart. For example, rumors have it that the Chevron plant laid off a very large portion of its workers recently. Will this have an impact on my 2 rentals? Probably. Can I adjust by slightly lower rents until the jobs return? Remains to be seen.

In your experience, is there a mass exodus from Bakersfield at the moment, and if so, where are all the oil workers going? Gulf coast? 

@Alex Tillman the turn keys that are in the $30-40k range, what kind of rents and tenants will you get? Will you have to chase those tenants? Thats what always worries me on the properties below 50k. I am in contract on a really really well kept SFR in the Detroit Suburbs and even that has be slightly worried on vacancy/tenant quality.

Im dont mean to sound impolite, I am merely curious as to the true quality of tenants. Thanks! 

What you describe is the case for many properties in these low-end areas. However we've partnered with some of the most skilled and experienced leasing and property management companies and our clients are very pleased.  - We also mitigate that risk by finding areas that are transitioning upward and then finding undervalued properties within those areas.

Originally posted by @Lindsey Maroun :

David, I'm looking in Bakersfield too. I currently work in the oil industry, which can be very volatile, and a lot of the economics seems to be dependant on oil. I'd also like to move to Atlanta. Thanks for the encouragement to look more into Bakersfield though!

OK, that makes sense why Atlanta then. In that case, I'd advise moving to Atlanta 1st, even renting for awhile to get the lay of the land, then invest there locally. I actually did something similar when I moved from LA to Orange County. Because I rented, was local, got familiar with the area, and wasn't in a rush I found a much better deal on my primary and investment properties both. In retrospect, I still consider the rent I paid for a year to be money very well spent.

As for Bakersfield and the oil industry, you are on the ground there and in the industry both so are in an excellent position to judge if the market is appropriately discounted or over sold. The key is to keep your eye on the long term, while making sure the numbers work in the short term to be sure you make it to the long term. I'm confident oil will come back, and Bakersfield will come back with it ... when this will happen and how much worse or better Bakersfield RE gets in the short term is anyone's guess. If you buy right with plenty of positive cash flow and equity, though, these short term fluctuations shouldn't matter all that much. Same should be true wherever you buy, just much easier to assess and pull off locally.

@Abe Osman , Chevron did a round of layoffs last spring and they are about to do another one in a couple of weeks. CRC has laid off a total of 25% of their workforce. The other major in Bakersfield in Aera, and they haven't laid anyone off, and they don't plan on it. I think the majority of the layoffs are done for now, but if the price continues to stay below $45/barrel all year, I predict more layoffs. On a more positive note, the majority of these people have expensive homes in the NW and SW that are above $200k, so I don't think that will effect the SFR investment properties I am interested in.  The oil people who are likely to rent homes around $1000/month all got laid off the end of 2014 when the oil price initially crashed, but I am not sure how long it takes for that to be reflected in the local real estate market.  I read that it took 2 years for the Bakersfield market to feel the impact of the 1980 oil crash.  I do think that the local market is going to become a lot more of a buyers market this year, which is again good for us.  Overall, the town is hurting quite a bit right now though since the oil companies are the largest tax payers int the county, and maybe even the state.   

@Lindsey Maroun welcome to BP. I'm in a very similar situation as I work for Aera here in Bakersfield. I've been looking at the market for the last 3 months or so since I found BP and real estate investing. I'm primarily looking here in Bakersfield for now at least for the first deal so I can get my feet wet and learn more from the process. Im afraid I'm to green to invest somewhere out of state since I don't know what I don't know yet.

If your interested in getting together and discussing the Bakersfield market or strategies get in touch with me. I'm mainly looking at multi family's currently so I can't speak to the SFR space as much. I also attend the FIBI meetings monthly. You can find those on meetup.

Matt

@Lindsey Maroun ,

The job losses in the oil industry could affect the lower end of the market as well as the higher end.  Higher income earners hire lower income earners and when the high end money stops...the flow of funds stop as well.  A few examples could be a gardener, maid service, etc.  When the 100k income earner gets layed off...they will likely cut the gardner and cut thier own grass. 

The good thing for Bakersfield is that the economy has been diversifying in recient years.  Logistics is growing fast and shows no signs of slowing down moving forward.  

The oil slow down might create a pretty nice buying opportunity. 

Hey Lindsey! You're right- your points are great- and I'd attribute it to the fact that you are looking in Atlanta. Back in the day, Atlanta was crazy amazing for returns (I bought like crazy then) but since then it's become very eaten up from investors and the prices were all driven quite high. So now the returns just aren't there like they used to be. If you change markets, you can find better numbers. Like Philly and Chicago for example fit more of what you are looking for for ratios. Atlanta has just been through it's big days already. I bought there like it was going out of style, but I don't recommend it to anyone now and wouldn't buy there myself. Times have changed.

Originally posted by @David Faulkner :

You can find cash flowing properties all day long in Bakersfield. With the money you'd save locally by rolling up your sleeves to manage acquisitions, renovation, and tenants, and not having to hop on a plane to visit your investments, you'd smoke the return you'd get out of state with a turnkey, and with less risk since you'd be in full control of your own destiny.  Why look out of state?

 It's not for everyone, David. As far as CA goes, Bakersfield is on the affordable side but compared to a lot of markets in the South and Midwest...

I'm looking at some TK in B areas in many markets back there and there are plenty to choose from that aren't mobile homes compared to their price equivalents in Bakersfield. 

I'm like the OP, I'm in CA for the $. If I'm still here when the market corrects in a couple of years I hope to purchase then eventually rent out or sell my primary but that will likely be it for investing on the left coast.

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