Should I be concerned?? First 2 Property Reccos from TurnKey

Question

So...we had decided to "go for it" and jump in the REI pool through TK's.  After some exhausting interviewing and due diligence, we decided on a well-known TK marketer/broker who was very well reviewed and recommended.  We got prequalified as requested and had cash in hand.

The first "off-market" property presented was nice but appeared to have a swimming pool.  The broker was unaware until our due diligence from pulling permits.  Needless to say, a pool would seem to add a whole new layer of liability, maintenance, etc.

The second "off-market" property presented was in a neighborhood that by all accounts, is the ghetto with huge crime problems.  Every site was use says stay out of this area.

Are we right to be skeptical again??  I get the providers and brokers get paid by selling properties but I do not want to get screwed either.

Thoughts??

Jay Hinrichs · Answer

I would not buy a rental with a pool unless you were in Vegas PHX  those type of areas.

and I would pay for a pool service your self if you do buy one with a pool.. they are liabilities both functionally and a accident waiting to happen.. someone drunk diving into the shallow end and getting hurt... kid falling in and getting hurt etc.

you won't get any more rent for them

Ghetto   NUFF said about that..

It sounds like you maybe using a marketing company  which is just repping a rental fix and flipper.

what I have come to realize in the rental game.. one turnkey is a moniker.. there are two schools of thought about what @Tom Ott describes above... many of the Aussie companies thought the same thing but the turn key companies were controlling everything and hiding issues since they controlled it all.. Many hedge funds found this out as well.. they first wanted the homes rented and performing then realized the providers were too aggressive putting tenants in .. then they wanted them vacant so they could vette the tenant and have their own management.. the Aussie companies I know went that route as well. they wanted to separate management from the provider..

either way I look at investing in rentals in any given market however you come by them as wanting to buy homes in areas that are receiving the top 20 to 25% of the median rents... NOT the bottom .. the bottom are trouble long term.. the top are usually the best tenants.

let me explain a little and I am stealing this one from Chris Clothier.

rents 600.. to qualify you need 3X  that's 1,800 a month.. that leaves 1,200 for the rest of your bills.

so they are living week to week on little upset and your not getting your rent.

now take 1,200 rent  3X is 3,600  now they have 2,400 to live on for the month.. we all eat the same food pay basically the same in UTLS.. and gas is gas etc etc. who do you think long term will be more stable.

Francis Dayamba · Answer

@Marty Joyner If you are considering Turn Key in this area, I would highly recommend Billwood Properties. They are out of Hagerstown,MD. About an 1.5 hour drive away from DC. On a house worth 100k, they are collecting around $1,700/month in rent. They rehab the property prior to selling it to you so maintenance fees will be low in the first years of you having the property. I know the owner and he is an honest and ethical man. Let me know if you would like more details.

Tom Ott · Answer

Where are they even finding these homes? If the own them and remodeled them (like a true turnkey provider) they should be aware of anything like that. If they are just acting as agents and finding you homes they think are "turnkey" then I would recommend walking away now. If you a re really going Turnkey, make sure it is an actual provider who really does this. Sometimes agents just say they are a provider because they find you homes that the THINK need little work.

Don't be fooled b people using the term Turnkey and not knowing what it means.

Phillip Dwyer · Answer

@Jay Hinrichs  We typically get a premium for houses with pools.  Sometimes this premium doesn't offset the costs, but many times it does.

Ian Ippolito · Answer

@Marty Joyner,  you have to have a lot of faith in a turn key provider and it has to be well-placed to succeed (because there are lots of ways they can take advantage of you that you may not discover until it's way too late).

If they are treating you this way when  they are expected to be on their best behavior and you can detect problems the most easily, what will they be doing later on when it's more difficult for you to determine if they are doing the right thing or not?  Personally, I would look elsewhere.

Tom Ott · Answer

If you are looking into crowdfunding, might I suggest Brelion. We have used them in the past and they are great!

Jay Hinrichs · Answer

Don't blame you rental game is not for everyone.... and their is nothing wrong with a balanced portfolio.. some of the crowd funders are doing a very nice job.. some have stumbled badly so be careful there.

Hooking up with a really good HML in your immediate area can bring you some nice returns.. there is no leverage but the returns are good and you can drive by and look at your collateral and make sure your comfortable..

Should I be concerned?? First 2 Property Reccos from TurnKey

Most Popular Reply