All Forum Posts by: Daniel Z Fang

@Nicholas Pedrick

It’s a good way to start out. If you go the turnkey route, do your own due diligence, including which provider you go with. Don’t trust their pro formas. Wait for the right property with the right numbers based on your own figures. Talk w locals in the area and with property managers to understand how much more you’ll be paying.

Your returns will be lower as you’re shelling out cash out for convenience. Less meat on the bones.

@Andrew M.

I own a couple turnkey properties and have been pleasantly surprised over the past couple years with returns. Buying turnkey doesn’t absolve you from doing your own due diligence. The TK group is done the moment they sell you a property but you’ll need to figure out how to hold it long term.

It’s true you can find better returns elsewhere and like you, I use real estate to diversify my overall portfolio. You will spend less time with TK and get worse returns than if you took the time to find your own deals. Of course, your time is also worth money so you’ll have to figure out how best to use it.

Thank you all for the helpful input. Good to know this isn’t out of the ordinary. I have no problem providing this info but was surprised at this type of ask coming one day before close to satisfy an investor. I closed with another lender only three months ago and it’s very apparent that lending needs have changed acutely. Time to get them what they need so we can all move on.

Hello BP community,

I’m in the process of securing financing for a home with an online based lender who, one day before proposed close date, has come back and requested twelve months of cancelled rent checks for rent paid to live in my own home. I found this highly unusual and upon asking, the lender said that their investors are asking for this or twelve months of bank statements showing I paid the rent or else the deal won’t close. Nothing unusual about my financial history and I’ve had no problems buying multiple properties the last year. I’m surprised that the investor is now directly dictating new requirements for lender approval, some of which seem ridiculous. Has anyone else encountered this? Is this related to covid?

@Milo Mincin

You’ll have to run the numbers to see what makes the most sense. In general I favor expense reduction via house hacking first if you can substantially lower or eliminate your mortgage expenses on your primary property. I went out of state for my first investment. Don’t expect to make phenomenal returns on the first home - the education itself is the main benefit.

@Sachin Amin I’ve worked with Memphisinvest, happy to share. Just shoot me a message

You’ll need to provide more details - what’s the purchase price, rental comps, hoa and other projected expenses, financing etc. Townhomes can be good investments but not for everyone given hoa costs and restrictions.

I’d take use this most recent purchase as a case study to figure out how your next investment can be purchased to cash flow positive from the start. Practically for this home now, can you raise the rent, find other sources of rental income, or reduce expenses to make the property cash flow positive? Is the property worth holding long term as an appreciation move even if it doesn’t cash flow positive?

Homes in the 50-70k range usually in B-\C neighborhoods with enough left over for closing and reserves. Crowdsource deals (eg crowdstreet, equitymultiple) or loans (eg patch of land) or Reits. General personal finance wisdom would also suggest having an emergency fund first and making sure high interest debt is taken care of.

Hard to know where the ceiling will be. If you need the cash, now is not a bad time to get it. If your investment time horizon is longer and you feel this asset is performing well, I’d go and buy another home.