On Due Diligence and Turnkeys

[Alex Heifetz]

Hi there,

I am soon to visit several markets where a handful of turnkey providers will lead tours of the neighborhoods they operate in, their renovations in progress, and their finished product.

In doing so, I hope to get a feel for the quality and legitimacy of their business and market. While I am primarily approaching it as a precursor to due-diligence on any one specific property,  I will have the chance to survey plenty of them.

With that in mind, where would you recommend my focus be on the visit? Which areas of the renovations should be the most scrutinized?  What about the market as a whole? What are the things that can be seen only while only the ground?

Before proceeding in any manner, I also plan to speak with multiple, unrelated PMs in the area to get a consensus on vacancy rates, maintenance rates, and the likelihood or unlikelihood of appreciation in addition to shopping around for a quality PM. 

Thanks for your time!

[Jonathan Mednick]

Originally posted by @Alex Heifetz:

Hi there,

I am soon to visit several markets where a handful of turnkey providers will lead tours of the neighborhoods they operate in, their renovations in progress, and their finished product.

In doing so, I hope to get a feel for the quality and legitimacy of their business and market. While I am primarily approaching it as a precursor to due-diligence on any one specific property,  I will have the chance to survey plenty of them.

With that in mind, where would you recommend my focus be on the visit? Which areas of the renovations should be the most scrutinized?  What about the market as a whole? What are the things that can be seen only while only the ground?

Before proceeding in any manner, I also plan to speak with multiple, unrelated PMs in the area to get a consensus on vacancy rates, maintenance rates, and the likelihood or unlikelihood of appreciation in addition to shopping around for a quality PM. 

Thanks for your time!

 Alex,

You are approaching this the right way. My group is the largest provider of turn-key inventory in Birmingham and we have many investors both domestic and internationally who come to Birmingham to see the operation. Most importantly, we rarely will take on a new client unless they do come for a visit.

If you visit with us, we would provide the following:

1. View properties that meet your criteria - This will be a mix of MLS and off market properties (both rent ready and tenant occupied) and will be from 10-20 properties. You will also visit properties currently under renovations (meet project crews) as well as see some properties that are finished. You will be provided with the scopes of work and due diligence for each property.

2. Visit our office to meet our team - You need to make sure that you work with a professional team with a full operation.  Check licenses and insurance.

3. Meet with our renovation team - Manager,, project manager, general contractor, staff. Request license and insurance. Request to see prior estimates and before and after pictures.

4. Meet with property management - You want to insure they are large enough to handle your volume with a full time employed staff. Request license and insurance docs.

5. Meet with closing attorney who will handle your closings.

6. Tour of the city and dinner with our principals.

You will want to plan on 2 days here in Birmingham to cover the above points. Matter of fact, one person I met here on Bigger Pockets from San Francisco came here a month ago, went through our itinerary and we are closing on his first three properties today. Once we have closed and turnkeyed the properties, I will request that he post up here his experience with us.

If I can be of further assistance, please feel free to contact me.