Advice regarding turnkey or BRRR for a foreign investor

[James York]

Hi all!

As the topic title suggests, I'm a prospective foreign investor, meaning I don't own any properties yet, but I'm eager to change that! I'm a UK citizen, but live in Japan, so either way it will be long distance REI.

I don't want this to be a turnkey vs BRRRR thread, but I have questions about the pros and cons of both... thanks in advance.

— Turnkey —

I have a decent (for me at least) amount of cash saved up, and looking at turnkey investment opportunities in Memphis (thanks to a recommendation from a friend). I will be able to afford a 40% down payment on a reasonably priced house (<100k). But it’s going to be difficult to do that once a year...

— Question —

Would it be wise to partner up with a US citizen from the get go?

That way I'd be paying loan tax and would need less of a down payment. I realise this means I'd have to use an LLC who would surely take a cut though...

— BRRRR —

I know less about how this would work as a foreign investor. I presume I’d be working with agents, renovators and the rest all whilst not being in the country myself. Seems like a lot of hassle, but perhaps more profitable? (Long Distance Real Estate Investing is on my read list!). I’ve been recommended a view areas, one being Alabama.

— Questions —

Has anyone done BRRRR whilst not being in the country? How did it go? What kind of companies exist for helping with this?

[Ali Boone]

You have a few questions going here, so I'll just respond to them and add my own thoughts in no particular order:

• If you BRRRR from that far away, you would need to SERIOUSLY have a team you trust. You'd have next to no way of monitoring what was going on (or not going on) and all of your money would be at risk. If you have someone that trustworthy, cool, but doesn't sound like you do.
• Turnkey is fine if you work with a good provider. That's pretty straightforward.
• Not sure partnering would do you a lot of good, and it would cost you a lot of your returns. Are you meaning to potentially partner so you can get a traditional US mortgage? Or for some other reason?
• If you're international, you need to first get the property US entity in place and then a US bank account. Those both need to be there prior to purchasing anything or you could end up in some tax messes.
• Have you heard of the BRRRR+turnkey model? The turnkey provider does all the same work they normally do but they use your money instead of their's, so you get the added benefits that BRRRR offer. You'd want to make sure you only work, again, with a seriously trustworthy group. Since it's your money on the line and not theirs.
• You said you have 40% of less than a $100k house. How much do you have exactly? BRRRRing can cost more upfront with the rehab being paid cash, etc.