What do you look for in a turnkey company?

Out of State Investing
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What do you look for in a turnkey company?

Natalie NixonPro Member
Real Estate Consultant · Birmingham, AL · Member since 2023 · 18 posts · 10 votes

I've seen posts about whether people should use a turnkey company or not, but for those of you who have used a turnkey company for out-of-state investing, what KPIs do you pay the most attention to? Do you focus more on the front-end stuff like how many properties they look at vs. acquire, how often major items like roofs/HVAC etc. are replaced? Or is the back-end performance more important in your analysis—days on market, occupancy, eviction rate, maintenance costs, etc.?

Curious what experienced investors look at when evaluating a turnkey company.

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1mo

A bit confused about your question, in the context of your profile here on BP:

--------------------------------------------------------------

Real Estate Consultant

Birmingham, ALMember since 2023

followers connections following

About myself

I’m Natalie Nixon, Investment Wealth Counselor here at Spartan Invest. I bring nearly 30 years of sales and leadership experience, along with a background in residential real estate and business development. Throughout my career, I’ve focused on understanding what people are trying to accomplish and helping them make confident, informed decisions.

At Spartan, my goal is to help investors simplify the process of building wealth through long-term, single-family rentals. I enjoy educating investors about our markets, our turnkey model, and the opportunities available while helping them determine what makes sense for their individual goals.

I’m passionate about building relationships, providing honest guidance, and helping investors take the next step toward their financial goals.

----------------------------------------------------------------

If you truly need feedback:

https://www.biggerpockets.com/forums/963/topics/1271829-out-of-state-turnkey-rentals

https://www.biggerpockets.com/forums/963/topics/1268245-fully-turn-key-house

https://www.biggerpockets.com/forums/963/topics/1296706-turn-key-investing

https://www.biggerpockets.com/forums/311/topics/565385-columbus-turnkey-houses-problems

https://www.biggerpockets.com/forums/311/topics/784439-turnkey-properties-is-the-roi-worth-it

https://www.biggerpockets.com/forums/311/topics/193041-out-of-state-turnkey-disaster-home-inspection

[email protected]248-209-6824
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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1mo

    I view "turn key" companies as nothing more than good marketers. If you want to purchase stable real estate, why not purchase property that was recently renovated, or is in good condition, has meaningful operating history, systems that have substantial useful life remaining yet experienced enough usage where a home inspection provides actual value? To me seems like a far safer investment.

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  • Josh HandlerPro Member
    Contractor · Memphis, TN · Member since 2026 · 72 posts · 84 votes
    1mo

    I come at this from the construction side rather than the buyer side, so take it for what it's worth, but the KPI I'd care about most isn't on either of your lists.

    It's what they replaced versus what they cleaned.

    Every turnkey rehab has a moment where somebody stands in front of a 19-year-old furnace that still fires and decides whether it goes in the number. Same call on a roof with a few years left, a water heater from 2009, cast iron drain lines that flow fine today. Cleaning those and calling the house renovated makes the pro forma look great for about 30 months. Then the buyer eats them all at once, and it lands as "maintenance costs" in year three, which is exactly the metric that looks fine on the company's own back-end reporting because it happened after the sale.

    So the question I'd ask is simple: for the last five houses you sold, what's the age and condition of the roof, the HVAC, the water heater, the panel, and the sewer line, and which of those did you replace? A good operator has that in writing and will hand it to you. A marketing operation will talk about their process instead.

    Two related ones. Ask what percentage of their sold homes have had a capital item replaced within 24 months of closing, and whether they'll say it out loud. And ask to see the actual line-item scope from a finished job, not a sample or a summary. Anyone doing the work themselves has hundreds of those and can send one in five minutes.

    On your front-end versus back-end question, back-end wins, but I'd weight it toward maintenance cost per unit in months 12 to 36 rather than the first year. Year one looks good on almost everything. Year two is where the rehab tells the truth.

    For context, I run a construction company and do investor rehabs and turns, so I'm the guy on the other end of those decisions, which is why that's the metric I'd chase.

    901-239-3970
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  • Michael Eskenasy
    Investor · Pacific Northwest · Member since 2026 · 538 posts · 309 votes
    1mo

    I don’t really believe there’s such a thing as a turnkey business.

    There are just businesses where the problems haven’t been disclosed yet.

    That’s what I’d be underwriting.

    Not whether the house looks clean at closing, but where the future pain has been pushed.

    Josh’s point about what got replaced versus what got cleaned is exactly the right instinct. A 19-year-old furnace that still works isn’t a solved problem. It’s a deferred decision. Same with the roof, sewer line, water heater, electrical, and everything else that can survive long enough to make the pro forma look good.

    I’d want to know what happened after the sale.

    What failed in years two and three?

    What surprised the buyer?

    What did maintenance actually cost?

    What percentage of homes needed major capital work shortly after closing?

    That’s where the real product reveals itself.

    “Turnkey” is usually just a very polished description of the handoff.

    The investment starts after the handoff.

    2Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1mo

    A bit confused about your question, in the context of your profile here on BP:

    --------------------------------------------------------------

    Real Estate Consultant

    Birmingham, ALMember since 2023

    followers connections following

    About myself

    I’m Natalie Nixon, Investment Wealth Counselor here at Spartan Invest. I bring nearly 30 years of sales and leadership experience, along with a background in residential real estate and business development. Throughout my career, I’ve focused on understanding what people are trying to accomplish and helping them make confident, informed decisions.

    At Spartan, my goal is to help investors simplify the process of building wealth through long-term, single-family rentals. I enjoy educating investors about our markets, our turnkey model, and the opportunities available while helping them determine what makes sense for their individual goals.

    I’m passionate about building relationships, providing honest guidance, and helping investors take the next step toward their financial goals.

    ----------------------------------------------------------------

    If you truly need feedback:

    https://www.biggerpockets.com/forums/963/topics/1271829-out-of-state-turnkey-rentals

    https://www.biggerpockets.com/forums/963/topics/1268245-fully-turn-key-house

    https://www.biggerpockets.com/forums/963/topics/1296706-turn-key-investing

    https://www.biggerpockets.com/forums/311/topics/565385-columbus-turnkey-houses-problems

    https://www.biggerpockets.com/forums/311/topics/784439-turnkey-properties-is-the-roi-worth-it

    https://www.biggerpockets.com/forums/311/topics/193041-out-of-state-turnkey-disaster-home-inspection

    [email protected]248-209-6824
    Logical Property Management4.9460 Reviews
    WebsiteView Page
    5Reply
  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 819 posts · 427 votes
    1mo

    Turnkey is the little brother of a guy named time share. 

    There's many people on the board who are on the take from turn key companies, getting referrals if they post about a good experience and someone mentions their name and buys from the same vendor. Many of these people are very wet behind the ears and have purchased their first or second turn key deals and having been owners for weeks or months come here to tell those with 100 and 1000x the experience how great they are. 

    Additionally, many people lurk and try and "connect" people with turn key operators to either get a commission or because they get marketing dollars from them. These relationships are rarely, if ever disclosed. It happens a lot. 

    Sure, every once in awhile, it works out. 

    More often than not, it doesn't work out and some people come to the board and tell us all about how they lost a lot of money in a short amount of time. 

    In other corners of the web, there's a lot more stories of deals gone very bad, promises not kept and lots of money lost from turn keys. 

    2Reply
  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 819 posts · 427 votes
    1mo

    aw crap that response was a waste of time. 

    Farm on, chase that aura lady. 

    0Reply
  • Natalie NixonPro Member
    OP
    Real Estate Consultant · Birmingham, AL · Member since 2023 · 18 posts · 10 votes
    1mo

    @Drew Sygit Didn't intent to create confusion, in my roll I am looking to learn when folks are assessing the actual turnkey provider what statistics are most important to them. We have dozen of data points and  want to make sure I am not missing anything of importance.

    [email protected]205-782-9788
    0Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    1mo

    @Drew Sygit - to cut a little slack, I think this is a forced post where Natalie is trying to come up with some creative way to start a conversation and maybe grab a lead. Technically, that is what a forum is supposed to be. Perhaps a sentence or two about disclosure from her would have helped clear up confusion about the question. I am going to post my response as one of the original people to use that terminology to describe our business model.

    As for the question itself, i think turnkey is about as clear as mud here on BP and has been for the better part of a decade. I like what @Stuart Udis , @Ed O. , @Michael Eskenasy and @Josh Handler added to the conversation. However, I think they all miss one point that leads to more questions and sometimes confusion.

    People still talk on BP like the word "turnkey" stands for one definition or one way of investing. I think it was Ed who said it really well that turnkey describes more of a hand-off than an actual product. Today, the word turnkey is used so many different ways to describe companies and people that investors should be forgiven for being confused. I think it is exactly what many people who use the word want. They want to distract buyers from the right questions and instead get them to define turnkey the exact way the company or person sells. I know plenty of companies that I would never recommend and many that I think are hurting investors for profit. I don't get lumped into these companies anymore, but for my first decade here on BP I had to fight constantly against the idea that all "turnkey" companies are the same and can be described equally.

    In 2007, there was a magazine article written about our company, then called Memphis Invest, and the writer described our process as Turnkey. We purchased the property, rehabbed it, brought it to market while also advertising it for rent. The "hard" parts that required an investors time were done for you, so the writer coined our process as being Turnkey. There could have been plenty of companies using the term before then, but we'd never heard it and we had already been in the business for a while. I joined BP a year later and started using the term and back then it meant that you were buying a property from a company that owned the property. Whoever owned it had already bought it with their own money and renovated with their own money. They also had the management company under the same roof ensuring that an investor had one person responsible for that property.

    Since that time, the word has been used so many different ways that the market is thoroughly confused and then posters here on BP try to describe "turnkey" as one thing or one way of operating or as each company or offering being equal. They are not.

    There are no set of KPIs that turnkey investors need to focus on to make their decisions. Each investor is unique and different with a different set of expectations. Those expectations may cluster around a handful of things, but they each may make buying decisions differently.

    For me, the most important items were mentioned already. Investors should evaluate a company based on available data points such as scope of work completed, deferred maintenance or capex, 3,5,7+ year maintenance average percentages, 3,5,7+ year median maintenance dollar charges, average and median length of occupancy plus any metrics that influence that number such as how does a successful 1st lease extension effect that number. How many properties does a management company manage if they sell property through a turnkey process? This is only to name a few. I agree with the above statements about transparency. Can and will a company provide you with a scope of work? How about letting you talk to current clients? If so, challenge them to let you talk to a client who has recently been upset about a move-out, a maintenance bill, etc. The truth is, most of this should be handled one on one through conversation and it is incumbent upon the investor to keep asking questions. Reputations are very important and so are facts and figures, but no one should buy strictly on gut and "feeling" good. It is important to understand how an investment and whoever is managing it actually work.

    Bottom line, there are no set of metrics that investors routinely use, mostly because each investors is unique. I think it was Ed who talked about the number of paid posters and hucksters being paid to promote here on BP. IT is a real problem and exploded in the last 5-6 years. From clear and obvious advertising posts to non-disparagement clauses investors sign to do business with companies, preventing negative comments. It is hard for investors to know who is legit and who is out to separate investors from their money one house at a time.

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  • Natalie NixonPro Member
    OP
    Real Estate Consultant · Birmingham, AL · Member since 2023 · 18 posts · 10 votes
    1mo

    @Chris Clothier Until spending time on this forum I genuinely had no idea there were so many definitions of turnkey. And yes while I do work for, what we call a turnkey company, I am putting together an education piece which is what prompted my question. We have so many KPIs my hope was to simplify and focus on the items that successful investors have found the most useful. Thank you again for your reply.

    [email protected]205-782-9788
    2Reply
  • Ed O.
    Investor · Statewide, MO · Member since 2011 · 819 posts · 427 votes
    1mo

    @Chris Clothier

    Good to see you here. 

    You and one other operator in Indy are literally the only turn key people I would trust - out of all of them. I've heard you speak a long time ago in person (the original BP conference, probably their last great conference they had) and am well aware of your track record. 

    It's the 99.9% of poorly run copy cats that give turn key bad name. You guys have done a ton of deals and I apologize for not qualifying my remarks on turn key as such. There's so many rotten operators, it made me momentarily forget the last two respectable ones. 

    1Reply
    • Chris ClothierBusiness Member
      Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
      1mo

      Thanks for that compliment Ed. That first BP conference was a long time ago. I don't even bother with them anymore because they are so far from what made the site and the event great. Oh well.

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  • Natalie NixonPro Member
    OP
    Real Estate Consultant · Birmingham, AL · Member since 2023 · 18 posts · 10 votes
    1mo

    @Michael Eskenasy thank you for your reply, the questions you listed were very helpful!

    [email protected]205-782-9788
    0Reply
  • Shiloh LundahlPro Member
    Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
    1mo

    @Chris Clothier I alway wonder about how profitable a turnkey property is. If you get a chance, could you break down the numbers of an average turnkey deal you completed within the last 30 days. What were the numbers to your company and what were the numbers to the investors who bought the home? And what are the projected numbers for the operation of the home and at what point would it make sense to sell it to maximize the IRR?

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  • Josh HandlerPro Member
    Contractor · Memphis, TN · Member since 2026 · 72 posts · 84 votes
    1mo

    Chris makes the point that matters and I want to add one construction-side test to it, because his own 2007 description contains the answer to the definitional problem.

    He said it plainly: they bought the property with their own money and renovated it with their own money.

    That's the whole test, and it's checkable in public record. Ask who held title while the renovation happened.

    If the company owned the house during the work, every overrun came out of their pocket before you ever saw a price. The rot behind the tub, the drain line that failed the scope, the panel that turned out to be aluminum, all of it got absorbed by the seller and the number you're quoted is a real number that somebody already lived through. If the company never took title, or took it the same week it conveyed to you, then the renovation risk was never theirs. It sits with a wholesaler, an assignment, or a crew being paid off your closing, and every surprise arrives on your side of the handoff instead of theirs.

    Same word, opposite risk transfer, and you can settle it in about four minutes on the assessor's site by pulling the deed history. Look at when they acquired versus when they sold you, and whether there's a gap wide enough for actual construction to have happened. A ninety day hold with permits pulled in their name is a different animal than a same-day double close.

    That also explains why the KPI conversation gets slippery. A company that owns the asset through the rehab has real numbers because they paid for them. A company that doesn't is reporting on other people's work and can only give you averages.

    For what it's worth, this cuts against plenty of contractors too, mine included. Anybody can produce a nice scope. Fewer can show you a house they carried the risk on.

    Josh

    901-239-3970
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  • Natalie NixonPro Member
    OP
    Real Estate Consultant · Birmingham, AL · Member since 2023 · 18 posts · 10 votes
    1mo

    Very helpful, thank you!

    [email protected]205-782-9788
    0Reply
  • James JonesPro Member
    Investor · Collierville, TN 38017 · Member since 2017 · 772 posts · 568 votes
    1mo

    Natalie - Memphis operator, twenty-two years, few hundred doors, and I've been on both sides of this: I've sold finished houses to out-of-state buyers and I've bought from people who sold them badly. Two KPIs nobody asks for, and one question that quietly matters more than every metric in your list.

    First: ask for a cohort, not an average. Every house you sold in one specific quarter two years ago. All of them. Occupancy today, number of turns since closing, and the current status of every single address including the ones that went sideways. Portfolio averages let the company pick a denominator, and the denominator is where the bodies are. A cohort can't be curated without lying about specific addresses, which most people won't do. If they can't produce it, that's the answer.

    Second: turns per unit per year, not eviction rate. Eviction rate is the most gameable number on your list. A manager who lets a non-paying tenant ride for five months to avoid filing shows you a beautiful eviction rate and hands you the loss anyway. Average tenancy length and turn count can't be dressed up the same way, because every turn costs somebody money and it shows up in the ledger.

    And the question that matters more than any KPI: what percentage of the maintenance dollars billed to owners goes to an entity the company or its principals have an interest in? If the manager owns the maintenance company, every repair is revenue rather than cost, and every incentive you assumed you were buying quietly runs backwards. That isn't automatically disqualifying - vertical integration is genuinely how you get fast response times, and I'd defend it - but you need it disclosed, in writing, before you close, because it changes how you read every maintenance number they show you. The good operators say yes and explain it. Be careful with anyone who acts confused by the question.

    One more if the units are Section 8, since that's most of what I run: ask how many of their voucher units passed inspection on the first attempt. A re-inspection is two to four weeks of lost rent that never appears in a vacancy statistic because the unit is technically leased. It's one of the largest hidden costs in turnkey voucher product and almost nobody tracks it, which is exactly why the number is honest when you get it.

    To your front-end versus back-end framing: the front-end numbers describe a process, the back-end numbers describe an outcome, and only one of those you get to keep.

    1Reply
  • Natalie NixonPro Member
    OP
    Real Estate Consultant · Birmingham, AL · Member since 2023 · 18 posts · 10 votes
    1mo

    @James Jones this is fabulously helpful! Thank you for taking the time.

    [email protected]205-782-9788
    0Reply
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