San Francisco, CA · Member since 2016 · 20 posts · 8 votes
Hi Everyone, Hoping to get a second set of eyes on my first set of calculations. This is a TK in Indy, good B neighborhood. I still need to talk through all the details of the rehab but it will be thorough.
Financial services executive · Frederick, MD · Member since 2015 · 609 posts · 341 votes
10y
Online sites? You're about to make a six figure investment - don't cheap out on $400 to fly there, rent a car, verify everything you've been told online is accurate, put your own eyes on the property and other deals the turnkey provider has available.
If the deal is everything it's supposed to be you're going to do more business with these people and the travel costs will really seem like a pittance. Find out that not everything is what you were envisioning and you'll feel like it was the best money you've ever spent in real estate.
Investor · Rochester, NY · Member since 2016 · 477 posts · 426 votes
10y
@Mike D'Arrigo I don't think we're actually that far apart, I probably should have just been more diplomatic in my terms :-) I said 'giving away' but maybe a more generous man would have said "paying to."
(The only thing I will squabble over is the whole "market value." I've had that discussion too, so I know what you mean, but if I can buy deals off-market (and even as a small-timer, I can) than I can absolutely buy them below 'market value.' Maybe I should have said "Buy them below retail market value" but even then, there are still workable deals on the MLS in places - you just have to catch them.)
When someone works with a Turn Key company, they're paying them to do all of the work - and there's nothing wrong with that at all. I definitely agree that for many people, it might very well be a good option for them to get involved in real estate investment - I'm just fortunate that I can invest where I live, and that skews my perspective on the topic. And if or when I start to invest outside of my immediate area, I'll have the advantage of quite a few deals behind me as well, and the foundation to replicate my efforts in a new market, remotley.
I think furniture is a good analogy: If I wanted a beautiful dining room set, made out of hardwood, stained specifically to match woodwork in my home, with a lot of hand-finished touches and intricate detail work, I have two options:
1. Pay a Master Craftsman, who is much faster than me, gets better material pricing than me, and has better equipment than me, $35,000 to delivery a finished set that meets every requirement I have.
2. I can do it myself, which will take longer, and might not even be as nice - but it'll cost about $30,000 less. And I'll learn more, expand my skills, and always have pride in what I've built.
Now if I have to account for paying myself, it might cost me more doing it myself - but at least then I've paid myself instead of someone else.
I think it's important to note that this is all just a personal preference. Turn Key is great for some people, but they have to be realistic about what it is, and the returns they should expect. 10% might be great for some folks - I'm just looking for a whole lot more than that, and I know that means I can't afford to pay somebody else to do it for me.
As an aside, I've heard good things about Pinnacle Mike, and I have no doubt you guys are one of the good ones. You're in a tough business - so good luck out there!
Investor · Cleveland, OH · Member since 2015 · 6k+ posts · 2k+ votes
10y
@Jason V., I liked your non-diplomacy better! Turnkey (ie. retail) Buyers need to know that their exit strategy will probably NOT include selling for any profit of note! Likely, their only profit will be any residual cash flow left over after they've paid retail for everything along the line (as you said).
And will that cash flow conform to pro forma predictions? Good luck with that! Cheers...
Investor · Rochester, NY · Member since 2016 · 477 posts · 426 votes
10y
@Brent Coombs Just trying to keep both sides in perspective, that's all :-)
It's easier for guys in our area (assuming you invest in Ohio) to be a little dismissive of what the TK companies do because we can do the same thing in our own backyard and get a lot better returns doing it.
If a friend or neighbor came to me and said they were going to use a TK company to invest in a first deal locally, I'd slap them on the back of the head, no question.
For folks who live in the very few places where there isn't a workable market within a couple hours drive? And who don't want to deal with contractors or tenants? Then maybe TurnKey - but I still view Real Estate as an Active Passive Investment, which is why it can be so much better (or worse) than 'hands-off' investing. I'm a big believer that we make our money when we buy, and that you're giving most of that up using a TK provider.
And yet, it makes sense for some people, in some situations. 'Round and 'round I go....
Was it the "best"? No, but great is the enemy of good. I flew out there, did the tours, shook hands.
Question is: compared to what? If this is a way for you to begin RE investing in a way that you are comfortable with, and you can sleep at night then only you know that. Let us know how it goes.