Best turnkey markets 2018

19 Replies

Hi Everybody:

I am new to BiggerPockets and I was wondering if I could have your advice on which would be good markets for turnkey properties today. I've read some posts about places that used to be good a couple of years ago, but are not anymore. 

Many thanks! 

Ana Barcellos

Originally posted by @Ana Barcellos :

Hi Everybody:

I am new to BiggerPockets and I was wondering if I could have your advice on which would be good markets for turnkey properties today. I've read some posts about places that used to be good a couple of years ago, but are not anymore. 

Many thanks! 

Ana Barcellos

 Hi Ana!  That is a great question, but also a bit of a loaded question because there are so many moving parts to that question.  There are a lot of fantastic markets today that may be excellent markets for long-term buy & hold, but are not home to any quality turnkey companies.  The other side of that equation is that there are a few quality companies operating in what appear to be subpar long-term investment cities.  They love them and for good reason, which makes those markets actually attractive if you work with the right company.

We use Bestplaces.com to compile some data on quality cities for us to grow our company into.  We obviously love Memphis given our name, but we also love Dallas, Houston, Little Rock, Oklahoma City, Tulsa, St Louis, Kansas City and Knoxville.  Here is a chart that you can build in an excel spreadsheet and enter the information to each of these data points for any city that you want to explore.  The better the numbers, the more likely you are to have long-term success at the proper price points.

Remember though, a great city may not have a high quality Turnkey company.  That is the key to your success.  The team you choose to work with will either make or break your investment.

Amen to that, Chris. There are a few TK operators here in Dayton, but some are selling lipstick on a pig with a turnkey price tag. "Fully rehabbed" properties that I would be embarrassed to call turnkey in the condition at which they are being sold. It doesn't stop there - the advertised returns are based on proforma numbers so far from realistic, I don't know how they can sleep at night. Things like a 25% expense ratio for a single family house in a D neighborhood (the TK operator says it's a B though); blatantly false property tax numbers; unattainable rent rates ...

For those of you considering a TK purchase, a 20% expense-to-rent ratio is completely unrealistic for ANY single family rental around here, regardless of neighborhood class. 50% is more like it, give or take a little. It takes almost 30% just to cover taxes, insurance and management, let alone any maintenance, repairs, or capex expenses.

So many reasons why people should do their due diligence. Verify the information presented before making a purchase, instead of blindly believing promises of an easy ROI ... especially if you have no intention of visiting the area (also a bad idea). For a lot of the sales I'm seeing, the only easy returns are those the TK provider is seeing at closing.


Originally posted by @Chris Clothier :

Remember though, a great city may not have a high quality Turnkey company.  That is the key to your success.  The team you choose to work with will either make or break your investment.

I agree with Chris Clothier and then I would also add that which market to pursue, ones with good turnkey providers, depends on you. Your budget, your interests, your comfort levels, and just general preference. There are a lot of good options out there.

For general info, and to semi piggyback on what Chris says-

https://www.biggerpockets.com/renewsblog/2015/12/2...

It's an old article, and the markets have changed since then, but the same idea still applies.

I've primarily always bought turnkeys and am involved in a lot of markets. Happy to chat more details on them if you want to message me anytime!

@Ali Boone would you mind if I took you up on that offer as well? I'm a new investor (only 1 SFH to my name) and trying to expand as well. Happy to share any info that helps you get an idea of where I'm at and looking to go! Thank you for your consideration in advance!

Hi Cristina:
Many thanks for your input. If I can ask for your advice, how can someone from another place assess the neighborhood classification? I try to use www.neighborhoodscout.com to start with. Any other suggestions? Many thanks agains. Ana

Originally posted by @Christina Carey :

Amen to that, Chris. There are a few TK operators here in Dayton, but some are selling lipstick on a pig with a turnkey price tag. "Fully rehabbed" properties that I would be embarrassed to call turnkey in the condition at which they are being sold. It doesn't stop there - the advertised returns are based on proforma numbers so far from realistic, I don't know how they can sleep at night. Things like a 25% expense ratio for a single family house in a D neighborhood (the TK operator says it's a B though); blatantly false property tax numbers; unattainable rent rates ...

For those of you considering a TK purchase, a 20% expense-to-rent ratio is completely unrealistic for ANY single family rental around here, regardless of neighborhood class. 50% is more like it, give or take a little. It takes almost 30% just to cover taxes, insurance and management, let alone any maintenance, repairs, or capex expenses.

So many reasons why people should do their due diligence. Verify the information presented before making a purchase, instead of blindly believing promises of an easy ROI ... especially if you have no intention of visiting the area (also a bad idea). For a lot of the sales I'm seeing, the only easy returns are those the TK provider is seeing at closing.


Originally posted by @Chris Clothier :

Remember though, a great city may not have a high quality Turnkey company.  That is the key to your success.  The team you choose to work with will either make or break your investment.

Super thanks Ali. 
I will PM you. 
Best,
Ana

Originally posted by @Ali Boone :

I agree with Chris Clothier and then I would also add that which market to pursue, ones with good turnkey providers, depends on you. Your budget, your interests, your comfort levels, and just general preference. There are a lot of good options out there.

For general info, and to semi piggyback on what Chris says-

https://www.biggerpockets.com/renewsblog/2015/12/2...

It's an old article, and the markets have changed since then, but the same idea still applies.

I've primarily always bought turnkeys and am involved in a lot of markets. Happy to chat more details on them if you want to message me anytime!

Originally posted by @Josh Crockett :

@Ali Boone would you mind if I took you up on that offer as well? I'm a new investor (only 1 SFH to my name) and trying to expand as well. Happy to share any info that helps you get an idea of where I'm at and looking to go! Thank you for your consideration in advance!

 Sure! Hit me up anytime.

@Ana Barcellos Cleveland as ranked by Forbes, ( last two years, )  really the last 10 years but nobody was paying attention. We used to provide properties for our clients for  about 35- 40k with 25% net caps, now avg PP 63k, with 11- 15% net caps, Rent are in the 2% rule, some higher . 

With Amazon taking the old Euclid mall, about 800k sq ft, and now building a 1 million sq ft facility 20 min away in the heart of everything , seem as though pricing is going even higher. I am not aware of any other city in america that has gone through a more positive transformation then Cleveland, simply booming.   Good luck , 

I would suggest calling at least a couple local licensed property managers and investor-oriented agents in the area and ask them about neighborhoods. Or even other local investors - anyone who doesn't have a vested interest in the sale should be able to give you honest advice. There is no website that I'm aware of that can substitute for boots on the ground.


Originally posted by @Ana Barcellos :

Hi Cristina:
Many thanks for your input. If I can ask for your advice, how can someone from another place assess the neighborhood classification? I try to use www.neighborhoodscout.com to start with. Any other suggestions? Many thanks agains. Ana