All Forum Posts by: Cory Tuck

@Justin Young - Great question.  In addition you have closing costs on both the purchase and sell, so you have to overcome those additional expenses in addition to the market decline.

@Chris Clothier - There are plenty of ways to be successful in the real estate industry.  From the reviews I have heard about you all, you guys have a great business with a lot of happy investors.  With my current goals and comfort level, I chose not to go in that direction right now.  Goals and experiences definitely change, and you all have a good record.

@David Pierce 

I think your intuition is correct on being concerned on the requirement to bring more cash to closing based on appraisal.  Having to bring significantly more cash to closing can dramatically change the economics of the transaction.  

I think Memphis Invest is definitely honest and upfront about this.  I appreciate their candor and understand their position.  Appraisers can be wishy-washy about appraisals values.  Many appraisals do not reflect the reality of the true price.  With this said though, this policy is the exactly reason why chose not to work with Memphis Invest.  It introduces a level of risk and rigidity that I am not comfortable as an investor.

@Alexander Price

I agree that the expected value of the transaction will come from discounted cash flow for the most part.  However, it is unwise to dismiss purchase price compared to value from the calculations.  Life never goes as planned.  Unfortunately in the single family real estate market you cannot sell cash flow.  You can only sell at the values the market will bear.  There are numerous items that can come up in 5 years that would make the selling the property necessary or advisable.  Purchasing significantly more than market value and adding closing and selling costs on top of this can be a recipe for large losses or dramatically reduced gains.

Anne,

Great question.  I am looking at purchasing turnkey properties as a diversifier to my stock and investment portfolio.  

I think cash flowing real estate does provide a great diversification tool to a portfolio.  When the markets decline your portfolio should produce solid cash flow to reinvest into equities.  

The attractiveness of real estate right now is the spread between the cap rate on SFH and the cost to finance. This spread is attractive as it should generate substantial cash on cash returns for levered real estate over the long term. If you are considering cash purchases of real estate, then the returns compared to equities are less attractive as your are not capturing the spread.

Why am I choosing turnkey?  It is as exactly as you said.  I work really hard and long hours at my day job and I do not have the time to invest in building a real estate business.  I look at the real estate business as an investment and a business.  Turnkey is relatively hands off and has limited time involvement.  From there, there are multiple "lines of business" that can be built off the investment: Property management, wholesaling, real estate agent, etc.  I view these as businesses or jobs in which you should be paid for your time.  Since there is a market for these services, you can determine if you want to utilize these services or pay yourself to do them.  It is my opinion that if you treat these as a business you earn can significantly more in real estate through better experience and connections, but only if you have the time to become an "expert" in those lines of business.

My 2 cents.  

Best,

Cory

Thanks for posting.  It is definitely an interesting article.  

Thanks so much @Ricardo Lopez.  I definitely understand this is not an easy question.  Looking to start formulating a predictive model for investment purposes.

I know there is a range, but what are the current typical interest rate differences being seen in the market for commercial with personal guarantee compared to personal?

Thanks @Jay Hinrichs for the solid, quick response.

I am in the process of completing some market research for turnkey investments.  I was wondering what sources of data are the most accurate in predicting future population growth for a metropolitan area.  

The second question is this metric useful for guiding future value appreciation predictions for mid-market turnkeys.  For example if I knew Memphis, Kansas City, Indianapolis were projected to grow at 5% per year, would that figure be useful or are the cities so large that a holistic figure like this has limited use.

Does anyone have experience with how turnkeys are priced with and without a Turnkey marketer?  

I am wondering if the price of the property is typically increased because there is an additional middleman.  Or since the marketer sends a large piece of business a providers way, the marketer's investor gets discount pricing.

Thanks in advance

Cory