All Forum Posts by: Ahmed Youssef

Thank you for your reply, it really help to look at things from different angles 

The turnkey provider used CMA to decide the purchase price, which should match the appraisal or at least won't be 8% away. Also, the property is still under renovation. although I'd give them that they have a rent guarantee for the first year, but that will only match the lower level of the rent range, so if the projected rent is between $1200 and $1250 they guarantee $1200 rent for the first year. But coming with $10K in cash to the closing table because the appraisal came low already ate up the rent guarantee benefits.

@Nick Rutkowski @Luke Anderson

There were other terms in the contract which will add make me bring more cash to the closing table

- If the property appraises for $120,000 or more the buyer agrees to purchase the property at the $129,950 purchase price indicated in this contract.

- Buyer will pay property manager for tenant placement fee, 50% of one month rent. (this term is so confusing to me BTW, I'm buying a turnkey, if I'm going to pay for the PM, why don't I buy from a flipper then? )

- Notwithstanding anything else contained herein, and in addition to any other costs that the buyer has agreed to pay, the buyer agrees to pay for the cost of the owner’s title insurance policy.

- Transfer tax

- 100% of the escrow fees

I don't think it's against the policy, I just thought that the provider's name is irrelevant since I started this post to ask whether that's common or not. 

It's Bridge turnkey, and BTW I don't have anything negative to say about them, they're professional in their process and communications. It's just happened that maybe they forgot to let me know early in the process that a condition like this will be included in the contract.

@Adam Montgomery @Kevin McGuire Thank you for the helpful replies. 
As I learnt from BP - I guess everyone agrees - it's all about the numbers, if the numbers make sense then it's a good deal if not then look for something else. Which is the case with this deal, WITHOUT the $10K and the extra closing cost (including the seller's closing cost too) that I might pay at closing the deal makes 9.x% COC, but WITH adding the risk of the low appraisal and the extra closing cost the deal goes down to 6.x% COC, which is not worth it from my point of view since I'm buying for cash flow not for appreciation. 

I tried negotiating but they didn't approve, so I walked away from the deal. I posted this post asking whether this is common or not because if it's common between turnkey providers to include a condition like that, then turnkey is not for me. From all the replies I got (BTW thank you everyone for jumping in and trying to explain and help) it's not common nor unheard of, so probably I have to find another turnkey provider with a different contract's language.

Congratulations! so glad that you're having a smooth experience with an out of state investment. As long as you're happy with your team, could you please refer them to me in a DM?

Highly appreciated! 

@Christle Stezskal May I ask which turnkey provider did you go with? And how is your experience with them so far? 

@Account Closed

Thank you for your reply, I’m learning a lot from the diverse replies I’m getting on this post.

I just wanna explain 2 points

First, as I mentioned in one of my comments above, what I learnt about turnkey is it doesn’t have premiums, they buy distressed low priced properties, rehab them and sell them at the market price. Which means if I’m buying from turnkey I lose any instant equity, but it doesn’t mean I have to lose the next few years equity upfront

Second, I don't see this as legit, because that wasn't mentioned upfront, we went through a series of emails over the span of 20 days, and I already ran the number using the inputs I have, adding an unexpected $10K in an 8 pages contract which you haven't mentioned anything about is not a good sign, and it will also affect the COC greatly since the purchase price is $130K and the down payment is $32k, that's almost 30% of the investment cash

@Account Closed Do you know turnkey companies in KCMO which you would recommend? 

That makes sense if the market is a really hot market, that's the case in CA for example, you bid higher than the purchase price because what you're looking for is the appreciation not the cash flow. But that contract was on a property in KCMO which is supposed to be a cash flow market, one only considers purchasing a property when they run the numbers with 25% down payment and a reasonable closing cost and the property produces a reasonable cash flow and COC return, but adding $10K extra in cash, takes 4~5% out of the COC

@Account Closed Actually what you said is what I was thinking, the surprise is that contract came from one of the most reputable turnkey companies in KCMO on BP.
Also, not only they're asking me to bring $10K extra to the closing table, but also they offloaded all the closing cost on me. even the obvious seller closing cost like the buyer's title insurance or even splitting the escrow.