All Forum Posts by: Henry J.

@Hector Sapinoso - I invest out-of-state / turnkey because I don't have enough $ and time to buy and deal with tenants.  :(

I found this article on $30K houses which has the CapEx example Sean referred.

https://www.biggerpockets.com/renewsblog/2015/03/0...

@Sean Dawson

Hi Sean - apparently you can't use @ unless you're a colleague with Ben, or if he posted in the thread.

I remember reading it somewhere on BP using average CAPEX of roughly $200 per month over 20 year period for roof, AC, heater, floor, carpet, etc. I keep a reserve account on the side to make sure I can deal with emergencies and add to it when I go below my threshold.

I'm guessing you are saying vacancy reserve and repair reserve. If not then please take a screen shot of what you're referring to. Vacancy and repair reserve are just estimates because you don't know if a tenant will stay for 1 or more years, and things do break. They are reserve because you don't pay them until you either have a vacancy, or something is broken. Depending on the location/area/property type, you may experience different vacancy rate. I use 1 month / year as a rough estimate. For example, if you have a possible rent of $1200, 1 month vacancy will have a yearly reserve $1200, or monthly reserve of $100. I use 8% reserve for my repair - using the same example above that means I reserve 8% x $1200 = $96 / month for repair estimate. Chances are most months you don't repair anything so this amount is captured / saved for rainy days. There shouldn't be any management fee when the property is vacant. The management fee is a % of the rent so when it's vacant, they shouldn't charge you anything. Tenant placement fee varies with PM. Some charge 1 month and some may charge 1/2 month. You pay it when PM finds you a tenant to rent the property. Usually that fee is paid to the leasing agent. Hope that helps.

For us it all depends on how many units and the % of our holding in real estate. As long as they are balanced (depending on your ideal mix), we will keep them forever, or 1031 to another bunch to use the tax write off as long as we can - then pass them to kids with step up basis when we kick the can. We use PM so it's paperwork, regular check in with PM, and once in a while city visit. Not as easy as collecting bank interest, but definitely much more than the 0.9% rate. May look into note to collect interest if the rate is good.

When we bought our DFW turnkey properties, our agent got the sellers to include the 1st year home warranty. We used them a few times for minor repairs but never got the 'big ticket' item repair. Each service call had a charge of $75. Subsequently we have not purchased it because it's guessing game whether you will need it or not. We are considering to get it for our older properties in the future. This past year we had to change couple of AC units and it would have been nice to pay only $75 and a few hundred for deductibles! By the way, research about the provider to see if they are reputable and if they will honor all the terms. Some providers drag their feet to provide service so it's the same as not having this home warranty when you need it.

Hi Jen, Do you know which market you want to invest and why? Remember to account for travel cost unless it's a city you like to visit. That's one thing we didn't account for when we started - we would have started in a location we want to visit more often! We have 1 Memphis property with Alex Craig and working on 1 more. Alex is extremely responsive and helpful. We are also working with Douglas / Crestcore team on a BRRR type experience. I met with Memphis Invest team before but I couldn't get the numbers to work with my assumptions. I think Mike D'arrigo of Pinnacle investment has properties in KC. He's pretty active on BP from what I can tell. Good luck! Henry

Yes we have. We wrote off business laptop, printer, travel to see properties, and meals. Didn't use repair or car write off because we invest out of state. Check with your CPA to get details.

Hi Julie,

I'm a semi-turnkey investor for couple of markets (DFW and Memphis). Full disclosure - my wife is currently buying a property with Alex Craig at Memphis Turnkey and I'm working with Douglas's team at Crestcore (also in Memphis) to see what they can help me with on alternative investment method (BRRR). Douglas listed out a good # of Memphis providers above.

Are you ready to buy in those markets or are you still researching the markets?  There are a LOT of turnkey providers here for the markets you listed so you will get a lot of posts from them.  They are all very helpful but you need to know what type of investor you are before you can nail down who you want to go with.  End of the day, it's your $ and I believe you want to be happy with your provider.  

Some questions that you should think about before you reach out to them - 

What type of investors are you?  Why do you want to get into turnkey purchase?  Why do you want to invest in those markets and what is your selection criteria?  What is your expectation of the provider and the result?  Remember there are risks associated with any investment and turnkey real estate is no different.  

I don't claim to be an expert so by all means do your research.  There are many turnkey related threads on BP so search them out and spend some time reading them.  It can be a heated discussion from time to time (or maybe I have weak stomach) but read them with an open mind.

Hope that helps a little and good luck finding the market and provider that best suit your needs.

Henry

Congrat and looking great!

I always included the escrow amount to calculate the cash on cash return. Your insurance bill will be annual and your property tax will be prorated so what you put in will likely be used up (unless they over-estimated something, then they will refund you).