All Forum Posts by: Alex Franks

 @Joshua Eastman @lisaphillips @joe Mueller

Guys I do a lot of posting on low end and turn key and why not to buy  low end not saying it does not work. Looking for an older post I did so I can send that if not feel free to Pm and I can cut and paste that post.

Just going to paste it here any way..

And my latest post for folks if you think it has some substance please feel free to share with friend. First one was about turn key investments how they did over 10 year period.

First one must keep in mind most turn key companies did not exist 10 years ago. This was a product the market created. These same properties the lower end were subprime homes. So folks sold them locally in their own market. We were approached by LA reseller in late 2008. Back then everything was sold retail, very few investors (very few smart) were building their own portfolio. Most of these guys have been involved in this business for long time.

Next point- the mess started in 2007 - 2008 when most of the product was created. Now that being said, I see the same lower end crap returning and being sold as great turn key deals. These type of deals are going to cost folks a lot of money. Again, nothing to do with the asset, but more to do with the mindset of the renters.

Now on the flip side, if you purchased between 2009 - 2013 most of the numbers made sense in many markets. Right now the nice properties (A and B limited product) as most folks can sell these retail.

So why sell turnkey or through a reseller? Look at most resellers or turn key with the exception of one or two companies. They are selling lower over priced assets or a nice products that is super over priced. The problem is even over priced, the entry level makes sense compared to most folks (local entry point). Lack of good solid deals make folks have to stretch the numbers or present good deals to others. If all these deals were so great why would any one sell not keep?

At the same time, I used to buy 4 properties sell 3 to keep one free and clear. So every person's motivation is a bit different. I would just be careful to anyone who has not seen or been through the 2007- 2008 crash selling deals. I don't think they can or will truly understand things. Especially when selling for profit and their motivation is profit. Which is why I get it; because they are in the business to make money, by selling a product. I just think the shelf life of that product has passed. So one can look at wall street or other investments, or jump in the turnkey market.

I don't want folks to think I am against turnkey. I just feel the window has passed on solid buys. The market tells us what to do, you just have to listen. Right now I'm building rental properties all in for $73/sqft. So cheaper to build than buy. There is no rush to investing. Sometimes it is better to sit back and watch. See what the market is saying and find the best place to park funds. Real estate is not always the best, but not the worst either.

Now what am I doing~ building new construction retail and rental. Taking the profit and buying apartment buildings. So I am hoping to have 200 units paid free and clear in the next 5 years along with being a private lender for local folks. Knowing I know the numbers better than most.

So I hope I answered your questions and have not made it more confusing.

Next post was turnkey investing in general

I was a turn key guy who also provided for resellers. I think the window for solid deals has passed. Most of the folks selling or giving you advice here are selling an asset or being paid referral fees to sell that asset (nothing wrong- it is a business and they are providing a service or the asset itself). During 2009 - 2013 was the prime time to purchase the solid cash flow rentals. Right now folks are way over paying for higher class assets or buying the lower end scraps. Lower end is basically recycled product that did not work out for the investor the last time around. Lower end is usually not a winner, but more of cash drain for your pockets. I see Indy and Kansas city being spoke about as they are the first recycled cities that I can attest to.

What I mean by this, in 2009 when I was doing seminars around U.S. areas, so were the guys from both of those markets. Now I am seeing the same older junk make its way back around only as higher priced. Again, I am not against turn key. We were scheduled to build 150 units for one company (turn key rentals). That number is now up to 500 units in a few markets in the southeast. We are rebuilding the vinyl villages that were built in 2000 - 2004. Very similar product, actually identical product. Just cheaper to build than buy, which then tells me the cycle has changed or moved on.

Basically what I'm saying, it is cheaper today to build than buy in most markets. That is why I don't think the turn key is a great buy today. I think folks are getting the bottom of the barrel or very over priced assets. Keep in mind, most the major hedge funds came in 2013 they took majority of any of the solid deals. The nicer homes A - B type assets most local folks can sell them retail. So why would they pay a reseller or flip to investor? Better money in retail sales in most markets, which is similar to 2005-2007. Folks sold these same assets to subprime buyers (lower end) or retail to home buyers (A-B) asset. So you can see, first and foremost, there is inventory shortage in most markets. Folks now have to push other cities (lower end product). As you folks in California have such a high entry points. Most markets still look attractive. Trust me when I say on paper numbers look great. In the long run I feel the return for folks from 2014 - present will be a lot less than the prior years. In 2009-2013 if you purchased during this time I think you made great buys. As well as hitting the timing of the market correctly.

Real estate is a lot about timing and cycles. At the same time the market tells folks what is working and what is not. You have to listen and not recreate the wheel. Still good deals just harder to find. I just prefer apartments over houses or new construction and A - B only

-Alex

@sonara Sek first and foremost whoops skipped you on your post. Welcome and ask away. I am pretty opinionated. Sure most of the folks on this post would agree on that part. Please ask away any questions , comments or concerns. I have a little bit of experience in this real estate market.

Alex

@Tomas Chao I got to say I am proud of you. I am watching you grow and stay active here and in the meeting. You are following what you said you were going to do. Promise what I say means nothing but good for you and continued success.  You and few other new folks are impressing me as you are helping others. While networking and marketing your self through this site.

Good for you man lunch some time my treat. I want you to connect with @Jeff Richman could be a good fit for you as well. Sending you some folks I think it would be good for every one to connect. As I see a lot of you all jumping into this business as the same time and similar levels.

@Debby Reed could be also good connection

@Steve Polk

@Brian Compton

Every one have a great weekend

Alex

Guys understand there is no such thing as an investor friendly real estate agent

Two different types of agents in this business.

One who invest and under stands investments, one who sells retail.

@Michael Bowman invest , does property management , and sells investments

@Bonnie Laslo @Curtis Waters  not saying they are friendly ( LOL ) but Bonnie runs a group of agents including Curtis that understand investments and speak the language. 

Just my two cents

Bonnie Told Talk Tank this morning you never called me  back LOL

Jimmy how is the group doing? I been a few of them been a bit thought. Been active lately in a lot of the meeting( more charlotte). Seeing where the value is for my self and other folks.

Alex

Jonathan How are you? Aiken in the house from  Rock Hill Myself .

Ask away great site to network, meet folks, and learn.

Alex

@Christopher Perschke

Now bare with me my answers are a lot simpler then most folks.

Yes most of the sites mentioned  above but I don't trust. Zillow and rentometer or some others internet sites becarefull using those sites.I want true numbers. If I can actualy drive the area.I pull every number I can from rental signs that I see it the area. Calling folks finding the high and lows of the area. I call every no less the 5 management companies also from who deal in those areas. By the end of the calls I should have detailed numbers on the high and low for each area. Then I like to base my proformas off the lowest numbers.

Just my two cents

Alex

@Shmuel Harris: great advice all way around.....

Alex

Thank you have always been intrigued  building out side the USA and Love to travel.

How is the food scene and the beaches there as well as safety/

Alex 

@tony Cross

Tony I don't think it a pitch it more about net working and marketing. Finding what folks wnt and need there. Then learning the numbers and truly knowing the numbers. I see a lot of new folks or  folks from other areas jump in new markets.Send me things they think are deals but they just are not grasping the numbers.

Net work as much as possible....

 Rei groups as many as possible never recreate the wheel just go with the flow. I rather have 5 buyers tell me what they want. Then searching for deals I think folks want.

Hope that helps

Alex