Anyone worked with Profit From Rentals?

99 Replies

They are a Turnkey Company in Chicago and trying to see if anyone has dealt with them before and if so what's your experience?
Thanks

hi Petru,

I just ran across their website and am also interested in learning more...have you heard back from anyone on Biggerpockets who has had experience with them?

I'm in the process of buying a property from them right now.  Would be interested to see if anyone else has had experience with them. 

Any feedback or updates on this turnkey company from Chicago?

Account Closed 

hi folks,

Typing quickly on my phone so please forgive typos.

I was very interested in this company and got to know the owner well through multiple conversations. I found him to be a super nice guy who seemed really sincere. All my initial due diligence checked out with references (both a few he sent me and a few I found on my own) checking out fine.  I think hes done quite well through personal real estate dealings and some other businesses. I was going to buy several properties sight unseen but my boyfriend made me fly out to Chicago for a visit before finalizing the deals. I'm very glad I did. This would have been my first investment so I'm no expert but the quality of the homes was not what I expected. The area was worse than I expected with many boarded up homes on the block. For fun, my boyfriend and I asked the cab driver who dropped us off at the property what he thought a home in the area would go for...he said $30K-$40K max. The property was being sold to us at $170K. Worst of all, the inspector I dealt with (a local company with very strong yelp reviews) told me the company does very poor quality rehabs.  That is to put their feedback mildly :-) I had a bit of drama when the company almost refused to allow me to use that inspection company but we ironed that out (I would have ended the deals if we couldn't use who I wanted).  

Overall I do believe the owner is sincere and also that I probably could have made money (at least in the short term). The rehabs *Look* great relative to what is available in the area so they are able to rent them out easily.  But I had concerns about longer term liability with the homes. I wasn't comfortable with this being my first deal but will keep an eye on them as I'm curious about how they will do. Apparently there is a huge development project in the area that should be great for property values.

Best of luck to anyone else who tries them!

Miriam

Working with them as  we speak...waiting to close on my first property so I won't have extensive feedback until I close.  Will update this thread once I do :)

@Miriam Nalumansi  Thanks for the feedback. Just curious, when did you come out to visit and did you end up buying anything through another company?

@Michael L.  Looking forward to the feedback!

I'm in the process of meeting with one of the owners and looking at a few properties so I'll update as well.

@Jay Y.  I think has experience with them.

@Miriam Nalumansi  - Just an FYI the development you are talking about is called the Lakeside Development.  It was approved by the city in 2010 but has yet to raise enough funds to start Phase I.  I hear the guy spearheading it is getting close to getting it started, but it has yet to happen and this is a 25 - 45 year project.  IMO until they start Phase I then I would not use it as a factor in my decision.  

@Tim Coppola  @Michael L.  @Miriam Nalumansi  

I don't know the owners personally.  I did hear that the partners had split and each went off to conquer the world separately.  

The piece of the business they are really good at is the sales and marketing.  

I own stuff down in some of the areas in which they are selling properties.  A lot of the areas they are in are not areas I would personally invest in.  Because there are so many neighborhoods it can be difficult for an out of state investor to truly understand the differences a few blocks can make in Chicago.

If anyone has any questions about neighborhoods dont hesitate to PM me.

On a side note, I don't know how anyone could buy a property from a third party provider and never do a site visit.  It would be one thing if it had been an established relationship.  Completely different when you know that the person you are talking to is trying to sell you something.

@Tim - nope I didn't end up buying with anyone else. I looked into a few other turnkey companies but didn't pull the trigger on any.

@Cliff- definitely agree that the visit made a difference for me. My thinking at the time was since I know very little about rehabs or investment property I would work with a few local real estate agents plus a reputable inspection company to give me a professional assessment of the properties and neighborhoods where i was buying. I figured that would be enough but being on the ground I didn't feel great about the investment so ended up walking away. 

I'm thinking to start off with them, but when I check the location in Trulia, the crime heat map is at the highest, that's way too risky for me as an out of country investor, oh well keep looking then.

Originally posted by @Miriam Nalumansi :
This would have been my first investment so I'm no expert but the quality of the homes was not what I expected. The area was worse than I expected with many boarded up homes on the block. For fun, my boyfriend and I asked the cab driver who dropped us off at the property what he thought a home in the area would go for...he said $30K-$40K max. The property was being sold to us at $170K. Worst of all, the inspector I dealt with (a local company with very strong yelp reviews) told me the company does very poor quality rehabs. 

Overall I do believe the owner is sincere and also that I probably could have made money (at least in the short term). The rehabs *Look* great relative to what is available in the area so they are able to rent them out easily.  But I had concerns about longer term liability with the homes. I wasn't comfortable with this being my first deal but will keep an eye on them as I'm curious about how they will do. Apparently there is a huge development project in the area that should be great for property values.


So they are trying to sell something worth maybe $40k for $170k and the condition of the properties are sub-par, and the neighborhoods are dangerous?

And this type of investment is acceptable to out of state/country investors???

I am also interested in Profit from Rentals, but concerned by the mixed feedback on this thread. Does anyone have a recommendation (based on personal experiences) for turn key operators in Chicago? 

I heard of them before and looked at the addresses listed on their website. They sell the highest priced homes in the market where these homes are located. I did not visit any, and I am not sure about the quality of the rehab.

As a Realtor I did few CMAs on some buildings, just because I own a property close to some of the buildings these guys sold in the past and I thought maybe the prices are back so much and I have this equity I was not aware of. My CMA did not even come close.

I can see that most properties are 2-3 flats, all brick and rented for top price in the area. As long as this company continues to manage these properties and they will keep re-rent them for you and you will hold them for a long, long time, I will say you guys are okay buying them.

If you want to get a better price, than just find a Realtor that knows the market and get them find you good rehabs that they can also rent for you. You might save tens of thousands of dollars in price, however you might have those units vacant at closing and you'll have to pay the fees to rent these places. Also, you can hire yourself a property management in the area.

ROBIN, I have not heard of them. You just got to be extra careful regardless. From what I have seen, some tk operators have a systematic practice of buying in C areas and getting top dollar for those properties by selling to out of state investors/suckers. No one local would ever buy at that price. In fact they don't even list it on mls for fear of just regular  competition would blow their cover. Fortunately, you can trust but verify easily with a few invested minutes online. 

Jay Henrichs wrote a free ebook as he has 40 years experience with hundreds of these.

check it here, these rules you want to closely follow. 

http://www.biggerpockets.com/forums/517/topics/146...

Two important rules is deal directly and not through a middleman.

If they offer rental guarantee insurance run away.

Good luck with your out of state search.

Thanks, 

Matt

Originally posted by @Robin Halsey :

I am also interested in Profit from Rentals, but concerned by the mixed feedback on this thread. Does anyone have a recommendation (based on personal experiences) for turn key operators in Chicago? 

 see my post above. My @thingy not working on tablet.

If you are looking for turnkey on the South Side I suggest talking with @Mark Ainley  

He has been investing and managing property in that area for a long time (check out his podcast on BP) and knows it like the back of his hand.  I believe he also has some rehabbed and rented properties for sale too

Originally posted by @Cliff Mccue :

@Tim Coppola  @Michael L.  @Miriam Nalumansi  

I don't know the owners personally.  I did hear that the partners had split and each went off to conquer the world separately.  

The piece of the business they are really good at is the sales and marketing.  

I own stuff down in some of the areas in which they are selling properties.  A lot of the areas they are in are not areas I would personally invest in.  Because there are so many neighborhoods it can be difficult for an out of state investor to truly understand the differences a few blocks can make in Chicago.

If anyone has any questions about neighborhoods dont hesitate to PM me.

On a side note, I don't know how anyone could buy a property from a third party provider and never do a site visit.  It would be one thing if it had been an established relationship.  Completely different when you know that the person you are talking to is trying to sell you something.

 Hey Cliff,

Tried to PM you but it wont let me. Had a quick question

@Miriam Nalumansi  @Brie Schmidt  @Engelo Rumora  

First off

 Brie is correct I do have experience with this company and I have a lot of experience in the space having funded over 2,000 rehabs in a 20 year career in 21 different states. And as such I consider this company a top Tier TK company and have invested with them.

I suspect I have quite a bit more experience than you have Miriam. To that point.

As Brie noted on a trip to Chicago when Brie and I got together for a nice dinner and to talk shop the purpose of the trip was to do deep due diligence on PPR and Alex the owner. I also met with Engelo and his partner on that trip...

I spent 4 days there going through the as is  middle of construction and finished product

I met with their staff their rehab superintendent along with Closing attorney REaltors etc etc. The kind of deep due diligence one cannot get from a cab ride and talking to a know it all cabbie.. your feed back is not credible in my mind. And to sway others is a disservice to the community.

While your correct  non inhabitable  units will sell for 40 to 50k AS IS these units require 80 to 120k in rehab to get to the point that Alex's company then sells them..

Alex's rehabs are top notch from my due diligence and experience.. homes are taken to the stud's new plumbing new electrical new windows all new kitchens with slab granite under mount sinks bathrooms completely redone in tile.. ( heck they are as nice as my new construction here in Oregon). 

I just wanted to clear the air here since on BP anyone can take pot shots, and as we know there are a lot of newbies on this site that really have no clue as to what they are doing.

Originally posted by @Jay Hinrichs :

@Miriam Nalumansi  @Brie Schmidt  @Engelo Rumora 

First off

 Brie is correct I do have experience with this company and I have a lot of experience in the space having funded over 2,000 rehabs in a 20 year career in 21 different states. And as such I consider this company a top Tier TK company and have invested with them.

I suspect I have quite a bit more experience than you have Miriam. To that point.

As Brie noted on a trip to Chicago when Brie and I got together for a nice dinner and to talk shop the purpose of the trip was to do deep due diligence on PPR and Alex the owner. I also met with Engelo and his partner on that trip...

I spent 4 days there going through the as is  middle of construction and finished product

I met with their staff their rehab superintendent along with Closing attorney REaltors etc etc. The kind of deep due diligence one cannot get from a cab ride and talking to a know it all cabbie.. your feed back is not credible in my mind. And to sway others is a disservice to the community.

While your correct  non inhabitable  units will sell for 40 to 50k AS IS these units require 80 to 120k in rehab to get to the point that Alex's company then sells them..

Alex's rehabs are top notch from my due diligence and experience.. homes are taken to the stud's new plumbing new electrical new windows all new kitchens with slab granite under mount sinks bathrooms completely redone in tile.. ( heck they are as nice as my new construction here in Oregon). 

I just wanted to clear the air here since on BP anyone can take pot shots, and as we know there are a lot of newbies on this site that really have no clue as to what they are doing.

Thanks Jay,

It was a pleasure being in your company.

Have a great day.

I'm definitely a newbie =) I shared my personal experience at the request of another member - apologies if it was offensive to anyone in any way.

Domicile Consulting is the inspection company I used - several of their inspectors including the owner/founder have had experience w/ PFR. Anyone seeking an expert opinion on the rehabs might consider reaching out to them. 

I continue to be a fan of the owner - Alex and wish the company and all it's investors well.

Hi All (@Jay Hinrichs  , @Miriam Nalumansi  @Martin Yung  etc

I also wanted to add that I have extensive knowledge of both the operations and their product and I echo Jay's comments. I have a high amount of respect for their company and the integrity and transparency of their owner Alex. They are one of the few Turnkey operations that I think are solid and provide value. Many turn-keys do not. This is no way saying it’s the right product, format, or investment for you. But – I would seek to reduce any anxiety about the quality or reputation of the company.

I think what often happens here is that sometimes we accidentally don’t compare apples to apples. While, I think as discussed in other threads that to buy or not to buy turn-key depends on a host of variables such as your goals, risk / reward desires, level of available inventory in market, individual challenges of that market, whether you can replicate what the turn-key can provide at a similar cost, etc we also have to make sure we are normalizing things.

Yes, you can absolutely buy in the same neighborhoods for $40,000. But that is not equivalent to their product. For example the cab driver might be able to assess the outside looking similar, but not the inside or state of the roof, porch, etc. The truth is many people are slum lords there and what they are willing to accept as a product to provide might be what the cab driver is used to. [email protected] Hinrichs Jay Hinrichs mentioned, this operation does essentially a rebuild almost from scratch NOT just some rehabbing and they put an excessive amount of money into the rehab. That is part of their strategy to have a more "luxury" type product in a more working class neighborhood so they can try and attract the tenants that want a better quality of life, appreciate the owners that care about what they provide, and tend to stay longer. It also minimizes a lot of maintenance going forward. It may end up that people don't agree with that strategy and that is fine, but they have one and its different than the slum lord and as a result their rent levels, evictions, and overall performance are different as well. That said, that product may not be for everybody. You may decide that you rather have a lower price point in and a worst condition property to try and get higher ROI – not something I would recommend especially in working class neighborhoods but there are people out there that this has worked for and had the tools to make it work. What I will add, having audited their operations, they have large scale - so they can do the rehab at a fraction of the cost that someone would spend to do it on their own, they have a long experience of understanding how to manage and working in those areas which is very important in working class neighborhoods, and their typical investor purchases over 5 so I would assume if their clients are not happy they wouldn't buy more.

So I am not advocating that anyone should buy turnkey, buy in Chicago or whatnot. In most areas you shouldn’t buy turnkey as the value isn’t there or the ease to replicate is high or the relative level of risk in the area is low. As I mentioned in a prior thread where I spoke a lot about to turn-key or not, only buy Turnkey if you think there is value created beyond what you could do on your own. Most turn-keys will fail this test and I speak about other ways to know if it makes sense. In this case, I am saying if you wanted to replicate their product to their standards as a mom and pop investor I would imagine by the time you acquired the building in all cash, paid all cash for the same rehab, dealt with insurance, holding cost, and contractor risk during the rehab, then looked for and placed safe and solid tenants, you would probably be in at a much higher cost than they sell (again just looking at scale of material and appliance buys). Again, that is if you tried and replicate their exact product. If you wanted to create a different product with a different strategy then there will be different price points to reflect the different levels of risk, variability, and return desires you want.

You run into risk purchasing a bad turnkey, but people also overlook you run into risk trying to do it yourself and that is my fear sometimes when people are 100% anti-turnkey as I have seen more people get into trouble trying to do something themselves when they really didn’t understand what they were getting into. I have my own operations in some markets and have done turn-key in others – I look at it a market and determine the right format by a case by case analysis of all the variables. There is no right or wrong format in general – you just want to optimize in each market you want to be in what the best strategy to accomplish your needs.

If you have any questions please don't hesitate to reach out to me. Disclosure – I have no sales referral relationships with any property sellers. I have been in real estate 15 years and made a host of mistakes across the board and people were great in helping me along the way and I am happy to try and provide any insight I can to others now in return. 

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