All Forum Posts by: Chris Clothier

@Nathaniel Donnelly

Really good info about going to your local bank there in San Diego or even with a traditional lender like Wells Fargo. I have used Wells in the past in particular for HELOC loans, but have had more success lately with smaller, local banks and getting LOC's. As @Joel Owens noted, you can get some great terms with smaller banks looking to build stronger and longer relationships and deposit accounts.

Thanks for the good words @Derrick Craig.  I keep hearing great things about you guys as well and have even given your number to a client of mine who made a major mistake buying Memphis properties from a company in Utah and needs help with management.  As you noted we work in different parts of the city and this one in particular is in an area that I do not manage.  Hopefully we can meet up soon and talk shop.

Best of luck Nathaniel and be sure to reach out if I can personally do anything for you.

Nice job @Derrick Craig and congratulations @Bill Manassero!  Good luck with all of your properties.

Chris

Awesome @ANDREA LEASSEAR!  Best of luck as you get started - this site is a fantastic resource.

Chris

It all depends on the time you are going to put into your portfolio.  Is this going to be a team building endeavor or are you going to be investing passively?  Depending on your experience as a business person and your goals and plan, you can absolutely accomplish investing in multiple markets.  You just have to put the time in so you understand what you are investing in and how it helps you accomplish your plan.

I would be more concerned with looking at different investment classes (SF vs MF) in different markets. It is not the markets that would scare me as much as it would be the fact that I was looking at different products in different markets.  It might be better to start with one or the other, say SF, and then as I find that one market or another may be really good for MF, I would save that for the future when I was ready to start looking at MF deals.

Best of luck as you get started - feel free to reach out with more questions as you get going.

 Hey Haim - 

Reach out to Mark at our offices and see if we have a crew who speicalizes in pool removal.  I am not sure if we do, but we remove pools often on properties.  We will estimate between 3k and 7k depending on the size and complexity of pool removal.  The difference really has to do with the eventual in-fill of that pool as well.

Chris

 Welcome Luis!  You have found a great place to network and learn.

Chris

Good luck with a new manager @Carlos Hernandez.  @Curt Davis, who is CB properties?  I know SPM, but have never heard of CB before or at least I do not recognize them right off the bat.

@Charles Worth & Joel thanks for the shout out to the conversation.  I have written several articles on this and I speak from experience, as Turnkey investments, low priced properties are the worst mistake an investor can make.  If you are going to be active in the day to day operation then you can absolutely make it work and many do, but as a passive investor, these are the properties and price points you want to avoid.

@Chris Lynch, the economics do not set up for you to be successful passively in this price point.  It takes revenue for a company to remain in business.  Business owners operate to make a profit.  Homes have to be purchased and renovated and - when sold to a passive investor - need to be renovated to an absolute top standard to avoid as much deferred maintenance as possible.  Regardless of the age or size or location of a property, there is only one way to do renovation work....the RIGHT way.  That cost money.  When everything is added together, in my opinion, one of two things happens to an investor buying passively or Turnkey in these price points.  

1.  The property is priced high, yet the value is not there.  The high price allows for guarantees on maintenance and management, which are often used as sales gimmicks and they mask the real issue.  The price is high so enough revenue can be generated to operate the company and some is put aside in case a guarantee needs to be used.  Unfortunately, the renovation itself has to be done sparingly to avoid spending all of the revenue on the property and putting the company in peril should a guarantee be called.  It becomes a crap shoot for the company, but they are gambling with the investors money.

2.  The property is priced super low and pencils out on paper to be an astronomically high return.  Problem is, the company selling it is using that return as a selling feature rather than quality of work.  Again, no underlying value.  The property is under-renovated and the company selling it is understaffed, but the gin is operated as a merry go round always looking for the next buyer after that super high return.

Neither scenario does anything to improve the socio-economic plight of many of the renters in these price points.  Rents ranging from $450 to $700 in many cases.  Using the 1/3 ratio for rent to income, you can expect your tenants to be earning between $18,000 and $27,000 a year.  These rent ranges will have - on average - more and quicker turnover, longer vacancy and constant repair work due to age of the property, lack of quality products and work during renovation and in general, more wear and tear.

Remember, that I am talking about being a passive investor and others brought in the Turnkey aspect as well.  In my experience as both an investor in these price points and a company owner who manages just under 3,000 turnkey properties for other investors, these price points are not the price points for long-term success passively.  Just my experience and I do not go near them right now.  

I have reached out a couple of times to a local Memphis company whom I have never met personally to try and sit down and learn what they are doing.  They say they are having a ton of success for other investors in these price points and I have no idea if they are or not. But, I want to meet them to learn and so I am investigating myself to see how they are operating.

Bottom line on this long thread!  Quality renovations and great property management are the key elements for success when buying out of area and from Turnkey companies.  Both require revenue and there simply is not enough revenue generated on these low price points.  In my experience the last 12 years and seeing many, many different companies, the properties, the renovations and the management are simply too shoddy.

 Hi Ilona,

One quick correction to your question, both Norada and HomeUnion offer the same type of service and neither is a Turnkey company.  Both act more as referral companies who meet, vet and then point clients toward Turnkey companies.  I know both companies and I don't point this out as a negative, just wanted to provide some insight that both are very similar and neither (unless one or both have changed business models) own the investment properties that their clients eventually purchase.  They have the relationship and make the introduction.

I think @Charles Worth

 pointed out some of the pros and cons of working with a Turnkey company directly and working with a company to do the vetting for you and most of that is going to come down to personal preference and comfort level.

best of luck as you get started researching!

Chris

Hi Alex,

Here is a link to an e-book about buying out of state properties and in particular buying a Turnkey property. You are right, there is a huge demand for passive investment options for all kinds of reasons, but your reasoning makes the most sense.  You want to get started and remain passive and hands off.  There is nothing either right or wrong with that standpoint.  You have your reasoning and now need to have a good plan to be successful. This should help you get started and from here you can develop a plan and start executing how to go about starting your portfolio.

Best of luck as you get started and don't hesitate to contact me on here or thru the BP email if you have questions.  

 Chris