Part 2 – Choosing a Turnkey Company
Part 2 – Choosing a Turnkey Company
In my last blog post I discussed why I chose turnkey over the other REI options. In this post I will describe how I chose the company I am going to invest with. I’ll leave out the company’s names in this post.
I got most of the below questions from multiple BP forums/blogs, determined which were important to me, and consolidated them.
1.Are you an investor?
2.How many investors do you work with?
3.How long have you been in the business?
4.What has been your biggest mistake as an investor?
5.Do you own all facets of the operation?
6.Do you actually own the homes you are listing?
7.Do you defer maintenance?
8.Do you manage the properties?
9.What is included in the listed price? Cash Price?
10.Do you have renters in all your homes?
11.What’s your normal lease term?
12.Do you have a rent guarantee?
13.Do you have any other warranties?
14.What percentage of your customers are repeat buyers?
15.Can you give me a list of referrals?
16.What’s your property management fee?
17.What’s your placement fee?
18.What’s the average stay of tenants?
19.Average vacancy rate?
20.How many properties do you manage?
21.How many did you turn over last year?
22.What company is financing the homes?
23.What happens to my property if that company goes bankrupt?
24.What’s your appreciation rate based on?
25.What’s your rent growth rate based on?
26.Do you have any special programs in place to keep tenants happy?
27.What is your process for keeping owners up to date?
There were 4 companies I started out vetting. I’ll call them company’s Company 1-4.
Company 1
This is the only company I vetted that didn’t come recommended from the BP Forums. This company didn’t start out well. I booked an appointment for the first interview online and did not hear from them. Two days later they called and said he just got the notification. I was busy and couldn’t talk so I set up a new day and time to talk. He ended up calling me 2 hours earlier than we scheduled. I didn’t answer the call, but I did send a text back promptly letting them know that I need a turnkey company I can rely on and if they can’t even get this right I probably don’t want to invest with them.
Company 2
This company was awesome with great customer service. They were going to work out a thorough plan on how we were going to reach our passive income goals and help me pick the properties. They owned all the houses, renovated them, had tenants in place…everything you expect from a good turnkey. One deterrent was they are currently only in 1 city and we want some diversification as we start to buy more properties. This wasn’t a deciding factor though because we could always invest with different turnkeys in the future if we wanted diversification of markets. The real reason I didn’t go with Company 2 was because their price to rent margins just weren’t there. None of them met the 1% test. He started to try to sell me on appreciation but I called them out on it and he quickly retracted the statement.
Company 3
This was a company that came highly recommended from BP forums. This company has a great podcast that really got me interested in them. The only reason I didn’t go with them is because we had a phone conversation scheduled for Friday and he had to reschedule for Tuesday, and after that I found Company 4 and the perfect house so I chose to take the leap before vetting this one. I will definitely give this one another look before we go with our next property because they have properties in 10 different cities.
Company 4
This is the company we ultimately chose to invest with and again was highly recommended by BP forum posters. Their answers to the above were all what you would want from a legit company, their customer service for owner and tenants is awesome, and all of their properties exceed the 1% test. I also liked their YouTube videos that show their renovation work so I know what to expect in the house without having to travel out of state to see it. Their tenant placement and property management fee is lower than others, 75% and 8% respectively, but they do add 15% to any maintenance. They are in 2 different cities and one of them is only 30 minutes from where my mother lives. The advantage of this being that I can tax deduct business travel there every so often. Other great stats are ¾ tenants renew their leases and 90% of their sales are to return customers. All in all, this company did everything right, was in the right locations, and had numbers that worked.
In the next few posts I’ll speak more about how I chose the particular property and things I learned in getting financing and closing the property.
Comments (24)
Kyle, very well done article. Thanks. Like everyone else who’s commented here, I’d be interested in the name of the company you ultimately chose. So, if you’re not completely sick of the request, please PM it to me.
Bill Mendenhall
Bill Mendenhall, about 7 years ago
Hi Kyle,
Good and informative post. I am also interested in turkeys. Can you please share with me the Company 3 and Company 4? Thanks !
Ramya Ganesan, over 7 years ago
Please PM me the name of company 3 and four please. And I'd love to hear about any new investments you have done
Hiep Vu, over 7 years ago
Hi Kyle,
Great info on how to choose turnkey provider. Can you PM me the info of company 4.
Thank you
Vincent Ngo, almost 8 years ago
Kyle,
Thanks so much for sharing what you have learned. I am getting ready to read your next two posts. I am in the Denver area and looking at out of state turnkey providers as my first investment in REI because Denver is so expensive right now. I have been studying up the last six weeks and am in the choosing the market and provider stage. would you be willing to share providers 3 and 4 with me via pm?
Thanks,
Brad
Brad Babcock, almost 8 years ago
@Brad Babcock I just moved to Denver and it looks like we are interested in pursuing similar strategies. Have you made any progress on your goals? Did Kyle send you Providers 3 & 4?
Chad G., almost 8 years ago
Hi Kyle,
Can you PM with the name of Company 3 and 4 also please? Thank you.
Chris Tran, about 8 years ago
Greetings Kyle, Thanks for taking the time to write these in-depth blogs. How is the turnkey that you decided to invest in working out? Any lessons learned from that 1st one?
I have also been looking at turnkey companies. Could you PM me with the names of Company 3 and 4? Looking forward to hearing how things turned out for you!
Thanks!
Sharon S., about 8 years ago
Hello - Can you send me the company names for 3 and 4?
Abdul Azeez, about 8 years ago
Hello @Kyle Myers great post and congratulations on your investment. Would you like sharing the names of companies 3 and 4? I have been researching turnkey providers as well to invest out of state. Thank you.
Cecilia Arnulphi, over 8 years ago
Hi Kyle,
Wonderful post!!!
I would like to get the name of the companies too. Thank you for sharing.
Marilou Rey, over 8 years ago
Hi Kyle! Great post!
Would you be able to send me the name of the companies in your post above? Thank you, sir!
Adrian Fernandez, over 8 years ago
plese PM me the name of the company. Thanks a lot.
Ray Nguyen, over 8 years ago
Could I get the names of these companies too please ?
Thank you!
Robert South, over 8 years ago
Kyle,
I have also been looking at turnkey companies. Could you PM me with the names of Company 3 and 4? Looking forward to hearing how things turned out for you!
Thanks!
John Carico, over 8 years ago
Greetings Kyle,
Congratulations on your investment! Your journey to arrive at your decision was an interesting read indeed... Would you mind sharing the TK companies via PM?
Best regards,
Joseph
Joe Speed, over 8 years ago
Hi Kyle
Love your blogposts - really insightful - thanks. Do you mind sharing the names of Companies #3 and 4 with me ? thanks ! Johanna Kollar
Johanna Kollar, over 8 years ago
Kyle,
Great blog series. Can you please pm the 4 companies you mentioned on this post? That would be much appreciated. Thanks a lot!
Marcelo Cazini, over 8 years ago
Would also be interested in company 3 and 4 if you don't mind pm-ing me the info. I would happily share my experience post purchase as I am looking to buy in the next 60 days.
Kari Piecuch, over 8 years ago
Great Post, Could you please PM me the name of the company that you used.
-Ken
Ken S., over 8 years ago
Kyle,
Thanks for sharing...I like the idea of deducting travel expense since your relatives will be in that area. I hadn't thought of that, but now I'm thinking of doing the same thing. Please continue with your posts.
Bobby
Bobby Kohler, over 8 years ago
Very interesting journey, thanks for sharing your decisions along the way.
Dolly Caswell, over 8 years ago
Thanks Kyle -
Im assuming that the one you went with is in the midwest? I'd like the name also - please PM.
Jeff F., over 8 years ago
Great post Kyle,
I live in Denver and have decided to go the turnkey rout too. I'm pretty sure I know who company 3 is, but would like to know who company 4 is that you decided to got with (if you're comfortable sharing), pm me if so. Thanks
Logan Halliburton, over 8 years ago