Huge losses with Freedom real estate group (Dayton)
Columbus, OH · Member since 2018 · 164 posts · 126 votes
Huge losses with Freedom real estate group (Dayton)
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Jonathan GreeneBusiness Member
Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votesThis is the major problem with turnkey for inexperienced investors. You think you are buying plug and play, but that's not how it works. If the turnkey provider owns all the companies that "take care of you", you are in a blind monopoly of services and have no oversight and leveraged trust. There's nothing wrong with turnkey per se and it seems that this was definitely a one-off, but why buy turnkey at 99k with $1,000 rent? The whole point of buying turnkey is that it's already turnt up and just scratching the 1% rule isn't that. Who chose the tenant? Even if they did the work, did you make the final decision? It seems like you were thinking like a lot of turnkey investors, that it would be passive. Nope. This is common in turnkey because the owners think it's sign and ride.
31 Replies
- 4yMarc RiceBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
Not sure who Freedom Real Estate Group is but with any property you need to budget for a stabilization period to fix all the issues, get a good tenant in there, and get your property manager collecting rent passively. Many people look at a property with a high rent and calculate their numbers at 0% vacancy, 0% rehab, and expect that tenant to continue to pay rent on time. That doesn't always happen in reality. I always recommend looping your property manager, inspector, and maintenance team in on any purchase.
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews - Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
@Marc Rice
They are a turnkey provider and have everything in house ( rehab team , PM, realtors etc)
https://freedomrealestategroup.com
We purchased in 2019 but just did not work out. We have a new tenant in place so let’s see!!
Just wanted to check other investors experience
- 4yMarc RiceBusiness MemberReal Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
@Sachin Amin
Have to be careful with turnkey providers. Glad to hear it’s going better now
Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews - Real Estate Consultant · OH · Member since 2018 · 24 posts · 27 votes4y
Hello Sachin,
It is unfortunate the situation that has unfolded with this property.
As you are aware, the circumstances surrounding the poor performance of the previous tenant was and remains an outlier to the standard our clients usually experience. The resident was effected by COVID-19 which lead to increasing issues with executing normal steps for removal. Once this was achieved, they had taken advantage of the situation and restrictions, and effectiviely destroyed the newly remodeled asset.
Our team quickly identified next steps and solutions to get this asset back into a cashflow state. This amounted to turnover that was heavier than initially expected. Even with this, it was requested by you to remove the non-safety related items from the scope of work. This has caused a few items to come up after the new resident moved in, as was warned when the scope was finalized.
This truly has been a situation that is difficult to navigate. There is risk involved with investments, but we are in the trenches here with you. The pace of a full resolution will be stressful as we continue to make every effort to minimize further losses on this asset.
Additionally, we have continued to improve processes including adjusting our fee structure to innovate and align with your interests. We care about putting you in a good position. This is a several months long effort to get you cashflowing well.
I appreciate your patience. Please feel free to reach out to me and my team if you have concerns. - 4yJonathan GreeneBusiness MemberReal Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
This is the major problem with turnkey for inexperienced investors. You think you are buying plug and play, but that's not how it works. If the turnkey provider owns all the companies that "take care of you", you are in a blind monopoly of services and have no oversight and leveraged trust. There's nothing wrong with turnkey per se and it seems that this was definitely a one-off, but why buy turnkey at 99k with $1,000 rent? The whole point of buying turnkey is that it's already turnt up and just scratching the 1% rule isn't that. Who chose the tenant? Even if they did the work, did you make the final decision? It seems like you were thinking like a lot of turnkey investors, that it would be passive. Nope. This is common in turnkey because the owners think it's sign and ride.
- 4yLydia BarPro MemberMember since 2021 · 30 posts · 10 votes
@Sachin Amin thank you for sharing your experience and I am sorry that this has happened to you.. it is unfortunate.
@Jonathan Greene so based on your experience what would be the best setting for a Turnkey company? can you give me an example on how they should operate and have their services?
- Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
we are closely monitoring this unit and area but mostly have decided to exit this location by next year. Memphis, Arkansa, Jacksonville, Maryland have been top performers on our portfolio...
- Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
@Jonathan Greene - I think they picked the tenant I am sure they had screening and background check in place but we will definitely take note for our future investments that we have a say and review the background check application.
- Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
@Christopher Sineno - this unit just has been nightmare since the procurement. May be because we just have never experienced this kind of -ve burn rate with our existing Turnkey providers till date. At this point with the limited tenure of lease not sure if we can get anything out. we are seeing every month there has been a appx $500 expense. I hope that stops now as all the issues should have remediated and we should see the rents coming from next cycle.
But yes we are done with this unit as my lenders all they care about is their monthly payments and this unit has not generated even signal $$ yet after new tenant and we are burning reserves to just sustain. and as discussed on various calls the only last option is to cash out when the unit is empty so we can target first time home buyers in that area. (at least that's what I was told would get us desired price)
- Member since 2018 · 30 posts · 15 votes4y
Interesting. I am having the same problem with Freedom Real Estate Group. Pls feel free to contact me so we can trade information and contact information. I would like to have a phone converstion with you regarding this. I'd like to learn more about your experience. Thanks
- Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
@Orlando Osuna - sure i just sent you a DM. are you planning to exit Freedome too ? becuase we have decided that we will be exiting by summer 2022 as soon as we recoup atleast some rents and sell the unit.
- Member since 2018 · 30 posts · 15 votes4y
Originally posted by @Sachin Amin:
@Orlando Osuna - sure i just sent you a DM. are you planning to exit Freedome too ? becuase we have decided that we will be exiting by summer 2022 as soon as we recoup atleast some rents and sell the unit.
Yes sir. My plan A is to sell these 4 properties because I don't like the quality of the renovations in at least 2 of them. Plan B would be to stabilize them with a competent pm and see how they do for a year and then reconsider. Let's chat. I will DM you. Thanks for reaching out
- 4yOzzy SmithPro MemberSpecialist · Dayton, OH · Member since 2014 · 352 posts · 265 votes
@Sachin Amin and @Orlando Osuna
Sorry to hear about your experiences. This is why I do partnerships instead of property managers. Both parties have a vested interest in the success or failure of the asset. I hear stories like this all the time.
- Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
@Ozzy Smith if you can please share more on partnerships? how does it work ?
- Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
@Orlando Osuna - Sorry to hear...are you getting any rental income, even we have similar situation all the rents from new tenant are constantly going for repairs (100% of them) - we are paying out mortgage out of our reserves and had to borrow from one of our private lenders with higher rate) as we never anticipated we would not make any $$ for almost entire year. we are in a deep hole :( on this one. but hoping to sell if we can get decent rate on our unit...hopefully next summer if we get good offer we will be selling it for sure.
- Member since 2018 · 30 posts · 15 votes4y
Originally posted by @Sachin Amin:
@Orlando Osuna - Sorry to hear...are you getting any rental income, even we have similar situation all the rents from new tenant are constantly going for repairs (100% of them) - we are paying out mortgage out of our reserves and had to borrow from one of our private lenders with higher rate) as we never anticipated we would not make any $$ for almost entire year. we are in a deep hole :( on this one. but hoping to sell if we can get decent rate on our unit...hopefully next summer if we get good offer we will be selling it for sure.
At the moment I'm not getting any income from any of my 6 doors. But they do charge and over charge for mowing,repairs and turnovers. My last turnover cost was 3k which is ridiculous. Never doing business with them again. They were recommended to me by a well known investor Keith Weinhold..i thought they were a trustworthy company. They are not.
- Columbus, OH · Member since 2018 · 164 posts · 126 votes4y
@Orlando Osuna - wow we were recommended by Noarada. (i hear from Norada - they broke the partnership when i last spoke to Oliver from Norada)
- Member since 2018 · 30 posts · 15 votes4y
Originally posted by @Sachin Amin:
@Orlando Osuna - Sorry to hear...are you getting any rental income, even we have similar situation all the rents from new tenant are constantly going for repairs (100% of them) - we are paying out mortgage out of our reserves and had to borrow from one of our private lenders with higher rate) as we never anticipated we would not make any $$ for almost entire year. we are in a deep hole :( on this one. but hoping to sell if we can get decent rate on our unit...hopefully next summer if we get good offer we will be selling it for sure.
At the moment I'm not getting any income from any of my 6 doors. But they do charge and over charge for mowing,repairs and turnovers. My last turnover cost was 3k which is ridiculous. Never doing business with them again. They were recommended to me by a well known investor Keith Weinhold..i thought they were a trustworthy company. They are not.
- Realtor · Pilesgrove, NJ · Member since 2008 · 11 posts · 5 votes4y
I am grateful I found this post. Keith Weinhold was pushing Freedom on his most recent podcast. Think I’ll pass.
- 4yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Jonathan Greene:
This is the major problem with turnkey for inexperienced investors. You think you are buying plug and play, but that's not how it works. If the turnkey provider owns all the companies that "take care of you", you are in a blind monopoly of services and have no oversight and leveraged trust. There's nothing wrong with turnkey per se and it seems that this was definitely a one-off, but why buy turnkey at 99k with $1,000 rent? The whole point of buying turnkey is that it's already turnt up and just scratching the 1% rule isn't that. Who chose the tenant? Even if they did the work, did you make the final decision? It seems like you were thinking like a lot of turnkey investors, that it would be passive. Nope. This is common in turnkey because the owners think it's sign and ride.
I have been involved with "turnkey" since i think the term for out of state investing became a thing back in 2002.
What we see is the investors demanding that the unit be tenanted when they close so they dont lose one day of rent.. and of course all the turnkey sellers have to keep up with the Jones.. This to me is a mistake and with the little bit of inventory I have and with some of those I fund we dont do this anymore.. It puts to much pressure on the provider to get the unit filled asap as they are burning carrying costs.
We rehab let the client do their inspections be happy with the property the close then the buyer has the opportunity to help/review who they rent to.. That way the investor if they want to hold out a month for a better tenant they can .
I just don't understand what people are thinking so worried about missing one or two months at the beginning of the investment and take a risk on a tenant like being described above.
The other reason we wont put tenants in prior to closing its a cluster trying to schedule appraisals and Punch list items post inspection you get a far better property in my mind if you just slow down and dont demand tenant be in place prior to close.
This as noted can lead to poor performance that is far worse than a month of vacancy.
- 4ySteve HodgdonPro MemberInvestor · Novato, CA · Member since 2015 · 432 posts · 321 votes
there's risk in this business. The biggest is counter party risk. Keep your team small and trustworthy. None of us are Warren Buffett. But we somehow want to make a better margin than he does.
- 4yMark S.Pro MemberRental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
@Sachin Amin, I visited them several years ago. Although the gentleman we met with at that time for property tours was extremely nice (he is no longer there, by choice according to what I was told, due at least in part to how the company was operating their business), we were not impressed with this group’s operations. We met at their office, took a tour with him, then went back to their office to chat. The office personnel were extremely nice, but I was not at all impressed with one of the owners who appeared to be aware we were there taking a tour and potentially becoming new clients, but he couldn’t take 30 seconds to pop his head in the conference room and say hello. The properties we toured were very old and in different stages of rehab, but I wasn’t particularly impressed by the rehab work, the contractors smoking indoors, or some of the uneven floors that they just decided to throw carpet over, hoping no one would notice. I gave them my criteria and never heard a word or received an email from them since. I did hear them a while later on Keith’s GRE podcast and reached out to their new contact about property that was supposedly available right away (probably thinking/hoping they changed their ways and might actually somehow have some “good” properties available) only for the new contact to tell me they don’t have any available. Maybe I’m a PITA, who knows, but again not impressed with them. I do remember that they pay hefty referral fees for referring other investors (supposedly), and I would guess that’s a big part of why he is recommending them. As much as I love Keith (met him in person twice on investor trips), I think he has made a change to trying to monetize everything and collect referral fees wherever possible. The podcast used to have great, original content. Now, it seems to have gone downhill and the relatively new YouTube channel is just another way to say the same things and monetize. Nothing wrong with making money, but when you associate with groups where investors repeatedly have bad experiences (Freedom, Maverick, Real Estate Cowboys/Larson, etc.), something just isn’t right. I understand there are outlier experiences, and while on the surface yours appears to be one of them, it may not be as uncommon as you think. With all that said, there are also guests on the show that seem to have good investor experiences (Mid South Home Buyers, AgroNosotros, etc.). Moral of the story to all of us is that we always need to do our own due diligence and be cognizant of who is on the other side of the transaction and their possible motives - usually $.
- 4yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Mark S.:
@Sachin Amin, I visited them several years ago. Although the gentleman we met with at that time for property tours was extremely nice (he is no longer there, by choice according to what I was told, due at least in part to how the company was operating their business), we were not impressed with this group’s operations. We met at their office, took a tour with him, then went back to their office to chat. The office personnel were extremely nice, but I was not at all impressed with one of the owners who appeared to be aware we were there taking a tour and potentially becoming new clients, but he couldn’t take 30 seconds to pop his head in the conference room and say hello. The properties we toured were very old and in different stages of rehab, but I wasn’t particularly impressed by the rehab work, the contractors smoking indoors, or some of the uneven floors that they just decided to throw carpet over, hoping no one would notice. I gave them my criteria and never heard a word or received an email from them since. I did hear them a while later on Keith’s GRE podcast and reached out to their new contact about property that was supposedly available right away (probably thinking/hoping they changed their ways and might actually somehow have some “good” properties available) only for the new contact to tell me they don’t have any available. Maybe I’m a PITA, who knows, but again not impressed with them. I do remember that they pay hefty referral fees for referring other investors (supposedly), and I would guess that’s a big part of why he is recommending them. As much as I love Keith (met him in person twice on investor trips), I think he has made a change to trying to monetize everything and collect referral fees wherever possible. The podcast used to have great, original content. Now, it seems to have gone downhill and the relatively new YouTube channel is just another way to say the same things and monetize. Nothing wrong with making money, but when you associate with groups where investors repeatedly have bad experiences (Freedom, Maverick, Real Estate Cowboys/Larson, etc.), something just isn’t right. I understand there are outlier experiences, and while on the surface yours appears to be one of them, it may not be as uncommon as you think. With all that said, there are also guests on the show that seem to have good investor experiences (Mid South Home Buyers, AgroNosotros, etc.). Moral of the story to all of us is that we always need to do our own due diligence and be cognizant of who is on the other side of the transaction and their possible motives - usually $.
Real Estate is still sales and Marketing without it not much would happen. And yes most folks that do pod cast and refer on these are just advertisements, and they are generally compensated if they are talking about a particular vendor in a particular market. Is no different than what a real estate broker in the local area would do they get paid as the procuring cause to bring buyer and seller together. Many turnkeys or should we say house renovators who specialize in not renovating a house to sell to a homeowner but specialize in renovating houses to sell to investors those companies are not great at marketing .. so they need outside agents who are very good at marketing and its all they do.
real wealth hartman maverick and the others you mentioned these folks saw the need and created monster marketing machines. And like U mention they will rep a certain company the company wont perform well and they have to drop them .. The investor who had the bad experience tends to be the one that takes the brunt of this.. But many flippers come and go in this industry.
Lastly your comment on the floors keep in mind these Turnkey markets most of the homes are old to VERY old and your just not going to be able to rehab everything out of the house and keep the price where you need it for an investor based on rental rates ( working backwards). Unless of course it major foundation issues etc but some unlevel floors in a house that was built in the mid west in 1899 is expected and for sure common does not make it a bad performer.
I personally dont know this company or the owners so not comment there my comments are just general observations of 20 years funding mid west Turnkey operators.
- Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes4y
So many of these "I got screwed buying turnkey" posts seem to come down to two common pitfalls:
(1) if you want steady income, buy a bond. A rental house is not a bond and will not pay out regularly like a bond.
(2) a truly knowledgeable seller (like a turnkey operator as opposed to a standard "motivated" homeowner you read so often about) has essentially two ways to making money: (a) selling the buyer a property with a profit mark-up and/or (b) selling you a razor with the understanding that you will be buying blades from the operator. In either case, there is no incentive to provide the distant buyer with any kind of "deal." You are buying at market (or, commonly, based on threads I have seen, well above market) or you are paying a premium on services.
- Member since 2025 · 1 post · 0 votes1y
What you experienced almost mirrors exactly what we went through last year. $10k was about the cost to fix everything the tenant ruined, not to mention the lost rents. All the appliances were missing and Independence didn’t even seem to know that they were there when the house was first rented even though they are the ones who handled the lease. I don’t know if they did anything at all to go after the tenant for the money she owes us. Probably not since that wouldn’t put any money in their pockets. Last year we got a new tenant and now they are duds as well and I just found out now (surprise!) that they aren’t paying the utilities so Independence stepped in and paid those delinquent bills. Never mind that they have never communicated to me that there were any sorts of issues with this tenant. I just find out when I don’t get any money this month all of a sudden. And how was this Freedom company so capable of making the investment property look so nice when they wanted to sell it to me but when it came time to re-rent it, they presented it like a piece of trashed garbage with regards to the flooring which looked so incredibly awful? They didn’t even remove paint the tenant got on the floors. No wonder we got crummy tenants again. I don’t know what to say. I just want to sell this property and move on. But I have a very bad taste in my mouth for Freedom Family Investments and Independence, the PM arm.
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