Any one owns a turn-key real estate (kris krohn)?

[Andrew Bailey]

hi, Recently, I found about a turn-key company owned by Kris Krohn and I talked to them on phone. Anyways, I want to know if this a good deal or not. Worse case, I lose thousands of dollars 

Their main selling part was that they can take my $60k investment and turn it into 20 houses in next 15 years which will generate $400 cash-flow per house. These houses are single family houses and location is Tennessee, Floridia and Texas. Also they don't keep houses for long terms, which means they sell and re-buy houses every 5 years to lower the high cost of maintenance, such as the roof.

Draw back of this turn-key company is that all of the houses will be 50/50 partnership. So on each house, they will receive $400 cash-flow and I will receive $400 cash-flow. House ownership also will be 50/50.

Total investment they are asking is for $60k

• $10k will go into up front fee
• $25k will go into down payment for house# 1
• $25k will go into down payment for house # 2

both houses will have the following:

• Houses purchase price is around $140k
• 25% equity position
• 23% ROI (might be gross roi)
• 7% to 10% cash-on-cash ROI
• $400 per month cash-flow (after all expenses such as mortgage, insurance, property management etc...)
• closing cost will be in mortgage

Their 15 year plan will follow: (rough idea)
Year#1

• Pay $10k up front fee
• buy 2 houses with $50k down payment
• cash flow $800
  

Year#3

• buy 2 more houses with refinancing
• cash flow $1,600

Year#5

• Sell 4 houses and buy 5 more houses
• Cash flow $2,000

Year#7

• 7 houses
• cash flow $2,800

Year#9

• 11 houses
• Cash flow $4,400
  

Year#10

• sell 11 old houses and buy 12 new houses
• cash-flow $4,800

Year#12

• 15 houses
• cash flow $6,000

Year#14

• 18 houses
• cash flow $7,200
  

Year#15

• sell all houses and buy 20 houses
• cash flow $8,000

[Chris Clothier]

Originally posted by @Andrew Bailey:

@Wayne Brooks @David Janosik

Thank you for ur advise. I agree, giving up 50% of the equity on house is bad deal so I talked to them on phone. They said that first 2 houses will be owned by me 100%. anything after will be 50/50.

for basically for $60k they will buy 2 houses and put it under my name 100%.

I am thinking to just get 2 houses with them. after 3 years, I can sell those houses and buy more houses locally. It's hard to find deals for me update NY bc of high taxes and its my first time. I guess it mainly comes downs to if I want to pay $10k up front fee

They said cash-flow is pretty good rough idea and some times its even more. I just ran some numbers using zillow cal... lets say 

Houses purchase value = $140k

Down payment = $28,000

• Mortgage = $788 (P&I = $601, Taxes = $136, Insurance = $50)
• Repairs $100, Vacancy = $100, PM = $200
• Total expenses = $1,188

Rent $1,600

Cash-flow = $412

RE-read the sentence where you wrote that you give them $60k and they will buy two houses and put them in your name 100%.

Then read it again and understand that this is not the way you buy real estate....EVER!  

I have no idea who this person or company is, but I can tell you from 16 years of experience in the Turnkey space and seeing all the scammers come and go, there is a 0% chance that the program you laid out in your original post will work.  Zero chance.  

You cannot build a 20 house portfolio in the next 15 years for a one time charge today of $60k.  You are guaranteed to lose your money.