All Forum Posts by: Axel Meierhoefer

@Taylor L.  Yes, totally. Passive is one of the most important terms for me. Still, I had to learn that the promise of passivity and the reality can be very far apart. the quality of the turnkey provider makes a huge difference. I have had a few and am now down to just three that I work with. I would like to add a 4th one to have more local diversity, but its hard to find one that really has everything under one roof (reno, sale, property management) and lives up to the plan by applying all the criteria. Constancy is really the key. If that's not there, you have a few good months and then a bunch of bad ones. I am lucky to have found my providers who really renovate well so things don't break and select tenants well so rent comes in without any issues.

@Andrew Rosenberg Yes, totally. I would even go one step further and say that it is important to have a set of criteria and principle. Several times over the years I was tempted to buy something or consider a location only to find that they did not meet my criteria and principle. They looked soooo good and sounded so interesting, but in the end sticking to my criteria and principles has always protected me from my excitement and foolishness

I have a strategy I call out of state turnkey residential investing or "OOS TK SFR". We have all our properties in this model and have great experiences for several year now. When I speak to people here on BP, a lot of them tell me that turnkey does not have a good reputation on Bigger Pockets, sometimes even to the point of being surprised when I describe what we do, how we do it, and how well we have been getting the desired results, especially when it comes to cash flow.

Am I just lucky, what are your experiences, and what do you think about turnkey investing in residential real estate?   

@Aiden Hatchett Sounds great. Happy New Year and if you like more help, let me know.

@Aaron Kyle Kinslow I agree with nathan and I myself have a portfolio of TK properties. It is really passive cash flow, no loss of rent in 2020, but most importantly I have as much control of my assets as I want and they are still performing very well.

Based on what you are writing, that should probably be one of the considerations. Syndication has less of that and if anything goes wrong you can't react individually.

If you like to chat about what I have done and lead from investing out of state using turnkey providers, I am happy to plan for a call

Bbe well and stay safe

Axel

@Eric Wong Congratulations for starting your investment journey with the new year. I live in san Diego county and my daughter is in Aliso Viejo. I am curious what made you decide to go into the flipping approach as your strategy?

Do you have a plan and goals that describe the outcome you are aiming for?

I am asking these questions because my strategy is totally different. Everybody has to develop their vision and then pursue it. There are so many ways to be successful in real estate. As David and Brandon and many others always say: "Its most important to get started and take action". 

@Greg Weik You are probably right in most cases. I have seen that neighborhoods that are not terrible but still low C category can appreciate a lot when a change in the area occurs, like a new Amazon distribution center or a manufacturing site. They can make it look like a great investment but only works out of the change is sustained and really improves the neighborhood and not temporary due to speculation or a short-term impulse.

Maybe a good way to combine our ideas would be to say: 

1. Take a look at appreciation and how long it has been sustaining. Also, check against the averages in the region

2. When you find factors that could be suspicious, like sudden spikes in appreciation, take a closer look at the details of the areas as mentioned in the list.

That way down-selecting can happen quickly and a deeper review can reveal or eliminate cases that initially looked good but later turned out to miss a criterium or two.

@Dominique B.Very impressive, especially for an area like WDC

Congrats

@Lane Kawaoka I totally second what you are stating. Even though my strategy is OOS TK SFH, I used to own OOS that I didn't buy from a TK and PM was always the most important issue. Even with TK, if they don't do a good job it will either kill your deal due to constant turnover and repairs.

One of my most important criteria for TK selection (and I only have 5 I work with due to this criterium) is what I call the "virtuous triangle"

That means you want to have the corner that represents the finding of property and renovating it, the corner that represents the sale of the fully renovated property, and the corner that represents the Property Management with all the things you listed in your post, all under one roof in one company.

It can work without that triangle working but for TK investments I have learned (the hard way) that this triangle is the big difference in a good, really passive deal and one I call "headache deals".

Avoid the headaches and thanks for taking the time to list all those aspects for a PM that investors should consider. I will keep that list for myself and people who ask me for input.

@Jonah Lamour One other method that could work in two ways would be to collaborate with TK providers in your area. I did not see where you are located, so can't tell if it's a region with lots of them like Memphis and other larger cities or not that many.

Here are the two ways it could work for you (assuming you have TK providers):

1. You connect with them, look at their pipeline of properties and offer them to renovate one or more in a given time period (i.e. 1 year). You would basically be a sub-contractor and you would know you would get paid a predetermined price. On the flip side, you would probably have some flexibility on the scope of work but if you do a lot of the or yourself while they typically pay a contractor, you could make that 20% difference plus possibly a share of the sales proceeds.

2. You could look at the TK providers and ask them where they reno properties. Then find similar properties in the same locations, ask if they mind sharing their typical scope, and maybe even offer a collaboration where you do the reno and then sell wholesale to them. When doing it that way you know what properties they use and where they find them and then do what they do and retain the option to sell to them or sell on your own.

On option 2, after you have done a few deals like that you could even decide to hold a few of the properties, and have the TK provider you work with manage them, put tenants in etc. 

you would help them have a little more inventory (if you go with option 1) or have an additional resource for reno and pipeline (if you go what option 2)

Good luck