Memphis Experience with James Wachob (Foundation Property Management / TurnkeyInvest)

[Max Gunther]

I really wish I had seen a detailed review of Foundation Property Management (FPM) or TurnkeyInvest here on BiggerPockets before signing on with them several years ago. I ended up entrusting five properties to their management, and I know of two other out-of-state investors who used them as well. While our stories vary slightly, a clear pattern emerged. 

Bottom line: There may be large monthly cash flows, but they won’t be going into your pocket :(

Positive Interactions

To be fair, James Wachob and his team are pleasant to work with. They respond quickly, and appear to listen to your concerns. However, in my opinion, their processes and incentives are misaligned with an investor’s best interests. As a result, I eventually moved all my properties to other management companies.

Two Main Problems with Foundation Property Management (FPM)

1. Exceedingly Poor Tenant Screening
   • -Out of my five properties, four ended in evictions due to the tenants ceasing to pay rent. While evictions are part of the business, that rate is far beyond normal.
   • -After the second eviction, I specifically asked FPM to focus on tenants with better credit scores, even if it took longer to find someone. Despite this, they placed a tenant with a 530 credit score, who paid one month’s rent (FPM collected their 50% commission) and the tenant never paid again. Considering a 530 credit score is among the worst 8% of Americans, this was a glaring red flag. My 10 year old nephew could screen tenants better than FPM.
   • -Before each eviction, FPM sends a polished video claiming they’ll pursue the tenant in court and recover lost rent. Unfortunately, after years and multiple legal fees, I never recovered a single penny.
   • -One particularly disappointing eviction involved a contractor who worked for FPM. Initially, I thought this would be an ideal tenant, but after I switched management companies, that tenant/contractor stopped paying rent. When I contacted James Wachob, he downplayed her connection to FPM and implied he might have helped if I’d stayed with them. In my opinion, it’s a terrible look when someone affiliated with a property management company doesn’t pay rent—and the owner won’t step in.
2. High Turnover Costs
   • -My properties often required expensive turnover work, frequently due to evictions and poor tenant quality.
   • -In one instance, I spent over $6,000 on a turnover before a new tenant moved in. After just one year, when that tenant vacated, FPM charged an additional $2,800 in turnover costs, with $770 earmarked just for touching up paint on a single wall—borderline comical.
   • -What’s particularly concerning is that poor tenant placement and high eviction rates don’t significantly hurt FPM’s bottom line. While they do lose a small monthly management fee during a vacancy, they instead collect high profits from turnover charges and leasing fees for each new tenant. I'm not saying they do this intentionally, but as Charlie Munger famously said, “Show me the incentives and I’ll show you the outcome.”

Takeaways

Based on my experiences—and those of two other investors I know—please approach Foundation Property Management and TurnkeyInvest with caution. If you do consider working with them, make sure to:

• Conduct thorough due diligence.
• Factor in higher-than-usual turnover costs and eviction rates.
• Understand their incentives and fee structures.

Or, you might save yourself the frustration and look for a different company. This post reflects my personal experiences and opinions, so always do your own research before making any final decisions.

[Jay Hinrichs]

Quote from @Ed O.:

The simple truth: most turn key operators are trash.  Sorry you got torched.

this is not all that unusual for section 8 in a market in the deep south. just sayin.. rentals that attract section 8 this is a fairly common scenario at least with the non pay of their portion and rough on the houses. Very unstable group of folks generaly speaking when you have a single mom with kiddos and multiple baby daddys.