All Forum Posts by: Chris Clothier

 Not sure if you have already made moves to increase the rent on this property or not, but I wanted to echo a bit of the advice on here.  Regardless of how far off you may or may not be to market rent, establishing good communication in a respectful way will help tremendously.  Always give the resident the option to accept the increase, reject it and move out or ask for the ability to negotiate.  We have found that quite often, residents will sign a multi-year extension with built in increases based on good information and respectful delivery.

One thing for sure is don't make assumptions either way.  Don't assume a resident can or can't absorb an increase or will automatically move out if you ask and don't be scared of a vacancy.  Just be open and honest and give them room to discuss with you and you will often find a willingness to work together and keep your property occupied and growing in revenue.

Good luck to you -

 I know this a couple of months old, but throwing out some advice based on the possibility that you haven't purchased yet.

1.  Turnkey is a marketing word.  I absolutely love it when it is being used by the better companies in the industry to describe a holistic approach to delivering services to an investor.  When companies take the risk of purchasing and renovating a property with their own money and then offer in-house management services, they have a full picture of the property and are taking on the continued responsibility of making sure that property performs the way they expected when you purchased it. 

I hate the use of the word Turnkey in just about every other scenario because it is being used to cloud the perception of the buyer.  Turnkey just means easy path of entry.  In the end it is meant as a passive investment that is actually semi-passive when done right by the investors.

2.  I personally avoid markets that experience a true winter.  Winter brings both added costs and added wear and tear to the property itself and every system.  OUr company has grown across the southern belt and I have never purchased north of St. Louis which still gets too much snow and winter weather for my personal liking.

Outside of that, If there is a high quality, truly turnkey investment company located in the market that has been in business longer than 2012 - then that market makes my list.  There are a few but they are all in the Southeast ( those in the North I still exclude personally).

3.  The best tip I can give you is to be patient.  You have to spend time getting to know who will actually be providing the properties and the after purchase services.  I would make every effort to visit the company you would purchase from if possible.  The biggest reason I say to meet the company and not necessarily view the house, is that you are trying to determine if what you are seeing with your eyes in person, meets with the expectations after speaking with them and starting to move forward.

If you are patient and spend time interviewing them (you can find a list of questions I suggest to ask turnkey companies here on BP), I am confident that you will avoid paralysis and find a good fit partner to work with and build your portoflio.

Best to you -

@Zachary Floto,

Kudos for jumping in here with your first post!  BP can be a great site.  It can also be very confusing with a plethora of ideas, strategies and suggestions and often they are conflicting.  The fact that you are posting on here looking for feedback is excellent. Best of luck.  

I really like @Nicholas L. post especially the be patient part!  Don't jump just because you are feeling like your missing out and expected to have already found a property.  However, I would also caution on getting caught up on cash flow.  I don't want you to share any information that you are not comfortable sharing, but sometimes our own paper math can be an obstacle.  I would suggest reviewing what properties you are looking at and how you are coming up with the data you are using.  Values, rents, possible work to be done, holding cost while renting, etc.  What is your ideal investment outcome?   

Atlanta is a strong market and there are many, many ways to profit from a long-term buy and hold rental property.  Cash flow is just one and often times, investors define cash flow as whats left over after they account for unknown future expenses.  That's not cash flow.  That is a return and calculated after expenses are realized and not before.

So, what are you actually after?  $400-$700 in true cash flow each month to put off to the side for a rainy day fund?  Are you trying to earn some extra spending cash each month for bills?  Are you trying to start down the path of building wealth and hoping to acquire appreciating assets?  Do you have an income that allows or you to cover investment property expenses for 6 months without spending any of the true cash flow you've put off to the side?

I don't expect you to answer any of these in public, I'm just pointing out that once you figure out exactly why you are investing and what outcome you want (as you may have already done), then it helps to evaluate what you're looking at and make sure they are congruent. If after all of that, you still cannot find a property that meets your needs, hit up the REIA meetings, ask Atlanta investors here on BP to grab a cup of coffee, keep posting here on BP. The hardest property is always the first. For those that are determined to get started, it will eventually make sense and you will get rolling.

@Taylor Davidson, that is awesome to read your post!  Best of luck on whichever path you take.  What re the major cross-streets near your property.  Happy to share some management companies, including my families', based on the area of the property.  There are definitely areas of town and types of properties that management companies tend to specialize.

Good luck with the property!

@Peter Mckernan makes a good point Shawn.  Comparable sales and appraised values of a property are super subjective and opinion rather than fact.  Make sure as an investor you are not being biased in your decision making because you want these to be exceptionally good deals.  I would be patient and really challenge your local realtor to give you a mid-case review not best-case nor worst-case, but a down the middle idea of resale value.

@Dominique Osborn a little late to your post, but I think the key to your entire question is the phrase - turnkey provider.

As you know, providing the actual product as well as the services is what differentiates turnkey providers from the many companies that use the word today.  Turnkey is nothing more than a marketing term and it can mean anything the person using it wants it to mean.  Same with buyers.  Too often an investor has an idea of what Turnkey means to them and unfortunately figure out after they purchase that their definition and the product and service provided are different.

Same goes for when they engage a turnkey promoter.  It is often not until after they are down the line that they realize a promoter may have a great reputation based on a great provider that they work with.  They may also work with some lousy providers that pump out a lot of volume.  The buyer thinks that because the word Turnkey attached to the brand of the promoter that any and every home purchased is the same with the same standards.  This is the biggest reason we've stayed with our own marketing team and plan.  We don't want our reputation for quality and service being used to sell other properties and hurting our brand.

I think in some ways the word turnkey has a bad reputation due to a belief that everyone is the same and every company or person using the word is providing the same quality and services.  Sadly, that is just not the case and it is really, really hard for investors to cut through the noise and figure that out.

You may not be necessarily missing anything, but you should consider the motivation of the seller and why there are not more buyers. Are the properties listed on the MLS? I am assuming from your post that you are local?

You mentioned an inspector so it sounds like you are taking the right steps to get your data straight and enable yourself to make a sound decision.  It could be that you happen to be in the right place at the right time to help someone out who needs help quickly.  Happy to review any addresses or areas if you want one more sets of eyeballs, but it really sounds like you've done a good job of due diligence. 

Connect with Mike D'arrigo here on BP.  Pinnacle Investments.  I know that he has invested in and worked with a lot of investors buying long-term buy and hold in the KC market.  He is a turnkey provider.  I can't get the @ system to work right now on BP so sorry I couldn't connect him in here.

 Oh no, the values have jumped in Texas making a lot of investors a paper return in equity and rents are a lagging indicator.  They go up slower and with a lot of rental properties to feed demand have not grown as fast.  But they will grow and I do think appreciation growth will slow to a more normal pace which is already high, just not as high as it has been the last couple of years.  That'll slow tax growth a bit too.

Best to you and good luck with your properties down there!

Wow, I spent too much time on this post this morning. I though I was going to leave a simple quick comment and then started reading...

Here are 3 quick thoughts.

1.  We, and that is a collective "we" including myself and a lot of other investors who have been doing this for a very long time, can sometimes have trouble allowing others to define their own success.  I work with and have gotten to know so many investors that it is impossible to count the different ways different people define success.  Cash flow, returns, hedge, preservation of capital, equity growth, ability to refinance, etc., etc....  Everyone gets to define their success - even the guy that says success is have some extra bucks each month to go on dates or rent cool cars.  It may not be how "we" define it, but if they do then so be it.

By that logic, I would put the percentage of people being successful in real estate a little higher.  I don't include in my logic anyone who hasn't actually invested.  Tire kickers and lookie-loos that never get in the game shouldn't be counted in my opinion.  Doesn't amtter if they arein a facebook group or bought a course or paid a mentor or guru.  Until you've put your money into the market, I don't consider that person an investor.  Those that have put their money in, I wouldn't be surprised if the number was greater than 50% would say they are successful.  They get to define what it means to them.

2.  I tip my hat to every investor who comes on here and shares.  Even when their numbers or math are wrong.  I'm big enough to say that I have learned a ton from other posters and am humble enough to admit at times I've written things on here that are incorrect from a returns standpoint.  I say that to remind everyone who started investing after the 2008 crisis that the real strength of your portfolio, your decisions and your knowledge go on display when the next crisis starts.  It has been an incredible run for many investors and everyone who bought and held in the last 8 years like the example in Arlington should be congratulated.  But pulling out cash, keeping leverage high, re-leveraging that cash into new properties and eventually growing a monthly payment that far exceeds your day job income is exactly how many investors lost everything.  When I start reading about pulling cash out as values rise and "infinite returns", I'm reminded of how many good properties I have been able to buy over the last decade plus where a bank wanted to off-load non-performing notes.  When properties go vacant and they always do and then need work to be brought back to market and they always do, cash flow tightens.  When investors suddenly have to use their day job to pay for repairs and notes because properties sit too long or repairs are super high, refinancing and pulling our equity is not an option. That ain't fun!

It's what we don't know that bites us in the a$$ every time and I have a feeling that investors who are not aware of the real danger they put themselves in are the same ones who won't recognize the time to sell and realize their return.  At that point, they'll no longer define their success and instead blame a guru!

Lastly, I actually like reading what @james Hamling writes on here.  I don't argue with him though...ever, lol.  He always has data!