All Forum Posts by: Rob Cee

I live in LA and my properties are in Atlanta. It's always worked fine. Remember, a lot of investors have "lost their shirts" on local properties as well.

@Martin Scherer 

@Rob Cee 

Martins rentals are in the northwest.. what I am talking about is the mid west north east grimy cities southeast... Basically larger towns and C class neighborhoods were houses are 20 to 70k and have life long renters in them... What Martin is talking about is a completely different kettle of fish... Coeur d' Alene does not have hoods and ghettos. The point is most out of state investments for low end rentals are in areas that have 50% or better rental populations in the SFR product.. this is not he case on the West side of the continental divide per se. And its ASSET class. I have 11 rentals in Madison MS Ridgeland MS that I bought brand new for GoZONE tax benefits. paid 150 to 225k each for those SFR's they rent at 1400 to 1700 each... some of my very best rentals. Then you go to Jackson MS and buy 30 to 60k homes and your right back in that rental demographic that is very tough to manage even a PM has a very hard time with it.. and your turn over uncollected rent maintenance kills you... To top it off my Gozone's I am now selling and I am getting what I paid for them back in 07 and 08 which I think is a huge win.. Any turn key houses bought prior to 08 in the mid west I highly doubt anyone can sell those for what they pay for them.

Plus in a place like N Idaho the properties are bought like CA.. basically from brokers on the open market with some wholesaling nothing like the mid west were most transactions are off market.. FAct is the local investors are just not going to pay what a CA person would pay for the same house... Because they KNOW how tough it is.

@Micheal Waldrup 

  If your going to go cheap just make sure you have a great team and you can be right on top of them. But your still subject to the type of people that live in those types of homes.. Can't get away from that.. Your not going to get superior tenants that want to live in such low end areas.   If I was going to go back into low end and I was fully immersed in it until last Oct.  when I sold my company  I had 350 of these house's in 4 states all mid west and I live in Oregon.. you can contact me personally and I can tell you how I set this up so we succeeded.

On a follow up to last post on my Madison MS rentals I self manage those from Oregon.. The class of renter is so vastly superior that I do not need a PM.. I run a craigs list add. and Have a realtor right up a lease for 500 bucks... then I collect the rent and I have a killer handyman.. Killer handyman is one very key component if your self managing.. IN this instance PM does me no good as a matter of fact my performance is much better than when I had them with PM... I react quicker to maintenance and stay right on top of them.

@Jon Holdman 

  The fundamentals of turn key are rather simple.. you take a busy professional that is living in a high priced market be it CA or AUstrilia GB  etc.. And you bring the inventory to them. Instead of what a true investor does IE they go to the inventory whether its in their home town or else ware. And by providing all the inventory and allowing and investor to make a decision from their home the investor will  pay over market almost always anywhere from 10 to 50% or more... Compared to what a local would pay for the exact same property.. by the time you pay the wholesaler profit  the contractor mark up  the Turn key provider and then the Marketing people on the West coast or over seas you are adding 50% or more to the actual cost of the home... Many Foreign marketing companies charge 10k minimum per deal.. And the Turn Key guys make 10 to 25k per deal. ( Just like a home flipper selling retail) So you take an 85k home in the mid west and that home has been bought for 20 to 30 k wholesale 15 to 20k to rehab the rest is mark up and profit... So the locals they get the properties for the wholesale price plus rehab.. those out of state are paying far more...

But there is enough velocity that the TK companies can report their sales as comps that is how they get appraisal numbers and they set market values... So its willing buyer willing seller or in the case of many un educated buyer getting sold a marketing line by a LA based marketing company that has no financial interest in the home and could not help you if something goes wrong other than words of advice as they only tout the deals from TK companies that will pay them end of story.. That's why when you see their web sites you will see specific markets they work that because they are only being paid to sell those homes. And many are not licensed at all to be doing this in the first place so you have no E and O to go after as well if you get a bummer.

What we have now is the new wave of CA investor that does not know any better the first wave that bought pre 08 by and large has been wiped out.. your buying their homes that they walked away from over the last few years....

this is a totally unregulated industry with a lot of folks that are new to it.. And have less than the best business practices... If this was truly nirvana as these LA based marketers make it out to be.. YOU would SEE HUD's being published before and after showing real profits.. Forget about 100 a month cash flow that's nothing unless you have the ability to buy 100 of them what the heck is that going to get you.. An asset that the nice sales people sold to you for 20 to 50% over market and you will never be able to sell for what you paid for it.. As you can't plug into the high priced sales network.. Its no better what these people do than what everyone gets really up about with regards to Gurus charging 30k for a seminar.. whats the difference you will learn more at a guru seminar for 30k than from someone who is trying to sell you a property...that is 30k over priced... at least with the seminar the bleeding stops at the 30k when you buy these So called cash flow homes the bleeding has just started... NOw of course this is not 100% there are great companies out there but they are the exception not the rule... And those that just shop for best returns are going to get a rude surprise.... And the Marketing people that tout only certain markets and certain companies are paid to do just that.. If they were truly helping you they would be working as RE sale agents and selling you homes off of MLS and setting you up with contracting teams and then PM's and charging a facilitation fee to do arrange it all.. But that's too much work much eaiser for these marketers just to post on BP write blogs and have a website... when investors realize its real work to actually buy investment properties they default to those that do it all for them. But just be aware your paying through the nose for that service .

@RobCee My out of state are primarily in Northern ID, specifically Coeur d'Alene. I purchased over a 4 year period starting in 2003. Duplexes and SFR. 10 to 50 years old but all in serviceable condition and generally easy to maintain. I purchased by location (near the lake or college) and cash flow.

I generally do not charge top dollar charging very slightly below market rent and have only had about 3 months lost rent cumulatively over that period.  The property managers I use charge 8% of collected rents.  My time and serenity are worth more than that cost.  Even when I lived-in Coeur d'Alene in 2008 and 2009 I still used them.  

I have had rentals for nearly 40 years and the hassle of dealing with tenants went away when I started using professional managers.  I interviewed all the the management companies in Kootenai County before I settled on my current managers.

I have passed up really good deals, $2000 a month positive cash flow on a $120,000 property in Tennessee for example simply because I couldn't find a real management company.  There are people who claim to be managers but as you indicated they really don't care about your property.  Many are agents simply managing for a client they sold a rental.  I want someone totally focused on professionally managing not their next sale or as a source of a little extra income.  I ask a lot of my managers and talk to them frequently as should any owner.  If they know you are going to call they pay attention and can tell you what is happening with your property and can tell you lots about your tenants.

Yes. most of my rentals are out of state.  All have been cash-flow positive from the day I bought them.  The key to making this work is the property management you use.  I have never tried long distance management  and I don't manage in town rentals anymore either.

I don't get middle of the night calls, I do get professional management reports, inspections, requests during office hours for repair approvals and income direct deposited into my bank account.

The odds are definitely against them. I've looked at a bunch of turnkey offerings, including some very recently. The properties are often very overpriced vs. other that are readily available on the MLS. Are some of those MLS properties junkers? Sure. But some are move in ready and valid comps for the turnkey offers. Yet I consistently see the turnkeys priced at or above the highest listings on the MLS. That's the first and easiest check.

I also see rents highly overstated.  In the most recent case, claimed rents were several hundred above other properties in the same area.  And we're talking $700-800 rents where $300 is a big difference.

Before buying turnkey, you must always do your due diligence based on the market where the properties are located, not where you live.  

I am very interested in this topic, so will be anxious to hear other's experiences.  I can't find anything close at this time.  And, sorry, turnkey sellers or promoters.  I give zero credibility to your claims this will work out fine.  You may be correct, but you have too much of a vested interest in getting people to buy to really accept your "it will work out fine" statements at face value.  Its a lot like that old stockbroker saying.  "The firm made money.  The broker made money.  Two out of three ain't bad."

@Jeff Blanchard 

Jeff like your ideas I really like the electronic code for the locks that takes that whole lost key component out of the equation.  The main issue I see especially in the C class and much into the B's is so many tenants do not have checking accounts. And only pay with cashiers checks money orders or cash.. Can you run a money order through the system your talking about for on line rent? I do have one tenant who sends me some kind of electronic payment that I get an e mail notification.. But so many Hud tenants and such just don't have checking accounts and never will and are not to computer savvy.

As to @Rob Cee 

 question form my personal experience I would say its 50/50 at best 50% kind of make it through and 50% figure out over time that going out of state  ( and its not necessarily out of state its low end C class rentals) is far tougher and far more risky then they could imagine.. the West coast investor if they are not familiar with the south mid west north and the neighborhoods these homes are in  are in for a big awakening... It just won't be like it is at home.. Like Portland were I live were there is less than 1% vacancy.. you just don't see the issues you see out east.. Not that you can't have them close to home you will.. but its just not the same.. The rental pool demographic is far different a long with cultural habits.

On thing I like to point out in the TK or out of state investing is.. WHERE are all these properties coming from... We cannot use the sub prime melt down and poor owner occ's losing there home story anymore... Those by and large have flushed through the system. These foreclosure and distressed homes or at least 50% of them are coming from landlords that failed and gave up and walked away... And that is a fact... So yes some make it but many don't and the one's that don't are not on BP posting about it.. Your only getting the ones defending the investment and how great it is for them.. the ones that lost all their money well they are doing other things and lost interest in the dream  that's my take on it.