First Kansas City Turnkey Purchase

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First Kansas City Turnkey Purchase

Chris Nordella
Real Estate Agent · Oxnard, CA · Member since 2014 · 73 posts · 77 votes

Hey Everyone, 

I figured I would document my first turn key purchase in Kansas City, MO. I read another members similar blog and found it very helpful. I won't be naming company names unless through private message for feel free to ask. 

I researched a number of turn-key companies before narrowing it down to a few. I also found an area that I was comfortable enough (a BP member drove the area and gave me the low down) with and pulled the trigger on one. 

My wife and I executed the contract on 2/10. The lender that BP suggested works weekends & as a Realtor myself, I really appreciate that. Also, every company & seems agent I have spoken with seems to know and respect this guy. Locked in my rate this morning (5% w/ 20% down). I was tempted to by down the rate to 4.75% since I negotiated $1600 in closing cost credit but realized I'd rather keep the maximum cash in my pocket. The more cash I keep, the quicker I can buy #2 if all goes well. And really after looking at the number, the .25 difference really wasn't worth it in my opinion.

Also, my contact at the turn-key company and title company they chose has been working this weekend as well. There has already been a string of emails going back an forth this morning. We have reach out to the physical inspection company to schedule the inspection. This company was also chosen through BP suggestions and vetted through reviews and past clients. 

Off to a good start I suppose. Here are my research numbers. I know it always looks better on paper so we will see in 12-13 months where the numbers actual fall.

Purchase Price: $85,000

Down Payment: 17,000

Estimated closing costs after credit: $1,100ish

Total Cash Out of Pocket: $18,100ish

Mortgage Payment: $365

Rent: $948

Gross Rent: $11,376

Estimated Expenses:

Property Tax: $486

Insurance: $675

Property Management: $910

Vacancy: $910 (8%)

Maintenance: $910 (8%)

NOI- $7,484

Cash Flow: $258.66

Cap Rate- 9%

COC Return: 17%

Again, follow along as this newbie enters the world of REI.

If you comment, please make it constructive. None of that negativity please. 

21Reply
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Most Popular Reply

Cliff Harrison
Rental Property Investor · Shawnee Mission, KS · Member since 2014 · 205 posts · 136 votes
9y

Congrats, I think you did pretty well here. My recommendation is to figure in $100-$125 for CapEx right away, assuming you have a long term hold in mind. I also like the zip code you bought in, some nice neighborhoods in there. The property tax is surprisingly low. My only house in KC with lower tax is in a borderline hood area. I strongly recommend to run the address on rentometer.com (I have a professional subscription, but anyone can run a general analysis) and confirm the market rent. Even the most reputable turnkey companies naturally fill their properties at the top of the market rent it makes all the other metrics look great and maximizes the purchase price potential. Also check comps on MLS/zillow and make sure the purchase price seems to fit and you aren't starting with much negative equity. Regarding vacancy and maintenance, consider costs of make-ready and LEASING FEES between tenants in addition to month-to-month items. With just one property in the portfolio right now, be conservative. PM if you want any help.

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  • Gordon CuffePro Member
    Investor · Roseville, CA · Member since 2009 · 1k+ posts · 587 votes
    9y

    This is awesome. I would buy this house every six months if I had the money . You might have a vacancy in two years but that doesn't make it a bad investment . You did not mention what zip code in Kansas City that the home is located in. The only way it is a bad investment is if it is located in the hood 

    1Reply
  • Elio Guillen
    Rental Property Investor · Agoura Hills · Member since 2016 · 16 posts · 8 votes
    9y

    Congratulations on your first turnkey purchase! I made my first turnkey purchase two months ago and now I'm working on my second in the same market. Nice job negotiating your closing costs down. I wish I would have done that on my first buy. I guess that comes with being a newbie. I'm learning as I go and I'm trying to absorb as much as possible from BP. We should definitely keep in touch and share learnings with each other. 

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    congrats on chosing a turn key at the top of the market... I really like KC as well..

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    2Reply
  • Edwin Williams
    Investor · Dallas, TX · Member since 2016 · 60 posts · 65 votes
    9y
    This is the worst deal ever. Who got you into this money losing deal... Just joking!!!! It's looks good... all the best with your Real Estate dreams, you're off to a good start.
    1Reply
  • Chihiro Kurokawa
    Rental Property Investor · Dallas, TX · Member since 2016 · 63 posts · 71 votes
    9y

    Congrats! I have an idea as to who you went through @Chris Nordella, I will PM you to confirm. 

    0Reply
  • Diane G.
    CA · Member since 2016 · 1k+ posts · 1k+ votes
    9y

    @Chris Nordella

    can you load some pictures, both inside and outside?

    2Reply
  • Chris Nordella
    OP
    Real Estate Agent · Oxnard, CA · Member since 2014 · 73 posts · 77 votes
    9y

    @Diane G. I can send you some, what's your email? 

    @Edwin Williams read the first line & almost had a heart attack! Lol 

    @Gordon Cuffe great to hear, it's in the  64138 near the Cerner complex. Neighborhood is decent, blue collar area with well kept yards & homes. Had a few people do drive bys of the area to get multiple opinions.

    @Elio Guillen thank you. I'd love knowing more about your properties. Being a Realtor myself my biggest tip in negotiating is ask. If you don't ask for a lower price or ask for closing costs, you'll never get it. Worst case is they say know & your in the same spot as not asking

    2Reply
  • Hardik Patel
    Southern California · Member since 2015 · 67 posts · 23 votes
    9y

    @Chris Nordella

    Congrats! can you plz PM me the company's name to start my due diligence? Tks!

    0Reply
  • Evan Kilbourne
    Consultant · Dana Point, CA · Member since 2015 · 48 posts · 7 votes
    9y

    @Chris Nordella

    Congrats to you. I'm also in the process of searching for a viable property to invest in. This will likely come through a TurnKey provider, or by way of someone through the BP network. Would you mind PMing me who you used?

    0Reply
  • Sharon L.
    Investor · LI, NY · Member since 2017 · 11 posts · 8 votes
    9y

    @Chris Nordella

    Congratulations.

    I've talked to a few turnkey companies. Still undecided on market. Could you PM the company you used. Thanks

    0Reply
  • Chris Nordella
    OP
    Real Estate Agent · Oxnard, CA · Member since 2014 · 73 posts · 77 votes
    9y
    Thanks Sharon Ligonde I've gone back & forth in multiple markets for the last 2 years. I finally decided if I'm ever going to do this, I just needed to do it. I pick a relatively low risk property (knock on wood) to get my feet wet. Dreams are only dreams until you make them a reality.
    3Reply
  • Robert GuilfoylePro Member
    Mount Laurel, NJ · Member since 2012 · 125 posts · 36 votes
    9y
    Chris Nordella Congrats on your first TK purchase. I am interested in the KC market as well. Would be interested in hearing who you used.
    0Reply
  • Chris Nordella
    OP
    Real Estate Agent · Oxnard, CA · Member since 2014 · 73 posts · 77 votes
    9y
    Robert Guilfoyle shoot me a message & ill let you know.
    0Reply
  • David B.
    Investor · Worcester County, MA · Member since 2016 · 122 posts · 72 votes
    9y

    Those numbers look good.

    wow - the property taxes are low!

    do you have good PM?

    if the neighborhood is solid, the renovation id decent, and you have a good PM, then this is a very good purchase.

    0Reply
  • Clint E.
    Investor · Saint Charles, MO · Member since 2016 · 118 posts · 91 votes
    9y

    Did you double check the property taxes?  That seems very low, which if right, is good for you.  

    0Reply
  • Travis Turnbull
    Lender · Spanish Fort, AL · Member since 2017 · 44 posts · 9 votes
    9y
    Chris Nordella congrats on taking action!!!! Would you mind messaging me as well the company you worked with! Appreciate it and good luck!!!!!!
    0Reply
  • Chris Nordella
    OP
    Real Estate Agent · Oxnard, CA · Member since 2014 · 73 posts · 77 votes
    9y

    Inspection day! I found a reputable inspector through BP and they will be at the property today at 12:30 CST. Fingers crossed there isn't anything crazy that I need to ask to have fixed. 

    Also, found my insurance provider. Also suggested through BP. About $56 a month. 

    0Reply
  • Adam Meese
    South Jordan, UT · Member since 2016 · 12 posts · 1 vote
    9y

    Hi Chris, thanks for sharing. I'm looking into tunrkeys as well and it always bothers me how they calculate their net cash flow. Most companies only assume a 5% vacancy and 5% repairs....which I understand, but things happen. I like you accounted 8% for each one. At what point do you start accounting for Capex? I know it's a turnkey and should be in great condition for many years but things happen and if you don't account for capex now and three years down the road the water heater or something larger happens unexpectedly, how will you pay for it? Factoring 5% capex right now won't affect your cash flow too much which is great, but I'm genuinely interested how you will account for capex later on down the road and how other TK buyers deal with it.

    1Reply
  • Peter Schuyler
    Fort Myers Beach, FL · Member since 2016 · 225 posts · 124 votes
    9y

    Hi @Chris Nordella, you mentioned you had to find a Property Inspector, is that normally outside the package of the turn key, when do there services kick in Property Management??

    I would be interested in knowing who you used via Private Message if your willing to share, TK, Lender, etc.

    Thanks

    Pete

    0Reply
  • Todd Douglas
    Realtor · Detroit, MI · Member since 2017 · 184 posts · 33 votes
    9y

    @@Hardik Patel What area are you looking to do Due Dilligence in? I may be able to help with your inventory. Lets chat.

    0Reply
  • Tom Ott
    Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ votes
    9y
    Originally posted by @Chris Nordella:

    Hey Everyone, 

    I figured I would document my first turn key purchase in Kansas City, MO. I read another members similar blog and found it very helpful. I won't be naming company names unless through private message for feel free to ask. 

    I researched a number of turn-key companies before narrowing it down to a few. I also found an area that I was comfortable enough (a BP member drove the area and gave me the low down) with and pulled the trigger on one. 

    My wife and I executed the contract on 2/10. The lender that BP suggested works weekends & as a Realtor myself, I really appreciate that. Also, every company & seems agent I have spoken with seems to know and respect this guy. Locked in my rate this morning (5% w/ 20% down). I was tempted to by down the rate to 4.75% since I negotiated $1600 in closing cost credit but realized I'd rather keep the maximum cash in my pocket. The more cash I keep, the quicker I can buy #2 if all goes well. And really after looking at the number, the .25 difference really wasn't worth it in my opinion.

    Also, my contact at the turn-key company and title company they chose has been working this weekend as well. There has already been a string of emails going back an forth this morning. We have reach out to the physical inspection company to schedule the inspection. This company was also chosen through BP suggestions and vetted through reviews and past clients. 

    Off to a good start I suppose. Here are my research numbers. I know it always looks better on paper so we will see in 12-13 months where the numbers actual fall.

    Purchase Price: $85,000

    Down Payment: 17,000

    Estimated closing costs after credit: $1,100ish

    Total Cash Out of Pocket: $18,100ish

    Mortgage Payment: $365

    Rent: $948

    Gross Rent: $11,376

    Estimated Expenses:

    Property Tax: $486

    Insurance: $675

    Property Management: $910

    Vacancy: $910 (8%)

    Maintenance: $910 (8%)

    NOI- $7,484

    Cash Flow: $258.66

    Cap Rate- 9%

    COC Return: 17%

    Again, follow along as this newbie enters the world of REI.

    If you comment, please make it constructive. None of that negativity please. 

    Congrats on your first deal! Turnkey is a great way to go when you want to invest out of state. I know many investors from CA who invest inward into the country to get a much better ROI.

    Good luck on your next deal!

    0Reply
  • Larry Fried
    Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
    9y

    @Chris Nordella Congrats on getting started in your REI. By the numbers this looks like a very decent turnkey investment. Please share more of the rehab and condition of property highlights, square footage and floor plan.

    1Reply
  • Chris Nordella
    OP
    Real Estate Agent · Oxnard, CA · Member since 2014 · 73 posts · 77 votes
    9y

    Thanks @Tom Ott

    I'll try to get you that info @Larry Fried

    0Reply
  • Gordon CuffePro Member
    Investor · Roseville, CA · Member since 2009 · 1k+ posts · 587 votes
    9y

    @Chris Nordella64138 is a good zip code and everybody in kc is talking about how many jobs the new cerner center is bringing to the area. You will do fine on your investment. The biggest challenge that I have had with out of state investing is the property management. I have a good one now. Hopefully your pm company will turn out good.

    1Reply
  • John Kerchner
    Bishopville, MD · Member since 2016 · 7 posts · 0 votes
    9y
    Could you PM on which company you used? Thanks
    0Reply
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