Anyone out there have experience with ABC Capital Investments in Philadelphia, PA for turnkey properties?

106 Replies

I was thinking about investing with them and was wondering if anyone of you out there had any experience with them.

Thanks,

Jay

no it seems like a good company 

quick review of their site I have the following observations

1. pro forma  does not include maintenance and vacancy ( I understand they give a one year rent guarantee  and or you may buy vacancy insurance). Also when you turn a unit over with a new renter there is always 500 to 2000 or more in work that needs to be done. Plus a leasing fee...

2. Rental guarantee's usually Imply a fairly large mark up from true cost ( need to pay that rent guarantee from someplace.

3. Stock looks like any of the inner city upper mid west NE  C stock.. Highly doubt there would ever be appreciation in these.

4. they are using none of their own money in any of the process other than the guarantees and those funds come from the investor in the purchase of the property. So they use your money to buy and your money to rehab... Lots can go wrong with this equation. You may want to ask them to  provide you with a home that is already rehabbed inspected and tenanted.  Most likely the buy and build out process works fine but if something goes wrong in the middle of it. your quite vulnerable to loss in this scenario.

5. they are marketing over seas  and those investors are not as intuned as most US investors about what a good deal is what a good neighborhood is etc etc.

Thanks for the input/review guys.  I was speaking with them about the rental guarantee and it is by a third party insurance company which I found unique but interesting being that I would be an absentee investor sounds like a good marketing tool for the investor that is just getting into turnkey. 

Looking at their returns in strictly in terms of cash-flow I'll have to say, was appealing. In terms of appreciation, I wasn't really looking for that as my main objective to investing in the Philly area so yes I do agree appreciation in these places will not be that much.

All the homes that are sold by them are priced post-rehab so I am aware that there is where they make their money.  And as far as out of state goes, I might as well be out of the country as well as I don't know anything about the Philly market about where to buy and not. So I thought why not ask the question from some of the BP users to see what their experiences are.

I was just looking to investing in good cash-flowing properties since I am out of state and it's hard to make the numbers work in southern California.  

@Jay M. you need to learn about the market if you are going to invest there.  I would suggest finding other folks who live in area, there is a tool for that on BP, then make friends and ask them to tell you about the areas and to even check out some of the houses for sale.  Be sure to compensate them for their time though.  You will be amazed at the number of folks who can tell you loads about areas in only 5 or 10 minutes.  Good luck.

Hi @Jay M. - I would really do my own due diligence. You need to know how they are arriving at their values. Also, my understanding, from your post, is that you would be buying the property in the current AS-IS condition, but paying the ARV price; without having any control over the rehab job. The quality of the rehab job will , in part, determine what your rents will be, the level of maintenance required, etc. For example, North Philly is North Philly no matter how nice you make it, the rents will never fetch above a certain price. Philly is very block to block in terms of quality of neighborhoods. What area are you thinking about? I have been working in the Philly market for over 10 years. Like @Jerry W. stated, I and many others can tell you about the area in about 5 min.  Ask around, BPers are a helpful bunch!  

Hi Jay,

I am in the same boat.  I am super New to rei and found this company.  I am doing my diligence currently and will let you know what I find/ decide what to do.  

Have you found anyone with personal experience with this company?

Thanks and good luck.

Hi @Jay M.   ,

I've come across this company before, but have no real experience with them.  I found them through a well-known "promoter" who utilizes their services.

Like others have mentioned, Philly varies vastly block to block.  I've jogged north and south from Center City and got to see firsthand the changes.  I found strolling the neighborhoods gives you a great sense of the area.

Yes @Michael L.  I too ran into the same "promoter" and I am currently doing my due diligence and will let you guys know what I find out.  I spoke with the guy over at ABC and he grew up in the area and he too reiterated how the neighborhoods can change from block to block.  His advice was to make a trip out to Philly to really see first hand what areas are "up and coming" and which ones were to avoid.  

Again..I'll let you know what what i find out.

@Jay M.  , @Casey Green   - Just found this thread, and in the same boat. Only difference is I live about an hour away form Philly and contemplating a trip to visit. Where did you guys end up with this?

@Jay M.  

I've visited there office and spent a day driving around with Jay one of the founding members. My take away is this: I believe that if you have 'boots on ground' in philly you can do much better than working with a turnkey provider. These neighborhoods are C class at best and part of ABC's pitch is that they will manage the property 100% so you wont have to deal with late rent, evictions interesting people :) This is great but will eat into your bottom line. Combine that with a higher purchase price and it becomes only a decent investment at best.

I think @Jay Hinrichs  is spot on with his post

@Jon Lafferty  

  What do you do when they are out of business, or the partners choose to do something else very few TK companies stay the same for any length of time... Life happens.. So think about it.. Your thinking your going to own a C class asset that admittedly has all these draw backs  1. you pay too much in the first place  2. tough neighborhood no liquidity to speak of unless you have the same marketing team that you bought from 3. tough tenants

inconsistent rents big maintenance bills because of tenants and underlying quality of the home.

And now your left on your own to find a new PM and do it all yourself... this type of investing while promising for those that live and work it in my mind should not be offered as a turn key we will take care of you until the cows come home investment.

I think investor really need to look at the what if's  What if I am in the SF Bay ARea and my team disbands what then... And like this company was promoting rental insurance well that company is out of business.. NO way you can sell rental insurance and make it work in the C class Insurance company would lose their behind which they finally realized and pulled out of the market.

those are just some thoughts , I am glad you spent the time Jon to come to the same conclusions.

Thanks @Jon Lafferty  for the information on Philadelphia! I haven't had a chance to go out there due to scheduling reasons but now that I know that they are class C properties at best it will make me re-think that investment, especially for it being my first turnkey property. 

When I spoke with  Jay from ABC he mentioned that these properties were located in areas that were near blocks that were"up and coming".  I did do a census research online to see what the household income was and it was between 28k-35k as well as a google street view so I had a feeling that the neighborhoods would be a little rough. 

Thanks for the feedback @Jay Hinrichs  and your foresight in property management turnover as well as liquidity of the asset if my PM is no longer in business.  Lots of food for thought.

Jay

Yeah I deal with abc, they are good money.  Jay from a bcuz is not about any games.  When I say I have a house after he sends boots on the ground views pics ( and his own knowledge of the area) will come out and check it out his self.  They get'em bust'em down rent them out to well qualified tenants and then sell and manage.  Awesome operation they have.  And jay is a stand up dude.  Cheap skate when buying but doesn't cut any corners.  ( Not from what I've seen)

* jay from abc

As far as area goes that probably depends on price.  I mean if you're pockets won't get you into the university area,  would you not be happy with a middle working class areas in West philly. And he tries to stay away from trap blocks. And pick out the nicer blocks of the poorer neighborhoods.  So imho u get what you pay for. 

Oh yea, and every smart investor knows DO YOUR OWN DUE DILIGENCE

Hi Jay and Martin.  The research I did on the neighborhoods looked a little rough to me, and the purchase price looked to be higher than the comps in the area.  However, it is a fully renovated turnkey so I guess that goes back to the hands off cashflow vs appreciation debate.  

I never got as far as talking with Jay from abc.  I didn't find anything in the research of his company that would have scared me away.

Ultimately, my wife and I decided to upgrade our family car due to a growing family, so we are holding off real estate investing for now until we build up a little more cash to use.  But we will keep researching and studying to be ready when the time is right.

Wow I just realized that was a lot of rambling with no real help.  Maybe I should run for office.  Good luck.

I'm actually heading to Philly on Thursday to take a look at the properties.  Did anyone decide to go forward with purchasing from ABC?  

I definitely understand that the prices are above market and that the likely appreciation would be minimal.  Just trying to balance properties with better cashflows along with ones in A/B neighborhoods that might not cashflow as well.  Essentially diversity in property holdings.

Tom,

No, I haven't had time to go out there to look at it. I just went as far as talking with Jay from ABC. I will probably make it out there in the near future as I am very curious and I would also would like to see the neighborhoods out first hand.  Let us know his it goes that would be much appreciated!

Thanks,

Jay

Hello,

I'm so glad I ran into this thread, because I don't know what to do.

I have been considering to buy my first property from Jay from AABC investments, but so far this has been my experience:

Last month he arranged a phone conversation and he called 3 hours later.  He told me that he would place me on a waiting list and give me the "first right to refuse" in the next triplex he would get.  He did not follow through.  Checking inventory, I came across a triplex and made a phone appointment for today.  He did not called.

Should I pursued dealing with him, since my experience tell me he is not reliable?

Be very wary of C areas turnkeys. From what I have read there is really no such thing. Just for kicks I check online what I can get solo compared to TK companies in C areas. I consistantly beat their prices by 50%. Sometimes literally next door to the one they offered.

thanks,

matt

Originally posted by @Chris Smith :

Hi @Jay M. - I would really do my own due diligence. You need to know how they are arriving at their values. Also, my understanding, from your post, is that you would be buying the property in the current AS-IS condition, but paying the ARV price; without having any control over the rehab job. The quality of the rehab job will , in part, determine what your rents will be, the level of maintenance required, etc. For example, North Philly is North Philly no matter how nice you make it, the rents will never fetch above a certain price. Philly is very block to block in terms of quality of neighborhoods. What area are you thinking about? I have been working in the Philly market for over 10 years. Like @Jerry W. stated, I and many others can tell you about the area in about 5 min.  Ask around, BPers are a helpful bunch!  

 have you gotten any new info about this company i would like to invest with them, but your ear is to the ground.

I visited them recently. My impression was that they buy properties that are in C-/D+ kind of areas. They will cashflow, at least for a while. The real problem is that the local market doesnt support the prices that they sell at. Case in point they showed me a property at 2541 South Carroll street that they had rehabbed and were selling for around 65k. They also let slip that they owned next door (2543). That property had been listed in very good condition by Century 21 to the local market in the high 30's before it got taken off the market. My guess is that ABC bought it so that the comp wouldn't undermine their properties. 
They sell a lot to foreign investors. Like i said their properties will cashflow but my guess is that there will be a problem when those investors try and offload. Either the local market won't support close to the prices they paid; or ABC will need to buy and sell to other investors; or i am completely wrong about both.
That was just my impression...

I did go to Philly and tour Jay's properties.  The neighborhoods are not ones I would live in, but if his rent estimates are accurate, would be great for cash flow.  I looked at a handful of properties in different areas, none of which I would call "up and coming," but every single property looks identical.  If you've seen one property, you've seen them all.  The renovations all look good, the same paint colors, the same wood floors, the same 5' kitchens (which I imagine is common for turnkey providers).  I was sent a contract for a property but didn't feel confident enough in my ability to read and analyze it (I'm not a broker or salesperson) and am still sitting on it (they sold that property to someone else but seeing as though their contracts are identical for all properties, I figured I'd hang on to it until I found someone I trusted to review it).  

Would love to know if anyone has actually purchased through ABC and what their experience has been.  They appeared to have an incredibly high demand for properties (they had over 50 under renovation at the time of my visit) as a result of Maverick's webinars and recommendations so there's got to be someone (or multiple folks) on here who have purchased from them.  Come forward, friends, tell us about your experience.  

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