Feedback on Turkey- Memphis Investment Properties company

Memphis, Tennessee
Memphis Real Estate Forum
5yFollow

Feedback on Turkey- Memphis Investment Properties company

Mina Skoutelakis
Member since 2021 · 11 posts · 11 votes

Hello,

I am from California, a newbie, looking for out of state opportunities as a first investment.  I have been looking at Memphis Investment Properties (turnkey) and wondering if anyone has experience or feedback about them?

Thanks very much,

Mina Skoutelakis 

5Reply
247 views

Most Popular Reply

Eric FernwoodBusiness Member
Realtor · Las Vegas, NV · Member since 2014 · 1k+ posts · 1k+ votes
4y

Hello @Mina Skoutelakis,

Turnkey is a purchase method, nothing more. Buying turnkey does not reduce your due diligence effort.

Location

Start by selecting an investment location. The location is the most important investment decision you will make. Select a location that meets all the following criteria.

  • Appreciation - The number one location selection criteria is appreciation. Inflation constantly erodes buying power; each year, it costs more to buy the same set of goods. If you buy in a location where pre-COVID prices and rents increased faster than the current inflation rate, you will continue to have the funds you need. If not, the initial cash flow will be the highest you will ever receive, and you will have a continuously declining standard of living.

    You may have noticed that I use rent increase and appreciation interchangeably. The reason is that appreciation and rents are tied together. If prices increase (appreciation), rent will follow, but with a 2 to 10-year lag depending on the market. What is happening with property prices before COVID is an excellent indicator of what will happen with rents in the future.

  • Population Size - Greater than 1 million. Small towns may rely too much on a single business or market segment.
  • Population Growth - If people are moving into a location, many things have to be right. Never invest in any location where the population is stagnant or declining.
  • Crime - People and companies will not move to locations perceived as dangerous. One source of cities to avoid is Neighborhood Scout's 100 most dangerous cities. Avoid any city on this list.
  • Disaster Risk - Some parts of the country are more prone to natural disasters. The best indicator for natural disaster probability is homeowners insurance cost. I would avoid states with high insurance rates. Note, even if insurance pays for all the damage your property suffers, you still lose. When a significant disaster occurs, people and jobs move to locations where they can make money today. The location may take years to recover, or it may never recover. ValuePenguin is a good source for the relative cost of insurance by state.
  • Operational Costs - Costs like property taxes, insurance cost, state income taxes, regulatory costs (ex: time and cost to evict), inspections, rent control, etc., have a tremendous impact on your return. Select a location with relatively low operational costs. Operational costs are a direct hit on profitability.

If you select a location that meets all the above criteria, you are off to a good start. The next step is to decide what to buy. It is not as simple as buying a property that looks like a good investment. When you buy a property, you also select many things that you cannot change in the future. See the diagram below.

As shown in the diagram, the property defines the tenant pool. The vacancy cost differences between tenant pools can be huge. For example, there are three major tenant pool segments in Las Vegas. Below is an illustration showing the annual vacancy cost for each.

Determine the tenant pool you want to target by interviewing multiple local property managers. The best tenant pool will have a high concentration of "good" tenants. I define a good tenant as someone who:

  • Has stable employment in a market segment that is very likely to be stable or improve over time.
  • Has a financial history that shows they are stable and pay all their bills on schedule.
  • Does not engage in illegal activities while on the property
  • Does not cause problems with neighbors
  • Takes care of the property
  • Stays for many years

Once you know the tenant pool you want to target, you can then define the property characteristics this tenant pool is willing and able to rent. Below is the least you need to know.

  • Type: Condo, high rise, single-family, etc.
  • Configuration: For example, 2,000SF, two bedrooms, three-car garage, large back yard, single-story, two stories, etc.
  • Location - Where your target tenant pool wants to live.
  • Price - You must profitability rent the property within the target tenant pool's rent range.
  • Wants - Tenant pool specific property features. For example, bars on the first-floor windows might be very important for one tenant pool. For another tenant pool, it might be granite kitchen counters.

Now that you know what kind of the properties you want to buy, the next step is to decide on a purchase method.

Turnkey vs. Investment team

Turnkey

In general, turnkey properties will always be more expensive than a direct purchase, which results in a lower return and lower equity. Turnkey providers must charge enough to cover renovation, carrying costs, marketing expenses, tenant acquisition, and profit. These costs are in addition to the actual property acquisition cost. Below is a diagram illustrating the cost difference between direct vs. turnkey. The difference between a direct purchase and buying turnkey is what I call the "convenience fee."

Note that even though you pay more with turnkey and have a lower return and equity, you save time. Convenience is the main value of buying turnkey.

Investment Team

An investment team has all the skills you need to acquire investment properties including the following.

Most of the services will be low cost and some will be free to you as the buyer. Working with an investment team will increase your return and initial equity, but it will take more of you time.

Turnkey Considerations

Below are two of the concerns I have heard from people who purchased turnkey.

Property Condition

Most turnkey providers put all their money into cosmetics, not systems. Painting, carpet, and light fixtures are small cost items compared to termites, roof, plumbing, wood rot, electrical, HVAC, and foundation issues. For example, during a recent inspection of a flipped property, we learned that the plumbing system was shot and the flipper patched over leaks. Estimated cost to re-plumb the house,$10,000. In comparison, the paint and carpet and everything else probably cost under$5,000.

I have also heard that some turnkeys do not provide an independent inspection report or even allow the property to be inspected. Unless you know the property's actual condition, how do you know the actual acquisition cost? Never buy a property without an independent property inspection. Also, do not use a property inspector recommended by the turnkey company.

Property Management

One of the selling points for turnkeys is that they manage the property after the sale. The flip side is that you cannot use a different property manager, even if you are dissatisfied with their property manager's performance. Read the turnkey's property manager's reviews. One large turnkey's property manager has a rating of 1.5 stars based on a large number of reviews. Such a poor-performing property manager will result in more frequent tenant turns, generating more income for the property manager and lower returns for you.

If You Decide on Turnkey

I recommend the following as a condition of a turnkey purchase.

  • The right to have the property inspected by an independent licensed property inspector of your choosing.
  • A list of all repairs made by the turnkey to the property - you need to know which items (from the inspection report) still need to be corrected. Get a quote for all the needed repairs so you know how much the property actually costs.
  • Get independent rental and sales comps for the property. This will enable you to compare market rent and property value vs. what the turnkey is stating.
  • Get copies of their management and leasing agreement and read them. For example, I've seen management agreement terms requiring you to sell the property through them at a very high commission rate. This may not seem important today but will be very important in the future when you decide to sell.
  • You must have the right to choose the property manager. You want a property manager that works for you, not the turnkey. From what I have heard, you do not have that option with most turnkeys. Property management and maintenance is where turnkeys derive a lot of their income.
  • You will receive all disclosures provided by the prior owner of the property to the turnkey. In some locations, the seller must provide detailed disclosures on the condition of the property.
  • A written statement from the property manager with specifics on the time and cost to evict a non-paying tenant. Then, confirm what they state with multiple sources.

If you obtain all the above, buying turnkey or direct becomes a simple time saved vs. return decision.

[email protected]702-358-8884
FERNWOOD Team, KW VIP Realty520 Reviews
WebsiteView Page
10Reply
See this reply in the discussion

26 Replies

Jump to latestLatest
  • Jason Rhodewalt
    Investor · Sacramento, CA · Member since 2020 · 105 posts · 48 votes
    5y

    Hi Mina - I'm also from CA and I have bought a property from Memphis Investment Properties (and have multiple others also managed by Reedy who is their PM company). The process of buying from them was great - very easy. We had a handful of things that showed up on the home inspection and to my surprise they fixed them all! (most home inspections include silly little things don't need to be addressed). I have had some issues with Reedy but they seem to be getting better

    1Reply
  • Mina Skoutelakis
    OP
    Member since 2021 · 11 posts · 11 votes
    5y

    Thank you @Jason Rhodewalt.  Is it true to assume that as a turnkey, most purchases will not meet the 1% rule?  I'm still trying to understand the downsides of turnkey - assuming it's like buying from Whole Foods vs. Grocery Outlet :) 

    0Reply
  • Jason Rhodewalt
    Investor · Sacramento, CA · Member since 2020 · 105 posts · 48 votes
    5y

    @Mina Skoutelakis correct - you will not make 1% rule with TK. There are two downsides to TK

    1) You're paying a premium price for a premium product so you have basically no equity when you start (BRRRR investors hate this idea)

    2) You're paying a premium price so you Cash on Cash return will be lower then if you buy the same house yourself and do some repairs and then rent it out

    To me for first time OOS investors I think its a great way to start. You won't maximize your returns but it's basically zero work and it gets you in the game

    3Reply
  • Mina Skoutelakis
    OP
    Member since 2021 · 11 posts · 11 votes
    5y

    Thank you @Jason Rhodewalt.  If you have a recommendation of who to work with at Memphis Investments, I'd love to hear.  I've never been to Memphis, so I have no understanding of neighborhoods, etc. 

    0Reply
  • Darius Ogloza
    Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    5y

    @Mina Skoutelakis

    I would strongly encourage you to do your research regarding Memphis neighborhoods before you buy.  I do not own turnkey and have never bought.  I also do not know anything about Memphis.  However, I have seen advertisements from turnkey companies selling in two cities which I know intimately and the prices tended to be 2x-4x of what the advertised properties were worth.  Moreover, many of the properties were located in dangerous areas where growth within any foreseeable future is highly unlikely.

    0Reply
    • Mina Skoutelakis
      OP
      Member since 2021 · 11 posts · 11 votes
      5y
      Originally posted by @Darius Ogloza:

      @Mina Skoutelakis

      I would strongly encourage you to do your research regarding Memphis neighborhoods before you buy.  I do not own turnkey and have never bought.  I also do not know anything about Memphis.  However, I have seen advertisements from turnkey companies selling in two cities which I know intimately and the prices tended to be 2x-4x of what the advertised properties were worth.  Moreover, many of the properties were located in dangerous areas where growth within any foreseeable future is highly unlikely.

      @Darius Ogloza Thank you. Would you mind sharing how I would (as an inexperienced new investor) determine true home values (besides comparing against Zillow, etc.) and do you use Neighborhood Scout re: crime rates?

      0Reply
    • Darius Ogloza
      Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
      5y
      Originally posted by @Darius Ogloza:

      @Mina Skoutelakis

      I would strongly encourage you to do your research regarding Memphis neighborhoods before you buy.  I do not own turnkey and have never bought.  I also do not know anything about Memphis.  However, I have seen advertisements from turnkey companies selling in two cities which I know intimately and the prices tended to be 2x-4x of what the advertised properties were worth.  Moreover, many of the properties were located in dangerous areas where growth within any foreseeable future is highly unlikely.

      To do this right, you really need to have the bandwidth to take a deep dive and learn the city, zip code by zip code and neighborhood by neighborhood.  In many of these cities, property values differ materially block by block.  For example, from my past experience, I can tell you that there is a substantial difference in value in properties east of Culver Rd in Rochester NY than immediately west of Culver Rd.  You really have to know the area that well to succeed at this.   
      Old fashioned roll up the sleeves research and visits to the places you mean to invest are, in my humble view, absolutely essential.  Otherwise, you are at the mercy of a seller's characterization of a "good deal" - some place you never want to be. There really are no simple shortcuts.   There are a lot of useful resources on the web - city data, scout, zillow but there's no substitute for spending time in a rental car zooming around.     

      1Reply
  • Richard V.
    Los Angeles, CA · Member since 2014 · 33 posts · 6 votes
    5y

    @Mina Skoutelakis I am a customer of Memphis Investment Properties and have one SFH with them. I visited MIP back in 2018 and dealt with Mark Hart. He educated me on why Memphis is a great place to invest and what areas to purchase in after determining what class of property would fit my goal of a balance of cash flow vs appreciation. Reedy is their property mgmt arm and the systems they have in place regarding handling maintenance and collections is impressive. I hope to purchase more investment properies with them in the future. Please message me if you have any questions regarding MIP.

    2Reply
  • ReShauna Jackson
    Member since 2021 · 3 posts · 3 votes
    5y

    Good evening. I currently have a listing that would be a great investment. I will message you directly

    0Reply
  • Mina Skoutelakis
    OP
    Member since 2021 · 11 posts · 11 votes
    5y

    @Darius Ogloza - Thank you for your post message.  Makes complete sense. 

    0Reply
  • R Miles
    Member since 2021 · 8 posts · 6 votes
    5y
    Hello Mina, thank you for this post. I too am getting my start investing in real estate in Memphis. I live in California but have family there.  I agree with @DariusOlgoza, that doing the research yourself is the best way to familiarize yourself with the neighborhood, and also ensure you are comfortable with your investment.  I have spent some time in Memphis, and the neighborhoods are so complex.  Within a zip code you may have varying degrees of quality in a neighborhood, often between adjacent blocks. It may be worth a trip to put boots on the ground and survey the landscape for yourself.

    I recently made my first offer, on 2 bed/1 bath turnkey property, though not through MIP.  Mathematically, I don't think it will meet the 1% rule or any of the other "should" parameters.  But, it is in an area where homes have appreciated significantly and the neighborhood is deemed very desirable (Sherwood Forest).  The rents in Memphis are favorable, so over time it may be a good prospect.  I am going to do my due diligence and see if it makes sense.  At the lower price points in Memphis, I feel like it's a great place to begin.

    This is all a learning process, but at some point I figured that I have to dive in.  There are a ton of resources here on BP and elsewhere. These forums are so rich with information, which is great.  I plan to keep asking questions and doing the grunt work. Best of luck to you!  
    0Reply
  • Mina Skoutelakis
    OP
    Member since 2021 · 11 posts · 11 votes
    5y

    Hi @R Miles.  I'd love to hear more about your experience.  I'll send you a connect message :)

    0Reply
  • Tyler Tapley
    Real Estate Agent · Memphis, TN. · Member since 2018 · 175 posts · 101 votes
    5y

    We are not a turnkey company or a management company.  We are based in Memphis.  I am happy to provide honest (third party) feedback on some of the turnkey companies.  Most of them do a great job...some only invest in Class A & B zip codes, some invest in Class A-C, some invest only in C-D zip codes, and some aren't really turnkey companies.

    We don't provide turnkey options and don't have anything to sell you.

    Private message me if I can be of service.  I sold 380 houses last year (just me) many of them to the turnkey guys.  I can tell you where they buy, what they sell them for, what they rent for, and what areas they avoid.

    9Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    ONe thing with Memphis everything being equal.. And rarely mentioned by those selling these properties .

    is you have dual taxation in that market..  IE county tax AND City Tax.. so if you buy in the city of Memphis your going to get two tax bills.. whereas if you buy in one of the nice burbs or in N. MS your only going to get one tax bill.. So do check that out.
    Also make sure the tax's that are quoted are realistic and not owner occ lower than what non owner occ are.. so you can prep correct cash flow numbers.. I dont recall in TN if its like many other states were Owners get a homeowner exemption and their tax rate is lower.. Unlike us on the West coast were there is only one tax rate.  I do know the double tax though.

    And i see it a bunch on the properties I finance were the current tax's are owner occ or very low only to get jacked up the moment you buy it in the next tax year.  And you run your numbers at current tax's on line which are correct for that second but wont be the same when U close.. this happens in TX a lot.
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    6Reply
  • Tyler Tapley
    Real Estate Agent · Memphis, TN. · Member since 2018 · 175 posts · 101 votes
    5y

    There is no home owners exemption in TN.  Mississippi has it (but it applies to owner occupants).  MS property taxes are lower, but they have an income tax.  TN does not have an income tax.  Our taxes for low end properties are usually $1000 or less.  For properties over $130K I'd say they are $1500 a year.

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Tyler Tapley:

    There is no home owners exemption in TN.  Mississippi has it (but it applies to owner occupants).  MS property taxes are lower, but they have an income tax.  TN does not have an income tax.  Our taxes for low end properties are usually $1000 or less.  For properties over $130K I'd say they are $1500 a year.

    IN Vegas I pay 1500 a year for a 300k non owner occ.. Vegas has probably the best of all worlds NO income tax  and tax rates half of other states along with no weather concerns for on going maintenance.. plus when you run the numbers and you can buy a 300k prop that cash flows the same as a 100k prop in another market your fishing in the 700 plus Non section tenant pond.. I find that attractive.

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
  • Sean Tagge
    Investor · Lehi, UT · Member since 2015 · 435 posts · 300 votes
    5y

    Thank you for the kind remarks @Richard V. and @Jason Rhodewalt glad your experiences working with our company went well. Hello @Mina Skoutelakis glad you are doing some research on our company we'd be happy to answer any questions for you! I have some introductory videos and booklets about our company and Memphis I would be happy to share with you. Best of luck to you! 

    Here are some recent stats on Memphis from Chandler Reports

    Home sale prices were up as well rising 17% in August with an average price of $245,436 for the month compared to August 2020's average home sale price of $210,494.

    @Mina Skoutelakis

    0Reply
  • Kevin S InguitoPro Member
    Member since 2020 · 4 posts · 1 vote
    4y

    November 9th I closed on a 4/2 SFR in Whitehaven for 139k, 25% down, 3.5% mortgage rate. It appraised at 150k. Rent is $1195/mo.
    This is my first income property, so I went  with a turnkey operator (Memphis Turnkey) that I heard about on a the GRE podcast. 

    I visited Memphis in July, taking a tour of different neighborhoods in which Memphis Turnkey buy.  Andrew Akins, their investor relations guy, drove me around, showing me various properties in different states of rehab. It was helpful to see the work firsthand, and I chose the home to get in contract from those I saw. The whole process from rehab to leased tenant was four months. They were professional, helpful and communicative. They responded to requests immediately. What I appreciated was their updates on the process through the portal software. 

    Give them a call if a turnkey product might work for your portfolio. They do their own management (CB Properties), charging 8% for management. 

    0Reply
  • Eric FernwoodBusiness Member
    Realtor · Las Vegas, NV · Member since 2014 · 1k+ posts · 1k+ votes
    4y

    Hello @Mina Skoutelakis,

    Turnkey is a purchase method, nothing more. Buying turnkey does not reduce your due diligence effort.

    Location

    Start by selecting an investment location. The location is the most important investment decision you will make. Select a location that meets all the following criteria.

    • Appreciation - The number one location selection criteria is appreciation. Inflation constantly erodes buying power; each year, it costs more to buy the same set of goods. If you buy in a location where pre-COVID prices and rents increased faster than the current inflation rate, you will continue to have the funds you need. If not, the initial cash flow will be the highest you will ever receive, and you will have a continuously declining standard of living.

      You may have noticed that I use rent increase and appreciation interchangeably. The reason is that appreciation and rents are tied together. If prices increase (appreciation), rent will follow, but with a 2 to 10-year lag depending on the market. What is happening with property prices before COVID is an excellent indicator of what will happen with rents in the future.

    • Population Size - Greater than 1 million. Small towns may rely too much on a single business or market segment.
    • Population Growth - If people are moving into a location, many things have to be right. Never invest in any location where the population is stagnant or declining.
    • Crime - People and companies will not move to locations perceived as dangerous. One source of cities to avoid is Neighborhood Scout's 100 most dangerous cities. Avoid any city on this list.
    • Disaster Risk - Some parts of the country are more prone to natural disasters. The best indicator for natural disaster probability is homeowners insurance cost. I would avoid states with high insurance rates. Note, even if insurance pays for all the damage your property suffers, you still lose. When a significant disaster occurs, people and jobs move to locations where they can make money today. The location may take years to recover, or it may never recover. ValuePenguin is a good source for the relative cost of insurance by state.
    • Operational Costs - Costs like property taxes, insurance cost, state income taxes, regulatory costs (ex: time and cost to evict), inspections, rent control, etc., have a tremendous impact on your return. Select a location with relatively low operational costs. Operational costs are a direct hit on profitability.

    If you select a location that meets all the above criteria, you are off to a good start. The next step is to decide what to buy. It is not as simple as buying a property that looks like a good investment. When you buy a property, you also select many things that you cannot change in the future. See the diagram below.

    As shown in the diagram, the property defines the tenant pool. The vacancy cost differences between tenant pools can be huge. For example, there are three major tenant pool segments in Las Vegas. Below is an illustration showing the annual vacancy cost for each.

    Determine the tenant pool you want to target by interviewing multiple local property managers. The best tenant pool will have a high concentration of "good" tenants. I define a good tenant as someone who:

    • Has stable employment in a market segment that is very likely to be stable or improve over time.
    • Has a financial history that shows they are stable and pay all their bills on schedule.
    • Does not engage in illegal activities while on the property
    • Does not cause problems with neighbors
    • Takes care of the property
    • Stays for many years

    Once you know the tenant pool you want to target, you can then define the property characteristics this tenant pool is willing and able to rent. Below is the least you need to know.

    • Type: Condo, high rise, single-family, etc.
    • Configuration: For example, 2,000SF, two bedrooms, three-car garage, large back yard, single-story, two stories, etc.
    • Location - Where your target tenant pool wants to live.
    • Price - You must profitability rent the property within the target tenant pool's rent range.
    • Wants - Tenant pool specific property features. For example, bars on the first-floor windows might be very important for one tenant pool. For another tenant pool, it might be granite kitchen counters.

    Now that you know what kind of the properties you want to buy, the next step is to decide on a purchase method.

    Turnkey vs. Investment team

    Turnkey

    In general, turnkey properties will always be more expensive than a direct purchase, which results in a lower return and lower equity. Turnkey providers must charge enough to cover renovation, carrying costs, marketing expenses, tenant acquisition, and profit. These costs are in addition to the actual property acquisition cost. Below is a diagram illustrating the cost difference between direct vs. turnkey. The difference between a direct purchase and buying turnkey is what I call the "convenience fee."

    Note that even though you pay more with turnkey and have a lower return and equity, you save time. Convenience is the main value of buying turnkey.

    Investment Team

    An investment team has all the skills you need to acquire investment properties including the following.

    Most of the services will be low cost and some will be free to you as the buyer. Working with an investment team will increase your return and initial equity, but it will take more of you time.

    Turnkey Considerations

    Below are two of the concerns I have heard from people who purchased turnkey.

    Property Condition

    Most turnkey providers put all their money into cosmetics, not systems. Painting, carpet, and light fixtures are small cost items compared to termites, roof, plumbing, wood rot, electrical, HVAC, and foundation issues. For example, during a recent inspection of a flipped property, we learned that the plumbing system was shot and the flipper patched over leaks. Estimated cost to re-plumb the house,$10,000. In comparison, the paint and carpet and everything else probably cost under$5,000.

    I have also heard that some turnkeys do not provide an independent inspection report or even allow the property to be inspected. Unless you know the property's actual condition, how do you know the actual acquisition cost? Never buy a property without an independent property inspection. Also, do not use a property inspector recommended by the turnkey company.

    Property Management

    One of the selling points for turnkeys is that they manage the property after the sale. The flip side is that you cannot use a different property manager, even if you are dissatisfied with their property manager's performance. Read the turnkey's property manager's reviews. One large turnkey's property manager has a rating of 1.5 stars based on a large number of reviews. Such a poor-performing property manager will result in more frequent tenant turns, generating more income for the property manager and lower returns for you.

    If You Decide on Turnkey

    I recommend the following as a condition of a turnkey purchase.

    • The right to have the property inspected by an independent licensed property inspector of your choosing.
    • A list of all repairs made by the turnkey to the property - you need to know which items (from the inspection report) still need to be corrected. Get a quote for all the needed repairs so you know how much the property actually costs.
    • Get independent rental and sales comps for the property. This will enable you to compare market rent and property value vs. what the turnkey is stating.
    • Get copies of their management and leasing agreement and read them. For example, I've seen management agreement terms requiring you to sell the property through them at a very high commission rate. This may not seem important today but will be very important in the future when you decide to sell.
    • You must have the right to choose the property manager. You want a property manager that works for you, not the turnkey. From what I have heard, you do not have that option with most turnkeys. Property management and maintenance is where turnkeys derive a lot of their income.
    • You will receive all disclosures provided by the prior owner of the property to the turnkey. In some locations, the seller must provide detailed disclosures on the condition of the property.
    • A written statement from the property manager with specifics on the time and cost to evict a non-paying tenant. Then, confirm what they state with multiple sources.

    If you obtain all the above, buying turnkey or direct becomes a simple time saved vs. return decision.

    [email protected]702-358-8884
    FERNWOOD Team, KW VIP Realty520 Reviews
    WebsiteView Page
    10Reply
  • Michael Le Blanc
    New to Real Estate · Los Angeles · Member since 2021 · 9 posts · 1 vote
    4y

    Thanks @Eric Fernwood! As a newbie, looking to make my first investment, I found your breakdown of criteria to extremely helpful! I took lots of notes. I was drawn here by an interest in turnkey properties in Memphis and have been reviewing/interviewing various providers, Memphis Investment Properties among them. I would love to hear from anyone else with any investors who have experiences with and recommendations of turnkey providers in Memphis. 

    0Reply
  • Lisa Waldman
    Member since 2020 · 28 posts · 9 votes
    4y
    Quote from @Michael Le Blanc:

    Thanks @Eric Fernwood! As a newbie, looking to make my first investment, I found your breakdown of criteria to extremely helpful! I took lots of notes. I was drawn here by an interest in turnkey properties in Memphis and have been reviewing/interviewing various providers, Memphis Investment Properties among them. I would love to hear from anyone else with any investors who have experiences with and recommendations of turnkey providers in Memphis. 

    We bought several properties in Memphis last year and we are OOS investors. We are doing well with them, but some were supposed to be turn key. They were more of a blow and go, with more repairs needed after purchase than there should be. If you want to know who they are message me. The good, for the price we paid for the properties the profit is decent. But another bad, some tenants they picked have been a pain. They said they screened tenants before movein. I know for a fact that was not the truth.

    Lisa

    1Reply
  • Mike MoseePro Member
    Investor · Eagle Point, OR · Member since 2011 · 187 posts · 123 votes
    4y

    I just came back from Memphis after checking out our rentals there as I believe in trust but verify.

    All properties were in decent condition, some I have never seen before.

    Tennessee has a Fonce tax exemption for excise tax so be sure your CPA gets that so you can avoid excise tax if you're not filing as C-Corp.

    We've worked with current property management for 11 years successfully, Mid South Home Rentals in Arlington,Tn.  Talk to Chris Peak.

    Best of luck

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
    4y

    @Michael Le Blanc

    The biggest challenges with Turnkey providers:

    1) Terrible renovation work - we've taken over many properties that investor bought turnkey and they were shocked to learn the true condition of their property from our TakeOver video.
    ---So, get a GREAT property inspector NOT recommended by the turnkey company to avoid bias.

    2) Misrepresenting Property Class - have seen many turnkey providers in Metro Detroit area sell OOS investors Class C properties as Class B.
    ---So, learn the neighborhoods where you plan to invest and use Google Streetview to virtually explore them.

    3) Poor Tenant Screening - they typically can't sell a property until they place a tenant. So, they have a conflict of interest in waiting for the right tenant.
    ---So, insist on them providing the rental application and supporting docs for your review. This means YOU need to learn how to evaluate a rental application!

    4) Poor Property Management - Where do you think a turnkey provider will put their best staff, on selling properties and making $5k+/transaction or on property management and making $80/month transactions?
    ---So, ask about their standard operating procedures and make sure your management contract has an easy termination clause.

    What are your options if you experience one of the above? Everyone thinks they can sue to solve the problem.

    Do you realize how much it will cost to hire an OOS attorney to sue the turnkey company?

    Unfortunately, the majority of investors that experience terrible service from turnkey companies, figure out that it's not worth spending tens of thousands of dollars suing their turnkey provider and just move on - which allows the turnkey provider to not change their ways and stay in business:(

    You should also check out this BP thread about the topic:

    https://www.biggerpockets.com/forums/88/topics/976647-turnkey-company-suggestion?highlight_post=5648876&page=1#p5648876

    [email protected]248-209-6824
    Logical Property Management4.9462 Reviews
    WebsiteView Page
    0Reply
  • Tamar Krongrad
    Member since 2023 · 2 posts · 0 votes
    3y
    Quote from @Michael Le Blanc:

    Thanks @Eric Fernwood! As a newbie, looking to make my first investment, I found your breakdown of criteria to extremely helpful! I took lots of notes. I was drawn here by an interest in turnkey properties in Memphis and have been reviewing/interviewing various providers, Memphis Investment Properties among them. I would love to hear from anyone else with any investors who have experiences with and recommendations of turnkey providers in Memphis. 


     Curious to hear if you bought? 

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free