All Forum Posts by: Mark S.

Same here, only I applied early April. 

@Andrew M., I have 4 with one provider and 1 with another PM company.  I bought 3 directly from Mid South Home Buyers (MSHB) and 1 from their exchange program from another of their investors who originally bought from them.   Those 4 are managed by them.  I bought my other house from another provider who outsourced property management (at the time - now they have their own in house).  That was from James Wachob’s group, now TurnkeyInvest.com.  I like James and his team, but that house has had some HVAC issues arise (over $1K in under a year) and that should never happen on a turnkey (or if it does, it should be fixed by the turnkey company under some sort of first year warranty).  Since this house is with a third-party PM, that didn’t happen.  Perfect example of why you want to have everything done in house.  For comparison purposes, that $1K+ in HVAC repairs was more than all repairs on all my other houses combined since I’ve owned them.  

@Andrew M., thanks for posting.  I’ll share my personal experience thus far and am happy to chat offline if it helps you.  

I currently own 5 turnkey SFRs in Memphis, TN.  

Here’s a brief general overview of my situation:

High income W-2 earner.  Not handy at all and no interest in buying a job (i.e., managing my own property, doing my own rehabs, etc.).  On the path to (somewhat) early financial freedom.  Heavily invested in the stock market and fully understand what that entails (discipline, long-term focus, ability to tune out the noise, etc.).  Interested in using leverage to create passive income that is durable and sustainable.  Realize bunting may be different than hitting a grandslam, but bunting beats bystanding.  

What I’ve learned so far:

Turnkey providers can be EXTREMELY different in both the product they provide and the service they deliver.  Always run your own numbers (which you seem to be doing and that’s good).  As already mentioned, property taxes can jump on you so always assume the property will be assessed at your purchase price to avoid surprises later.  In the meantime, you may enjoy a short period of time of (seemingly) higher cash flow.  My cash flow numbers aren’t the sexiest, but my total returns are difficult to beat (consistently) so far - and I assume 0% appreciation in those calculations.  Generally speaking, if you play in a slightly higher rental rate sandbox, you will probably have a better overall experience - I don’t buy properties that rent for $600/month (I’m sure some people do great in lower rent ranges, but I feel that the rental amount can sometimes be reflective of the type of tenant you may be able to attract).  Reserves are definitely important; I’m going through my second turnover right now and I’m glad I consistently set aside reserves each month that were more than adequate to cover these expenses.  In order to get any SIGNIFICANT monthly cash flow, I will need many more of these or to pay off the mortgages (arguments for/against this and that’s for another day).  

Final Comment:

I think as long as you buy solidly rehabbed properties (not the lipstick on a pig stuff), have a solid property management team (that you will absolutely pay for but that make your investment possible and your life easier), who is able to attract and retain high quality tenants, this can be a great addition to your overall financial portfolio (and doesn’t have to be the end all be all); it’s just one component.

Feel free to PM me if you’d like to chat.  I have nothing to sell you.

@Bjorn Ahlblad, thanks.  I did push back a little bit for some clarification and about how much of the tenant's security deposit ($300) would be used towards the repairs.  They said security door not necessary but there was a black frame on the door where there seemed that one may have been installed previously.  Since all my other houses have them (didn't realize that initially) and they're using all $300 of the tenant's deposit toward the get ready (and my total out of pocket cost is now only $2,199), I decided to give the green light to go ahead with everything.

@Robert McKay, yes, I believe it was for IL tax withheld for those of us who chose option 1 (to be included in their IL filing).

@Account Closed, it’s a 1,141 sq ft 4BR/1BA.

I am going through my second turnover in the rental property space since I started acquiring rentals in 2017.  I currently have 5 SFRs.  The first was after a family (husband, wife, 2 young kids) stayed in the house for 2 years and 3 months; it cost me about $1,600.  Nothing major.

The current turnover / "get ready" is with another property management company, who I've frankly not had the greatest experience with (not terrible, but not great).  This house was occupied for 1 year and was occupied by Section 8 mother and 4 young children.  The make ready quote is $2,499.  They sent pictures and I didn't see anything awful.  Here is the breakdown of the quote:

Remove all trash: $172.50
Paint all walls trim and doors: $1,380.00
Broken blinds: $115
Light fixture missing globes: $46
Install security door on front: $402.50
Repaint entry porch: $46
Install 2 jelly jar missing: $50
Cut tall grass: $92
Final clean: $195
TOTAL: $2,499

Is this reasonable or outrageous?  To my untrained eye, everything looks okay except the $172.50 remove all trash (seems high) and paint all walls trim and doors $1,380.  I understand the PM company needs to make money, but these two items, especially the trash removal, seems a bit high.

The good news is I have diligently put money in reserves from rental income during the year and this property's reserve account can cover this turnover (completely covered by tenant's past 1 year's rent).

Is this reasonable and I should just approve?  Should I question some of the charges?  Should I be asking for tenant's security deposit to cover some of these items?  This is all still new to me, so trying to balance between what's fair and what's outrageous.  Thanks in advance.

Turnkey 3/2 SFR in Memphis, TN in late 2017 for $84,000 that rented for $885/month. It now rents for $905/month. Had my first turnover (cost about $1,600) and new tenant moved in within weeks.

Now have 5 turnkeys.  It’s the long game for me.  Not a ton of cash flow now, but solidly rehabbed properties with no deferred maintenance that have good tenants who pay their rent.  

@Michael Kagan, you should be fine. My lowest purchase price for turnkey so far has been $73,000 SFR and I financed it with 20% down. There are lenders who specialize in this space. PM me if you want more info.

@Keleisha Carter, Mid South Home Buyers (MSHB).  Extremely long wait but well worth it.