1. How many out of state turnkeys have you purchased? 4 - all SFR - I would classify one as A class property, 1 B class and 2 C class.
2. Do you still own these properties or were any sold? Still hold them.
3. How involved are you with the management of the property? Professional property management is in place to deal with tenants/toilets/trash; I primarily review/approve new tenants and repair requests.
4. What kind of cap rate, COC, ROI are you getting? 8-17% lower end for the A class higher end are the C class properties.
5. Was the estimated rent, cap rate, ROI that was advertised close to what you are actually getting? The estimated rent was on target. I have since got an increase in rent for the A class property. I never based my purchase decisions on the advertised cap rates/ROI because all proformas, in my opinion, are just a starting point you need to really get to know the area, the insurance rates (flood insurance?), property taxes (city taxes?), HOA fees (how often has it increased in the past?), meet your team/boots on the ground, budget for capex items even if it is a brand new house because you will eventually need to replace, budget for yearly tenant turnover, etc. If the numbers still make sense after your conservative proforma take action!
6. Overall, are you happy with the investment? Yes
7. Which turnkey companies would you recommend or warn against? There are a few turnkey operators who are active right here on BP - I would start with them.
8. If tenants were already in place, how long did they last and what caliber tenant were they? A class property - current tenant has been in place 3 years; B class property - current tenant has signed 2 year lease and will be completing one year in Aug; C class property #1 - current tenant signed 2 year lease which will end Feb 2016; C class property #2 - tenant moved out on 7/15 at end of 1 year lease, out of pocket turnover $500 (remainder covered by security deposit) for all cosmetic repairs, PM has started marketing for new tenants.
9. Were you satisfied with the PM that came with the deal? I interviewed 5 different PM companies and chose 2 based on their responsiveness and patience guiding me through the learning process. They have performed as advertised.
10. Do you have any advice for others looking to venture into out of state turnkeys? Visit the area, interview the PM companies whom you are trusting to run your RE portfolio, trust but verify everything (get a home inspection, ask for the scope of work for rehab performed, verify taxes/insurance/etc.) and finally run it as a business not a hobby. If you have the resources scale up as quickly as possible to spread out your risk.
