All Forum Posts by: Ali Boone

Originally posted by @Zach Lemaster:

@Ali Boone

Thanks for the input on the thread.  Lots of good info for Austin here.  To clarify your comment though, we both market and directly sell turnkey properties that we 100% own and control.  Last year we did over 60 homes internally across 3 different markets.  We also own many vacant lots, and are partnered with a builder to offer many new BTR homes in FL.  I wanted to add context here as we do operate as a direct provider.  I've had Phil at Maverick reach out previously to sell some of our personal KC stuff, but the numbers didn't make sense for us to sell through them.  I did have them sell some Chicago stuff for me though back in the day in 2014.  I know Maverick is your referral source for most turnkey investments.  Maybe we should start the discussion about us working together?  Excellent blog by the way.  I think that does a very good job outlining the risks of an investor taking on the brrr method on their own.

Thanks for the clarification! I'll be sure to relay that more accurately to folks who ask. Phil is long-gone from Maverick, and I don't just work with Maverick. Thanks for connecting... always good to meet more people that support the turnkey industry!

Just to put some clarification in here, Austin... the questions you're asking are really a mix of different questions. If I'm understanding right, you're first asking about the turnkey strategy as a whole, and whether you should do that or do a property yourself. For help on that question, check out this article-

https://www.biggerpockets.com/...

Then there's a clarification about different kinds of turnkey companies, because who is who matters for understanding who/what to do your due diligence on. You said "is Rent to Retirement" a smart investment? That again goes to the previous question... you're actually asking if turnkeys are a smart investment... but then if you decide to pursue turnkeys, you need to understand the difference between a direct turnkey provider and a turnkey marketing company. RtoR is a marketing company, as are many good companies, so they aren't the one who is directly selling you the property. They're merely connecting you with the company (direct provider) who does. That simply matters so you know where to direct your due diligence focus. Yes, research RtoR and learn about them and see if you want to work with them, but they aren't the one selling you the property, so don't stop your due diligence there.

Yes, absolutely run your own numbers. You should always verify everything for yourself and don't take anyone's word for anything.

As far as whether turnkeys are a good strategy or not... I've been buying turnkeys since 2011 (not through Rent to Retirement) and I wouldn't choose any other strategy! They aren't perfect, nor is any strategy, but they fit for exactly how I like to do things.

Hope that helps. The biggest thing is--separate out the questions you're asking into their specific categories so you can better and more easily figure it all out.

It's not that you're lucky, it's that BiggerPockets just notoriously leans away from turnkeys or supporting turnkeys. Or I guess more accurately the people on BiggerPockets tend to lean away from it. I've been involved with turnkeys (as successfully as you have) since 2011 and I've worked with hundreds of turnkey buyers throughout that time. What I've seen is that everyone who has a good experience... they're no longer on BP after that to talk about it or offer support for the model. Think about it--people get on BP to learn and figure out strategies, so when they figure it out and it all works out, they may not be on here anymore. Particularly turnkey investors because they're not trying to make a career out of real estate investing, they're just trying to do something smart with their money on the side. So they're not on BP to yabber about it after. And then the other thing I've seen on here as far as the naysayers... two things... 1. the only people who leave reviews are the ones who have had a negative experience (because of the aforementioned reason about the positive experiences) and 2.  there are a lot of people on here who respond to turnkey forums who have absolutely no experience with turnkeys, so I really don't know why they feel inclined to knock it when they don't actually know. I think turnkeys are just the thing people love to hate. They aren't a flawless strategy, but I'm with you... they've been perfectly successful for me. Just wish more people would share their experiences when that's the case. I'm glad you did! Helps give the strategy some support.

I will say... most of my portfolio I bought turnkey and have PMs on them... and the biggest mistake I've made over the years, or I should say the costliest mistake I've made, is letting bad PMs stay on too long. My biggest expenses have always been tied to bad PMs.

Just for the fact that you have to schedule so far out for a call.. Feb. 1st, that alone is a red flag. In my experience, the ease of communication with my PM has been directly proportionate to the quality of their work. I've had great PMs over the years who eventually either get too swamped to keep performing well or whatever happens, but the first sign is always with the communication.

I would absolutely start interviewing other PMs. Catch it early before it costs you money. The only exception to this would be if you still have a scope-of-work warranty or other guarantee from the turnkey provider, as that will go invalid if you switch PMs. So make sure you know any potential repercussions there.

Hope that helps!

Originally posted by @David Shapira:

@Gregg Cohen I've heard good things about Jacksonville as a place to invest. Are signs pointing to appreciation there continuing into the foreseeable future? 

@Ali Boone I'd also be interested in joining the Facebook group. It's difficult in my area for a beginning investor and I'm looking for alternative paths in my REI journey.

Hey David, I responded to this but the post was deleted because I said how to find the group. Not even sure I'm allowed to tell you to message me. I can give info any time, I think if I hear from you first.

Originally posted by @Doane Cole:

@Ali Boone I've been looking at roofstock for a while now and wasn't aware of other companies out there. Not sure what the etiquette is...so I figured I'd reach out and ask you directly of what/who these other companies are?

Feel free to message me, either on here or at my email address. Roofstock isn't even what I would consider to be a truly turnkey company... they just offer turnkey properties. I much prefer to work with actual turnkey providers. Happy to explain the differences and give names and such if you message.

Originally posted by @Supada L.:

Originally posted by @Ali Boone:

Thank you very much for your advice. I've jotted down all of them.

It is listed as a turnkey. I will check with Roofstock if they have a warranty on it. Having a 3rd party PM to look at it is also a good idea. I will do that too.

It may be too late to get help on those repairs, but it'd a) be good to know the options and b) I recommend ALWAYS going directly to the provider of a turnkey property if things start to happen... you never know when they may be more than willing to help. I try to tell people to not just go with it all and not tell anyone! No one can help if you don't say anything. 

As far as what market to go for, a lot of it will depend on your budget and any preferences you have for a property. Things like-- what's more important? Cash flow, tenant quality, property quality, neighborhood quality, price range, appreciation potential, risk levels, etc. And then part of it for me too when I'm thinking of buying a turnkey is that a lot of the times I'll let the market I choose be dictated by which turnkey company I like the best. I can love a market but if there's not a good turnkey provider there, that doesn't help. So, different things to look at.

Of your list, the only one I'd say something about is San Antonio. No cash flow there that I know of. Or at least not much, and not enough to sustain much for turnkey companies being there. 

My question is-- did Roofstock sell you this property saying it was in turnkey condition or did they sell it to you as-is? As-is, you can't do anything about. But if it was in turnkey condition, I would imagine there should've been some level of scope-of-work warranty or something. Normal turnkey providers offer that, but Roofstock is a little bit different so I don't know exactly what comes with their properties.

I'm with some of the others who say... I don't know that I would've bought a property with only $100 cash flow. At least not unless there was some other major perk to it that made up for the low cash flow. But here's the thing-- your first property won't always be perfect, and you'll learn a ton! It's how it goes. So, it's okay, now you know.

As far as moving forward, that's a little tough. I would say to probably give it at least another year or so to see how it goes. If you sell now, so quickly after you bought it, you're going to lose a lot of money just in closing costs and otherwise. The other thing to know is that cash flow isn't the only way a rental property profits, so you may not be at as much of a loss as you think (appreciation, tax benefits, equity building via mortgage paydown, inflation hedging).

Before you decide anything, I would do/consider the following things as a way of doing research to better decide whether to keep or sell:

- Run a RentFaxPro report on the property and see the analysis it gives you (will give you an idea of rent rates and you can compare that to what you're getting, info on the neighborhood (appreciation potential?), comps, etc.)

- Really look at the current property manager you're using. Are they actually good and it just is about the repairs? Or are they not great? That's huge.

- Call a 3rd party property manager and give them the address and ask their opinions, tell them your situation (you can always fire your current PM and move to a new one), and see what they say. Property managers are the most in the know about specific properties and specific areas.

- Run the numbers. Really make sure you know exactly what you're working with. And maybe even compare that to what you could get on a different turnkey property... just so you know the comparison.

It's not uncommon for small repair items to come up with new tenants. See if it chills out over the next year. Still do all of those other things though, since you are working with such a low cash flow margin, but I wouldn't rush into a sale just yet.

Just for future reference, if it was a turnkey property you were aiming for, there are other companies with a lot higher cash flow margins (and with scope-of-work warranties, etc.) I work with a lot of them and they would all cover those small things for at least the first few months. Happy to chat more on the turnkey front if you feel like you need some help with it.

I'm incredibly biased because I volunteer in California prisons on the regular... I literally probably hang out with murderers (and otherwise) more than I do people on the outside. I mostly work with the men, and most of them are in with life sentences. In the last few years, many of them have gotten out. And I will tell you that when someone has had a life sentence (which is usually the case for murder charges) and they are released, they can be damn motivated to perform well. When you've been told that you're going to die in prison, and you're given the chance to get out, there's a lot of motivation there to behave. It's why the recidivism rate for lifers is extremely low compared to most (~1%). That's by no means to say that every single lifer who gets out will perform to the highest of standards, or even try, but so far all of the guys I've worked with who've gotten out absolutely have. Yes, being in prison for that long can have some effects in regards to maybe some things they aren't used to or logistics or whatever, but those things may have no bearing on paying rent. If it were a repeat offender for smaller crimes, I'd actually be more concerned about them than I would someone who went in at 17 for being an accomplice to murder and was in for 25 years. It's a tough one to call-- they could literally be your dream tenants.

I would say that if all of the normal screening processes check out, and you got a great vibe with the family... that's hard to beat. I'd be tempted to go for it. I think another big clue would be talking with his employer when you verify his employment and asking him/her how he is as an employee. If he/she says he's an insanely hard worker and never misses a day, that'd be it for me and I'd let him move in.

Let me know his name or what prison he was at (privately of course) and maybe I know him! :) I know quite a few guys who have been paroled to San Fran in the last couple years. And the ones I do know who have been paroled-- I would absolutely rent my property to them.