Large portfolio through turnkey provider?

Question

Hi everyone, still doing my research on how I want to jump in to REI. I'm curious how feasible it is to have a large portfolio (50+ units, mostly SFH) under a turnkey provider? Does anyone on here have experience with building a sizable portfolio, either under a single turnkey provider or multiple? Has anyone been able to do this with REI Nation specifically?

I'd love to hear about how people were able to scale over time, and how the TK provider was able to assist with that. I'd love to here any experiences or advice! Thanks!

Cameron Braig · Answer

@Keaton Reiners

Congratulations on getting started and welcome to the forum.

It would depend on your goals and what matters to you, but multifamily can also be a way to scale quickly and at times more efficiently. Closing one deal over multiple deals in a competitive environment can provide some advantages.

Best of luck and congrats again.

Michael Ablan · Answer

@Keaton Reiners -  I have no experience doing this, but I'm considering being a turn-key provider.  The reason I'm holding back is because a high quality property manager needs to have high quality maintenance and construction on call .  Without it, your units will sit vacant (awaiting rehab), or your tenants maintenance requests will sit untouched (which turns into more damage or turnover).

I'd recommend going with a highly rated company, and going slow.  Buy 1 asset and see how they do.   If they do a good job after 3-6 months, then buy another and wait.

Just remember, good companies become bad companies when they don't know how to scale effectively.   When someone is actually great, then word gets out.  When word gets out, business comes in.   More business can crush systems and burn out good people.   It's incredibly difficult to scale.

Keaton Reiners · Answer

Chris, thank you for this reply! For the clients who have a more modest portfolio size, such as 5-10 SFH, will all of the homes typically be managed under REI Nation as well? I guess I'm asking how "hands-off" the investor might be when dealing with a portfolio that size under REI Nation.

Thanks again

Chris Clothier · Answer

@James Wise is right, the bigger obstacle is not whether or not we could, but can an investor actually pull off this size of a portfolio. With us, that size portfolio is going to be more in the $10M range and many investors I speak too would rather do some diversification into other investments before they hit that number.  Including holding debt on short-term lending, syndications in larger projects or outright owning small multi-family or storage.  On my side, 5 houses is typically going to be close to a $1M portfolio and we have 400+ investors who have eclipsed that number.  However, there are a few investors here on BP that are methodically buying and growing their portfolios much bigger and I'm sure they would share their strategy. The reality is, it take a long-term mentality (it could take several years) and a very focused buying box.  At some point in our process, we'd be happy to connect you with investors who have over 25 properties with us and you can see if their process fits a need for you.

The bottom line is, depending on your ability, yes it is possible ad feasible to build a sizable portfolio with one TK provider and even diversify that portfolio across several cities.

James Wise · Answer

We've had a several clients over the years build large portfolio's in the 25-50 unit range. It's not really a question about feasibility from the provider's standpoint though.

The thing that limits more investors from doing this is their budget. Even in the cheapest markets where we operate a portfolio of that size is going to run an investor somewhere in the $1M to $4M range.