What do YOU expect from an Out-Of-State investment real estate provider?

15 Replies

There are a multitude of investment real estate providers.  Most notably, the out of state turnkey providers and others with similar strategies offered.  Many of these companies provide excellent products, but are they delivering on YOUR expectations?  Sure, we all want a better investment deal, but what are these providers missing that would make them a more useful investment vehicle for your portfolio?

Providers---Let's stay out of this discussion and let it be a learning tool only....."listen"

Originally posted by @William Robison :

There are a multitude of investment real estate providers.  Most notably, the out of state turnkey providers and others with similar strategies offered.  Many of these companies provide excellent products, but are they delivering on YOUR expectations?  Sure, we all want a better investment deal, but what are these providers missing that would make them a more useful investment vehicle for your portfolio?

Providers---Let's stay out of this discussion and let it be a learning tool only....."listen"

Well, beyond honesty and integrity I would say communication.  I don't like to find out that repairs were made when I get my statement.  I don't want to find out that the tenant moved out when I get my statement.  I don't want to find out that the tenants haven't paid at the end of the month.  Things like that.  I like to be prepared ahead of time when my cash flow is going to be impacted.

Monthly statements - I have one property manager that has a very nice clearly written and easily understandable statements.   I have another property manager whose statements are almost indecipherable....and I have a masters degree in finance.

What I feel most turnkey providers are missing:

1. Low to non build in equity (some you have to pay a premium)

2. sub par location and old properties - (I know that's where the numbers look attractive, but I find it difficult to locate premium turnkey providers who really provide good location and newer houses. So if higher quality homes, I guess using a realtor is the alternative)

I will stick to the fundamental in investment, for instance, investing in stocks i prefer to evaluate the fundamental of companies instead of chasing the most popular or heated stocks for long term success. In properties, I will stick to location as I believe that's the fundamental for properties.

Anyway its still boils down to personal risk tolerance. I am more risk adverse, and I find it difficult to find a premium turnkey providers. (If you know any, do let me know) 

Martin,,, your talking Risk reward scenario in the Turn key environment. and turn key is a mid west upper mid west and deep south ( including Texas )  vocation.. There was some turn key in phX and Vegas but that went away when prices rose and yields fell. but is that not what we all want is appreciation.. Cash flow is nice but appreciation is what we expect with premium properties as your describing. Its two vastly different animals in the US.

If you want premium NEW properties then your going to get 3 to maybe 7% yields and if your prime CA. less to negative Gear or cash flow. But you stand the real chance of a property going up in value by 50% over a 24 to 36 month hold time.. Were mid west turn key it would take 30 years for it to go up 50%.. maybe a stretch but not really.

YOu cannot get new prime properties turn key in the mid west that return cash flow like old lower end C D properties the metric does not work... So what you need to decide is if you even want to own US rentals... As the stock market if your good at will probably out perform most US rentals especially if your leveraging. And or what CLASS US investment you want.

@Billy Rogers  

  Maybe one of the PM software companies should take note.. and have auto e mails when the PM clicks in the software system that property is vacant, or that bids are going out.. then the software system sends you and auto responder type of email so you can stay on top of it..

But land lording is land lording.. and this type of thing is just what it is ... It one reason that seasoned landlord many times turn into note investors... they finally have enough liquidity to buy notes and don't want to hassle the things that make turn key frustrating or land lording frustrating.. But its the turn key company and pm who need to manage expectations but if they were up front with most clients many would choose to pass.

I think Memphis invest built their business on communication...

Disclosure: Pinnacle Investment Properties is a turn key provider

One of the most important things I think a turn key provider should offer is strong knowledge of not just the market at a macro level but also have detailed knowledge at the neighborhood and street level. That's where a turn key company brings in the most value. The problem is that many turn key companies are in too many markets and can't possibly have detailed knowledge at the ground level. Often times the turn key company will tell you a property is a B class property when in fact it is a C class or even D class and they may not even know it themselves. If you want to find out real quick if the turn key company knows the area well, ask them to give you a virtual online tour on Google Maps and to walk you through different areas and whey they are good or bad. You'll get a good feel for how knowledgeable they are.

Disclosure: NOTE my company provides investment properties to investors

What you are describing Martin are lazy companies who wannabe turnkey. They buy in bad locations because they don't know how to buy well in good locations because of the competition. They should never be considered serious providers. And eventually they go broke as they should so only the better players are left.

@Jay Hinrichs  sorry I didn't state it clearly. When i say location I mean the micro location in the market they serve. Not to the extend to have a negative cashflow turnkey company in CA and their selling point is wait for the capital gain. Because capital gain is widely available in Asia and some part of Asia (HK and Singapore) capital gain is on par or even better than CA. The only attraction for me as a foreigner to invest in US RE is cash flow, capital gain I can get it in my local market. 

For example, I couldn't find a turnkey provider in better area of Chicago, such as north Chicago, but there are a lot turnkey companies operating in the south side. However in BP communities, they are quite a lot people invest in the better area of Chicago for buy and hold. just that the return is not as good as the south, I wish to follow that path but I find it difficult to have a turnkey company do that for me. So a realtor is the alternative. 

@Martin Yung  

As you state there are no turn key providers in A class properties by and large, simply because to be turn key one needs to pretty much advertise 10% returns or better to compete head to head with all the different TK providers nationwide. And to get those returns the properties are not A they are not Northside Chicago.. SF bay area. Portland Ore, Seattle WA  Charleston SC  New York City etc etc. Where the markets are dominated by local investors... And I guess as I stated and as you stated there probably is really no reason for you to invest in the US if your local market can match or exceed returns here.. When you step down in class of property you increase all the bad stat's  like education deficiencies, crime, lack of any appreciation at all.. lack of liquidity IE renter dominated streets or sub markets.

If our looking for bigger returns in the best neighborhoods then you need to be looking at Value add.. Buy rehab and resell, partnering with a flipper etc etc.. Not just buy and hold rentals they are what they are.. the attraction for many US investors is buy and hold in many markets has the lowest point of entry. especially if they can get 75% or so financing they can get into properties For properties for 20 to 30k out of pocket and feel good about owning something.. For a foreign investor who is paying cash and usually has more cash than the average US investor starting out. their options are more varied, but like we all know who you choose to do business with will make or break you.  

This post has been removed.

I agree with @Billy Rogers . Communication is everything!. I will score the TK am currently dealing with zero when it comes to communication. I practically have to prod to get information.

For me, the fulcrum for remote investing is communication and when you don't get that, it creates a big void.

@Kyle Baker  

I have some difficulty understing what you meant by being in a wrong buisness. Is it impossible for a TK provider or PM to simple communicate and inform the investor of expected expenses before they are incurred. I know some must be incurred at the spur of the moment, but the onus on the PM to communicate this promptly, and certainly not at the end of the month from the statement.

Thanks

Originally posted by @Kyle Baker :

Billy Rogers you're in the wrong business if you want to know about cash flow impacts before your statement. If that's the case you're not doing enough do diligence on the property to begin with.

 I'm not understanding this comment either. I don't see anything wrong with wanting to know about repairs or vacancies before you get your statement. Good property managers communicate all of that by email. I also don't understand what it has to do with not doing enough due diligence. No matter how much due diligence one does, there will always be maintenance calls unless you believe the pro forma's that don't include a factor for it.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here