A Turnkey Review: TCS Investments

61 Replies

@Daniel P. from what I have learned, many MANY investors have done exactly what you and I are trying to do. I think as long as you don’t have your insurance and taxes escrowed, the chances of the lender discovering the deed transfer are very slim. Brandon Turner has mentioned on the podcast that of all the deals he has done and investors he has spoken with, he can only think of one time that a note was called due. And in the instance the bank just let the investor deed it back to himself. So I think we’re ok there. 

That being said, much of that history was during a falling/steady interest rate environment, so banks had little incentive to call a note due as long as they were still getting paid on time. The way I see it, if the loan is at 4%, but current rates get up to 6-8%, banks might start calling these investors and calling the note or forcing a redo at a much higher rate. 

Finally, I did speak with a local bank that could get me 5.3% 15 yr fixed underwriting the LLC, but I have to open a savings account and reside in my county. So I guess it's possible.

Thank you for the feedback and let’s keep each other informed on the progress. 

@James Palassis Hi James. Just something to note, in Florida you can quit claim properties in and out of a LLC for $150, provided you are transferring the property to a LLC 100% owned by yourself. It is a called a "mere change transfer". In Philadelphia, even for a mere change transfer, you need to pay a 4%+ tax based on the assessed value of the property! This leaves Philly investors in a conundrum, do you close in your individual name and obtain a conventional loan, spend a few thousand dollars deeding the property to a LLC, and run the risk of having the mortgage called? Or buy in your name, and purchase a few million dollars worth of umbrella insurance. It is a big pain and I have not found any good answers yet. From experience and speaking with many different investors however, having the mortgage called does not seem to be a real concern. Just have your mortgage payments automatically paid each month so you never miss a payment and I don't think the servicers will want to bother you.

Hi @Daniel P. , really enjoyed your post on the TCS Turnkey model, and considering using myself. I am curious how you reached your financial metrics (Cash-on-cash), and if you could provide any more information on the financial analysis/ lenders that you considered in the region. Also, did TCS guide you through a location search, or was much of that process done on your end?

Thanks

@Daniel P. , This is a great post by you. I'm sure your experience would be a huge asset for anyone thinking of investing with TCS. I was considering purchasing in my own name then transferring to an llc when I found out you have to pay transfer tax to do this in pa.

@Matthew Coffey  

Hey Matt - hopefully some additional information will help answer your question on cash-on-cash. On the first property, my annual expenses including PITI payments come to just over $10,600.00. I'm reserving 8% for repairs/capex and the property has all new mechanicals and appliances. The expected annual gross income is $14,375.00, minus my annual expenses and I'll net around $3,700.

In addition, the all-in was $105,000 with an ARV of $130,000. I then refinanced at 75% LTV which brings my cash invested to around $8,400. This brings the cash-on-cash return to around 44%.

One of the reasons the cash-on-cash is great is because we opted to leave radiant heat in the property. If we removed radiant heat and installed forced air, our renovation cost would be higher and the cash-on-cash lower. Do I regret not installing forced air? Slightly... but I'll be taking care of this over the next few years.

Hope this helps!

Originally posted by @Stephen Mahler :

@Daniel Pagan, This is a great post by you. I'm sure your experience would be a huge asset for anyone thinking of investing with TCS. I was considering purchasing in my own name then transferring to an llc when I found out you have to pay transfer tax to do this in pa.

Thanks Stephen. I purchased my 2nd property through an LLC (can't recall my thought process at the time) thinking I would be taking advantage of it being in an opportunity zone. I later decided against this after additional discussions with my CPA and transferred title to my personal name while closing on a 30-year loan. It certainly wasn't an inexpensive change of mind.

@Daniel P. Do you plan to keep your properties in your personal name? If so, are you going to just get an umbrella policy for asset protection? I bought my 1st property in my name and am going to keep it in my name because I don't want to pay the transfer tax. My 2nd property(in rehab right now with TCS) i bought thru my llc and will do a cash out refi in my llc thru my credit union

Originally posted by @Stephen Mahler :

@Daniel P. Do you plan to keep your properties in your personal name? If so, are you going to just get an umbrella policy for asset protection? I bought my 1st property in my name and am going to keep it in my name because I don't want to pay the transfer tax. My 2nd property(in rehab right now with TCS) i bought thru my llc and will do a cash out refi in my llc thru my credit union

For now that's what I plan on doing but hope that won't be for long. I would prefer keeping the rates I have now, and I don't plan on having them mortgaged for the duration of the note. So my plan is to accelerate payments to shorten the life of my loans, and transfer properties over to my LLC once that happens. In the meantime I'm shopping for umbrella policies to help cover my liability.

I'm curious what kind of rates your receiving from your credit union. I live in NYC so I can't join any credit unions in PA (first thing I asked around about a while ago). I purchased my 2nd property under and LLC as well, but ended up paying transfer tax and it wasn't insignificant.

Hows the rehab going on your 2nd property?

Originally posted by @Craig Eppler :

@Daniel P. How has your experience been with TCS Management? I've read some pretty terrible review online.

 At the beginning, it was not bad but not great. I found a couple errors owner distributions last year - nothing that wasn't resolved within a couple days, but still something I had to catch myself. Found that a tenant with a mid-month move in date was incorrectly charged a late fee not long after moving in. This was fixed the morning I pointed it out (day after I spotted it) so that's great, but still something I had to catch.

Repairs/maintenance goes pretty smoothly. I'm notified immediately after a request is opened and we have someone on-site for the repair within a day or two, depending on urgency.

Previously, trying to communicate with specific departments wasn't easy. Had to call the main number and select the option for the department, hope someone answers, leave a voicemail, and I would typically get a call back a couple hours later. Then they hired a new owner/tenant liaison months ago and she's been my interface for everything, and the experience is *significantly* better now than before. Reaching a tenant to coordinate work I want done, asking another department a question/request, checking on the status of rent payment for a specific unit.... she's very good at keeping track of all that and getting back to me pretty quickly.

With that said, I plan to continue using them as my PM as long as they keep up what they're doing now. If things change in a negative way, this might change, but I'll take what I'm getting versus the average stories I hear about PMs around here.

As for online reviews, I remember the first time looking them up and finding the same thing. One thing I noticed about these reviews is that a good number of them belong to either a) tenants whose owners don't give a crap about their properties and don't authorize maintenance requests (or can't be reached) or b) properties they're collecting rent on, but maintenance is handled by another party. At least that's what I found when reading through them. 

Did you find the same thing when reading the reviews?

Hope this helps!

Thanks for the great info.  I’m curious what fees or percentage TCS charged you for the services.  Acquisition fee, tenant placement, fees associated with rehab, etc.

@Daniel P.   What rates are you getting in you personal name? My 1st rental is in my personal name and I got 5%. MY CU rates are 5.5-5.875 currently with a .5% origination charge. I have checked with lima one, lending one, visio and a few others but they have pretty origination charges and rates. Did you try checking  with some regional banks? They may have better rates than the big national banks and I think they are easier to deal with. Yes transfer tax is no joke, My plan was to buy in my personal name than transfer to llc until i found out about the transfer tax. 

Well the rehab was going good overall until about 3 weeks ago. A stop order was put in place by the city because a neighbor complained about there being no permits. I actually found out while visiting the property on a weekend. The communication was non existent until I Brought it up to Josh. He was apologetic and assured me this would not happen again. Since then, I have been updated regularly and the permits are all active. Work is scheduled to resume next week.  

This three week delay has been extremely frustrating but I am optimistic the rehab will be finished next month.  

Originally posted by @Stephen Mahler :

@Daniel P.  What rates are you getting in you personal name? My 1st rental is in my personal name and I got 5%. MY CU rates are 5.5-5.875 currently with a .5% origination charge. I have checked with lima one, lending one, visio and a few others but they have pretty origination charges and rates. Did you try checking  with some regional banks? They may have better rates than the big national banks and I think they are easier to deal with. Yes transfer tax is no joke, My plan was to buy in my personal name than transfer to llc until i found out about the transfer tax. 

Well the rehab was going good overall until about 3 weeks ago. A stop order was put in place by the city because a neighbor complained about there being no permits. I actually found out while visiting the property on a weekend. The communication was non existent until I Brought it up to Josh. He was apologetic and assured me this would not happen again. Since then, I have been updated regularly and the permits are all active. Work is scheduled to resume next week.  

This three week delay has been extremely frustrating but I am optimistic the rehab will be finished next month.  

Hey Stephen. The note on my first property has a rate of 5.25%, second is has 5.875%, and I'm about to lock a rate on my third over the next week or two so I'll let you know what that turns out to be! 

Do you mind me asking what lender you went with on your first property?

As for the rehab.. that sounds stressful but I'm glad it all got sorted out. Are you getting an inspector to review the property as the rehab comes to completion? I make sure to bring in a home inspector so I have an unbiased 3rd party person to tell me what's right and wrong with the work. I've then given the report to Josh and his team so they write their punch list using the inspectors findings.

I've used the same inspector for all three properties and can't speak highly enough of him if you're interested. I can PM you if posting that here is frowned upon.

Originally posted by @Craig Eppler :

@Daniel P.


Did you apply for section 8 on either of your properties with TCS? If so, how has your experience been with that?

No I haven't... I have mixed feelings about section-8 and not sure if that's something I'll do. 

Do you have any experience with it? What are your thoughts? I certainly like the aspect of clockwork payment.. and feel that maybe it carries a stigma that it doesn't deserve (maybe?? I can be wrong..).

@Daniel P.

I don't have any experience with it. After my 2nd conversation with TCS yesterday I'm leaning towards going that route. The examples I was presented CF an extra $200 or so a month. There is currently a five year waiting list to get section 8 in Philly which is a huge positive from a vacancy perspective and tenants keeping the property in better condition, not wanting to go to the "back of the line" for being kicked out in my opinion. I do agree with you about the stigma, deserved? Not sure yet. 

Thoughts?

Nice! rates have dropped so you should get a great rate on this one

I financed thru wells fargo for my first rental

Yes it is pretty stressful but I feel good about it now. Josh has been really proactive to remediate the situation. I am going to get an inspector for sure. Elizabeth actually told me she was considering using the same company as you. I am considering them as well. Maybe we can start getting exclusive pricing if we are all using them. Feel free to give me a call anytime. Would like getting your insights and feedback. 

Hi all,

This thread is a bit dated but very helpful. I am in discussions with TCS. It seems that a few of you have been working with them for a while now and during a period of growth for the company.  Have you stayed with them and are you overall having a good experience? Are they able to consistently find you good deals? Are they providing good property management service?

Thanks!

Updated 2 months ago

@Daniel P. and @Stephen Mahler Any insight on TCS after working with them for a while during their growth period? Are they finding good deals and providing good service? Are they easy to work with? Thanks!

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