Turnkey investment opinions
Troy BaackPro Member
Member since 2023 · 13 posts · 11 votesTurnkey investment opinions
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Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
3yI do think people get too caught up in the property type and area as opposed to the math that is involved. You're right, it's gotten a lot harder in the last 18 months. Not only did interest rates make the P&I payments on a property much more expensive vs rental growth, but taxes and insurance have risen as well making a lot of properties not cash flow. Many of the investors we work with have started putting a lot more down on the properties to keep payments lower, thereby making the properties cash flow. Other's are buying properties that needs some TLC that they feel they can get at a discount to fix and rent. In your case, it doesn't sound like that's going to work for you. Keep in mind that as you sift through the haystack looking for the needle, so is 90% of the people on Bigger Pockets and everyone on every RE Facebook Group. It is hard, but every market will have their bad and good deals.
30 Replies
- 2yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
Quote from @Troy Baack:
I know this a couple of months old, but throwing out some advice based on the possibility that you haven't purchased yet.
1. Turnkey is a marketing word. I absolutely love it when it is being used by the better companies in the industry to describe a holistic approach to delivering services to an investor. When companies take the risk of purchasing and renovating a property with their own money and then offer in-house management services, they have a full picture of the property and are taking on the continued responsibility of making sure that property performs the way they expected when you purchased it.
I hate the use of the word Turnkey in just about every other scenario because it is being used to cloud the perception of the buyer. Turnkey just means easy path of entry. In the end it is meant as a passive investment that is actually semi-passive when done right by the investors.
2. I personally avoid markets that experience a true winter. Winter brings both added costs and added wear and tear to the property itself and every system. OUr company has grown across the southern belt and I have never purchased north of St. Louis which still gets too much snow and winter weather for my personal liking.
Outside of that, If there is a high quality, truly turnkey investment company located in the market that has been in business longer than 2012 - then that market makes my list. There are a few but they are all in the Southeast ( those in the North I still exclude personally).
3. The best tip I can give you is to be patient. You have to spend time getting to know who will actually be providing the properties and the after purchase services. I would make every effort to visit the company you would purchase from if possible. The biggest reason I say to meet the company and not necessarily view the house, is that you are trying to determine if what you are seeing with your eyes in person, meets with the expectations after speaking with them and starting to move forward.
If you are patient and spend time interviewing them (you can find a list of questions I suggest to ask turnkey companies here on BP), I am confident that you will avoid paralysis and find a good fit partner to work with and build your portoflio.
Best to you -
- Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes2y
@Troy Baack great questions Troy. You've gotten some really good feedback on here. Breaking even/positively cash flowing is definitely still attainable with turnkey companies that know what they are doing, even in this rate environment. Now more than ever you have to be careful and be patient, as cash flow gets more difficult unfortunately there are companies out there that will start cutting corners and that could put your investment at risk just to show paper cash flow.
Of course do your interviews on who you're looking at but I'd narrow it down to your top 2-3 options and visit them in person if possible. After meeting the team, seeing their work environment and even some of the finished products this will help you be more comfortable in your decision making.
Best of luck and happy investing!
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Troy Baack:
In much of the research I have done I have been struggling to find rental properties that are going to be able to cash flow well in this economy. I am looking at investing for the long term and am okay with getting into a property that only breaks even or only has a small cash flow. At this time I don't have the capacity to try and work on a BRRR or other rehab projects and I am looking at investing in a turnkey property. My main questions are:
- What are your opinions on turnkey properties?
- Are there any markets you would avoid?
- Do you have any helpful tips you would give to new investors?
in cash flow area, just buy turnkey. especially if you are out of state.
but if you are nearby , then you can do flip, since you know the area and the market. - Real Estate Agent · Member since 2019 · 569 posts · 257 votes2y
Quote from @Troy Baack:
In much of the research I have done I have been struggling to find rental properties that are going to be able to cash flow well in this economy. I am looking at investing for the long term and am okay with getting into a property that only breaks even or only has a small cash flow. At this time I don't have the capacity to try and work on a BRRR or other rehab projects and I am looking at investing in a turnkey property. My main questions are:
- What are your opinions on turnkey properties?
- Are there any markets you would avoid?
- Do you have any helpful tips you would give to new investors?
I would look into buying something that can be renovate in a strong appreciation market and you should be cash flowing positive after the remodel. Right now are properties are doing 7-10% cash on cash return even with the current rates doing it this way.
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