New OOS investor looking for Turnkey. Help deciding company

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New OOS investor looking for Turnkey. Help deciding company

Wei Jie Yang
New York City · Member since 2018 · 161 posts · 75 votes

Hi guys, I'm a new investor trying to find the  and am trying to find the right turnkey company to work  with. 

I think the most important thing about finding the right turnkey company is finding a great property management team and worry about the area later. I came with a list (with commentary):

Memphis Invest - The golden standard. Property might be a tad more expensive but if turnover and repairs are minimal then I'm fine with that. Another plus is that they are in five markets going to seven. They also seem to have thrown out their requirement of buying two houses initially with them as well, which works great for me. I did the initial consultation with them and got preapproved by two of their lenders already but haven't pulled the trigger for part 2 since I wanted to research other companies first. Currently my top pick. Can anyone share their experience with them and help me decide which market I should invest in with them?

Smartlands(Ohio) - Interested in the Cleavland Market. The only "full" turnkey company I know of in the Cleavland area. Had an initial consultation with them where they promised to send me a list of their approved vendors as well as any current deals they have open for me to look at. It's been almost two weeks and I haven't heard back from them. I tried emailing the rep I talked to a few times and no response. I'll just chalk it up to me giving them too long a time frame for my purchase(I told them 3-6 months at the time. Now I've made up my mind to 1-3 months though) during my initial phone call more then anything else, as there customer service reputation on these forums seems to be pretty stellar.

Holton Wise(Ohio) - The whole reason I am interested in the Cleavland market thanks to @Jameswise blog and his youtube videos. Holton-Wise does not seem to be a "Full" turnkey company however. They seem more like a realtor with a PM and renovation arm. They seem more like a company I want to work with for my third or fourth deal, not my first or second. 

JWB (Florida) - Great reputation, sample of properties given is by far the more expensive out of any companies I've seen. Cash flow seems really poor. Expenses seem really high. It seems that the only real play is Appreciation for these Florida houses? Or maybe just an alternative to investing in Treasury/Fixed income interest rate products if an investor is paying for everything in cash. Am I missing anything?

Spartan Investment(Alabama) - Their biggerpocket presence seems good. Alot of people on this forums  vouched for @Clayton mobley and Spartan invest which makes me feel great about possibly investing with them. I just have two issues with them. The issue I have is it seems that Birmingham in general seems to be declining. Population is decreasing and has been for DECADES.  Also there is a recent thread about several Spartan investor not being able to evict their tenants due to "sheriff backlog". I believe one guy has had this issue since June and it still hasn't been resolved yet. That being said, that sounds more like an area issue rather than a Spartan Invest issue, but still, it's in the area that Spartan invest are in. Anyone has any local knowledge of the Birmingham area know where the Sheriff department has such a terrible backlog of evictions as of late?

Turnkey Investment Properties(Memphis and Little Rock) - @Alex Criag seems to come highly recommended on this Biggerpockets. I've even seen @Chris Clothier recommended his him on several occasions! @Alex Criag's company seems to work in a rougher part of Memphis than Memphis invest. Does anyone have any experience working with him and his team? I know some of their investors had weird experiences. Was that due to the area that @Alex Criag invest in being rougher  or was it more bad luck more than anything?

Buy memphis Now! - Comes highly recommended again by the BP forums. From what I can gather either uses @Chris Clothier PM company or @Alex Criags. Seems to be in the same neighborhood as @alex Criag as well. Any benefit of using @Curt Davis over @Alex Criag or vice versa? Well, other than wanting to invest in multifamilies and in Little rock that @alex Criag offers?

Can anyone throw in their suggestions, experiences, and critiques on my though process?

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Alex CraigBusiness Member
Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
7y

@Dean Letfus I agree with a lot of what you are saying, but disagree with the 2 bathrooms are always easier to rent.  In some areas, it is a must such as Barlett, Hickroy Hill, 38125, 38119 and a few others, But in 38117, 38118 and 38111, it doesn't make a difference. We rent houses in those zips all day that are 2/1, 3/1 and 3/1.5 all day and quickly. My best rental is a 2/1 in Colonial Acres that I have rented twice within 2 days of being vacant for $1,025. Off the top of my head, I would guess 1/2 of my portfolio is 2/1 and 3/1. So long as these are owned in the right area, they rent just as fast. You may disagree, but I have first hand experience as an owner of these and manager of almost 700 properties that says these do rent just as quick. Again, the key is the right area and most of the time, it is inside the 240 loop.  Another reason I love owning 2/1's and 3/1's is less wear and tear because typically less people living in the homes, less maintenance cost because of one less bathroom (plumbing is the # 1 maintenance call we get by far), roofs are smaller to replace, HVAC units are smaller, turn cost is smaller--everything about a 2/1 and 3/1 is cheaper to operate, thus why I love that 2/1 that I get over $1,000 a month for.

901-848-9028
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  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y
    Originally posted by @Daniel Kong:

    @Wei Jie Yang Great thread! Looks like you've done a bunch of research. I was in your shoes a couple months ago and came to the same conclusions about how important it is to have a great company to buy from first before the location. Obviously, you would judge each deal the company presents on its own. 

    From my research, it seems like an up and coming company would offer you a better deal (ROI) because they have to to be competitive. Once the turnkey company reaches a certain size and have enough customers and "reviews" they will give a little less ROI, but you are getting their tried and true systems and knowledge that they will most likely be around for a while and be pretty trustworthy. So its something to consider when choosing your company. It's like buying the safe stocks with slow and steady returns vs slightly riskier ones that may pay off huge, or may lose you money. I have a friend who owns a couple of properties from both Memphis Invest and Mid South Home Buyers, and he makes small steady returns without a lot of headaches. He also owns some rentals he got from some smaller guys that could have paid off well, but have been a little more painful/time-consuming.

     The only Big turnkey company that I've seen that no one has bad mouthed is Memphis Invest. All the other really well reviewed ones I've found are mid sized outfits like Alex Criags. 

    1Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y
    Originally posted by @Dean Letfus:

    @Wei Jie Yang, all the companies mentioned above are "good" as opposed to the many "bad" outfits in Memphis.

    Now your most important 6 items are really all you need to focus on regardless of where you buy from.

    Number 1, 2,3,4 and 5 are GOOD MANAGEMENT.  Find the best PM you can. That may or may not be with the turnkey provider but the best property can be a lemon with bad management. Also with Turnkey often there are big promises made about performance and remedy. So make sure the company is big enough and likely to last long enough to fulfil their obligations.  We went through 5 companies before we found one we have now been with for many years. The previous ones cost us a fortune. Sadly even the ones oft recommended on here I have seen perform terribly.

    Once you sort the above out you have already eliminated 95% of the players in Memphis.

    Then your second issue is simply whether the property is a good deal or not. As Chris has pointed out they tend to have higher overheads as they are such a big machine so you may pay more for their property over a smaller outfit like Curts. However if the quality of rehab is higher with Chris or the rental guarantees are better then they may be a better option. Conversely Alex or Curt may be able to put you in the same house as Chris for 10K less simply because they carry less internal costs.  However they won't have the range of properties to offer you that Chris will!

    So then it comes down to the actual property. Do you like the location? Make sure it's all brick, avoid frame houses in Memphis. Does it have at least 2 baths? If not it will be hard to rent. Does it have any big trees not removed? If yes then this is going to be a big cost perhaps later.  Is it too close to an area that is degentrifying? There are many in Memphis.  If it has a basement make 200% sure it doesn't have water issues.  Knowing you are paying full retail for turnkey is it a sensible price for the area. If you buy a 70K house for 95K no matter how well it's rehabbed, you will have to own it a LONG time to ever exit it.

     Hi @Dean Letfus, thank you for the tips and information. 

    I actually looked into your company as well doing my inital research but I couldn't find anybody that worked with you on the forums. 

    0Reply
  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    7y

    @Hadar Orkibi I think that is low, but in line with current rents. I own 2 E. Laramie and trying to get $650 when I am done renovating my vacant unit with gray shaker cabinets, granite, vinyl plank throughout and ceramic tile. Your unit is nice, also like the added touch of naming it. I was talking to Brian and I just think in an neighborhood like Sherwood, specifically where we own, those rents should be $695 now with the goal of pushing up to $750 in 2 years. Sherwood schools are good, crime is low and there is a lot of shopping and amenities off of Hwy 167.  Also close proximity to I-40 into LR. A similar area in Memphis would easily go for $795.  I think landlords in Little Rock are mostly mom & pop type owners who have not reacted to the need for market increases, basically operating their properties the same way the did in the early 2000's. We talked an 80 year old owner of MF in Sherwood, that guy has not raised rents since Jimmy Carter was President.  Basically we will own and manage over 50 units on Laramie and Powhattan, our goal is to put our Retail Ready, high end renovation into every unit and get rents up over the next 2 to 3 years.  We are going to go for $675 at Powhattan.  Also, the higher the rents, over time, the better tenant class we will attract.

    901-848-9028
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  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    7y

    @Wei Jie Yang no need to apologize. My comments were not intended to be an sales effort towards you, there is enough business to go around for everyone. People do business mostly where they feel comfortable and I 100% get that and glad you are taking action. I just wanted to clear up some inaccuracies on the Forum and clarify a few comments that I felt were unintentionally misleading.  I have learned that often time individuals read these post and take responses as they are communicated without digging in further to what is being posted.

    BTW, congrats on the newborn, no wonder you are posting in the middle of the night! I have 3 girls; my favorite time was the first few months. While a lot of individuals do not like getting up in the middle of the night for feedings, I actually enjoyed it because the house was quiet.  Also gave me the opportunity to watch Married with Children re-runs and Sportscenter.

    901-848-9028
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  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    7y

    @Wei Jie Yang@Dean Letfus  One thing I like about Dean, he also is transparent and tells it how it is. To many individuals in Real Estate feel the need to sell and really, oversell their property. By that, I mean tell people irreverent information about the house such as location proximity to something that has no effect on the house whatsoever. For example, selling a house in 38127 and mentioning "10 minutes from downtown."  That fact has nothing to do with why a tenant would choose a house in 38127, but it sounds good to an Out of State buyer who does not know or understand our market. Or calling a property "B" class when it is "C" class. While I do have a full time Realtor to handles our sales, we internally talk about not selling people on the house or even real estate, but simply communicating our core values as a TK provider and Property Management company and share our experiences as investors.  That is why we don't call people after our initial consultation unless they have expressed they are ready to buy right now. Rather we do a weekly email that is typically a short write up of my thoughts for the week and available inventory.  If someone on that email sees something they like, they will reach out to us, which happens weekly. I spent 10 years in Corporate Sales and Marketing--I am done with "selling."  We want people to want to do business with us, not us talk them into doing business. I imagine Dean is the same way.

    901-848-9028
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  • Alex CraigBusiness Member
    Real Estate Professional · Memphis, TN · Member since 2009 · 1k+ posts · 1k+ votes
    7y

    @Dean Letfus I agree with a lot of what you are saying, but disagree with the 2 bathrooms are always easier to rent.  In some areas, it is a must such as Barlett, Hickroy Hill, 38125, 38119 and a few others, But in 38117, 38118 and 38111, it doesn't make a difference. We rent houses in those zips all day that are 2/1, 3/1 and 3/1.5 all day and quickly. My best rental is a 2/1 in Colonial Acres that I have rented twice within 2 days of being vacant for $1,025. Off the top of my head, I would guess 1/2 of my portfolio is 2/1 and 3/1. So long as these are owned in the right area, they rent just as fast. You may disagree, but I have first hand experience as an owner of these and manager of almost 700 properties that says these do rent just as quick. Again, the key is the right area and most of the time, it is inside the 240 loop.  Another reason I love owning 2/1's and 3/1's is less wear and tear because typically less people living in the homes, less maintenance cost because of one less bathroom (plumbing is the # 1 maintenance call we get by far), roofs are smaller to replace, HVAC units are smaller, turn cost is smaller--everything about a 2/1 and 3/1 is cheaper to operate, thus why I love that 2/1 that I get over $1,000 a month for.

    901-848-9028
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  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    7y

    Hey @Alex Craig - I want to be clear for the readers here that I do not have any insight into the actual costs of your renovations.  I chose my words poorly when describing your renovations.  My statements were made purely from the past 18 years of renovating properties and having a pretty good eye for estimating costs.  We also routinely, as I'm sure you do, review the work in the investment community to find out what the trends are, but actual costs are something we only know through networking and sharing with other companies.  Since you and I don't actually share that kind of data, I don't know what your actual costs are and I should have left that out of my post.

     I meant my original post as encouragement to the OP that either company would be a quality company to work with.  I continue to tell investors, when they ask for my input or advice on companies, that you guys are stand up and do a great job.  If you felt slighted by my original post, then I apologize.  That was not the intent.

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  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    @Wei Jie Yang, hey I wasn't touting for your business. We basically only deal with non US investor and work with existing clients and direct referrals.

    @Alex Craig, agree with you completely on baths etc., I guess my comments were more general. Unless you know exactly what you're doing and know areas intimately, it is generally easier to rent a 2 bath home IMHO.

    1Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    Very Happy with Memphis Invest so far. Appraisal came back, with a worth of $1100 more than my buying price. Place is already tenanted with a two year lease at the highest projected price. Now all that needs to be done is the 3rd party inspection and any issue that might come from that.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    Inspection report also came out today. 

    1)Issues with water damage in the crawl space, 

    2)dryer vent is disconnected in the crawl space. 

    3)A section of the Metal trim on a garage door seems to be missing as well.  There is also some damage to the Vinyl Siding

    4)An outlet cover is missing in the kitchen

    5) two door hinges are loose. 

    It seems like the only major issue is the water damage. Otherwise these things should be easily fixable.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    Closed yesterday. Memphis Invest are still doing post close repairs, but they agreed to repair everything that was wrong on the inspection report. Tenants are set to move in on the 21st. Overall, no issues with Memphis Invest at all, and they've been great!

    Current plan is to buy investment property 2 and 3 this year as well. Not sure if I am going to use Memphis Invest again for #2 and #3. It will depend on the property and deal that I see from them. While Memphis Invest's properties are expensive relative to the rent, their Pro-Forma numbers are very accurate. Hopefully I can say that about the others I am thinking about working with.

    The current short list for #2 and possibly #3:

    1) Memphis Invest

    2) Memphis/Littlerock Turnkey

    3) Midsouth Homebuyers

    4) Norada - I know these guys are marketers but they've opened my eyes to new markets and possibilities (like pre-construction stuff which I have just started researching on)

    5) Possibly a BPer. Not sure.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    Repairs were done yesterday! Memphis Invest has been great so far. Pretty much all good except for these two VERY minor things:

    1)  No real listings for new properties. They rely on their sales people/portfolio managers to send profroma's to you.  No mass spread sheet or online listings. I guess it's a good sales tactic but it comes with a few obvious downsides when it comes to knowing your options. 

    2) Apparently they distribute their ACH/Checks by some sort of name order. Since my name is Wei Jie Yang, I will always be getting my check on the 3rd week of the month or later.

    Other than that, great experience so far. 

    0Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
    7y

    @Wei Jie Yang Thanks for keeping the thread going. I am in the starting phase for a 1031 and have the exchange liaison in place, the current property had the first showing this week, and I have been talking to Ashley. 

    Have you spoken to MI about other locations than Memphis? I just bought a new construction deal (not form MI) that will close next week with tenant already in place to move in on the 22nd of Feb. I am tempted to not put all the properties I would acquire from MI using the 200% rules in Memphis but maybe have 1 or 2 in other markets. 

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  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    @Axel Meierhoefer I'm actually also working with Ashley!  What's the 200% rule? 

    I actually asked to see all the markets they have. My first property was bought in Little Rock. With the numbers I've seen currently with Memphis Invest, I will probably be sticking to the Memphis and Little Rock market. Those markets occasionally have better rent to value ratios and still cash flow. Can't say that about Oklahoma City or the Texas properties. I actually saw their proforma for the one St. Louis property they sold, it had an AMAZING Rent to value ratio (For Memphis Invest's properties anyway) in comparison to everything I saw prior.

    0Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
    7y

    @Wei Jie Yang the 200% rule is one of the rules for 1031 exchanges. You will either need to buy a property with the same or higher value than the one you sold or multiple properties that add up to a max of 200% of the selling price. That's what would apply to me as I am planning to purchase 4-5 properties in exchange of the one I am selling.

    1Reply
  • Krishna Anisetty
    Member since 2018 · 7 posts · 0 votes
    7y

    @Wei Jie Yang Thank you so much for initiating this thread and also posting all your updates. Lot of useful information here. For new investor like me, it is a very useful thread.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    For u newer REI guys interested on where to begin

    Beginner Real Estate Investor Map

    I created a map listings various turnkey/Turnkey-Lite/Investor friendly real estate agents as well as their areas of operation. I also put in commentary of what I know about them. I originally made this map for my own use, but I figured why not share it since Turnkey and turnkey like services are a hot topic for us OOS newbies.

    This map is by no means a comprehensive one. These are just ones that I've come across, talked to, or just found mentioned often on various forums or by people. The commentary I make about each company shouldn't be taken as gospel either. They are just general thoughts and information about the various providers I gathered from talking to people and just looking around.

    If anyone knows of any company that is not on this map please tell me! I want to add as much as I can on here.

    2Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    7y
    Originally posted by @Wei Jie Yang:

    Well I hope everyone here wishes me luck and I didn't make a horrific mistake doing this

    Wei - can you expand why you are scared you may have made a horrific mistake??  Real estate may not be the right avenue for you?  Check out bank CD's - very safe.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    @Account Closed  Well that was said half in jest but when I wrote that I still haven't gotten completely used to the idea of good debt. That being said, I actively trade futures and sell option contracts too. So, I guess I shouldn't care either way as that's waaaaay more leverage than any mortgage I can get.

    0Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    Well, just got under contract with @Nathan Brooks Bridge Turnkey for another property. Now that I have experienced the Cadillac of Turnkey companies, I'll keep everyone up to date with a group that has a completely different property management style. Let's see how this goes!

    4Reply
  • Eric Chase
    Rental Property Investor · Germany · Member since 2017 · 74 posts · 22 votes
    7y

    @Wei Jie Yang You’ve got my email, Wei! I’ll be interested to hear about your experience!

    1Reply
  • David Katz
    Member since 2018 · 46 posts · 31 votes
    7y
    Originally posted by @Wei Jie Yang:

    Well, just got under contract with @Nathan Brooks Bridge Turnkey for another property. Now that I have experienced the Cadillac of Turnkey companies, I'll keep everyone up to date with a group that has a completely different property management style. Let's see how this goes!

     Please keep us updated.  I also purchased 1st property with Memphis Invest, and everything has been great so far.  Not sure I want to take any risks in going with anyone else.  So please let us know how your purchase with Bridge goes and how it compares to MI.  

    1Reply
  • Axel MeierhoeferPro Member
    Rental Property Investor · Escondido, CA · Member since 2017 · 679 posts · 550 votes
    7y

    @Wei Jie Yang could you clarify what you mean by "Cadillac of Turnkey companies". I read so many labels that I no longer know if that is meant literally or as in jest :)

    Thx

    1Reply
  • Wei Jie Yang
    OP
    New York City · Member since 2018 · 161 posts · 75 votes
    7y

    @Axel Meierhoefer meant as a jest. Mostly positive, but I think I'm going crazy looking at my Memphis invest Profroma.  

    Can someone else who has a Memphis Invest Proforma confirm it's just not me? turn your maintenance and vacancy from 4% to 0%. Their Monthly Cash flow numbers decreases right?  I'm not crazy to think it shouldn't right? Since that number is suppose to be the income - Expenses without reserves.

    0Reply
  • Chris ClothierBusiness Member
    Rental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
    7y
    Originally posted by @Wei Jie Yang:

    @Axel Meierhoefer meant as a jest. Mostly positive, but I think I'm going crazy looking at my Memphis invest Profroma.  

    Can someone else who has a Memphis Invest Proforma confirm it's just not me? turn your maintenance and vacancy from 4% to 0%. Their Monthly Cash flow numbers decreases right?  I'm not crazy to think it shouldn't right? Since that number is suppose to be the income - Expenses without reserves.

    Wie Jie, not 100% sure what your looking at, but if it’s the last PE, then we are trying to break the formulas to make it do that and we can’t!!  Shoot me a message if you’d like with exactly what it’s doing and I’ll take a look.  However, like any calculator, if you wanted a picture of your return in a year with no vacancy and no maintenance, then yes, reducing those fields to zero will make the return go up.

    Lastly, I know Nathan Brooks.  I was not familiar with that company name, but do know that Nathan is a stand up guy.  Have met several times at masterminds.  Hope your investment with his company goes great.  Best of luck

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