share your turnkey experiences

[Kay Yu]

i see lots of questions about turnkeys, but very few real-life experiences. (i did find one). So, for those who did buy a turnkey, would you be willing to share your story? Specifically, what did you expect? and how have those expectations correlated with reality?

[Account Closed]

I've bought 8 properties so far in Indy, all turnkey. So here are my lessons.

1. This is NOT passive investing. Even with a property manager, its a lot of work.

2. Dont do it if all you are going to buy is one or two properties. Much like stocks or any other investment, a single unit is very high risk. But a diversified portfolio will likely give a consistent return. I have had one disaster home out of all of them with a bad inherited tenant and large damages and long vacancy. But even then, I made money on the overall portfolio that year. If it was my only home, I would have lost a ton of money.

3. You need business management skills. It is a business. You need a business plan and strategy. You need good processes for due diligence, managing your PM, accounting etc etc. And things will change. You may change PM/s. You may sell a bad performing home. You need to have good financial skills to analyze your numbers and see whats working and whats not. I do that kind of stuff all day at my day job so I am good at it. It helps a lot.

4. Focus on one or two markets and learn them. Develop the networks of people you trust in those markets. If you do out of state like I do, you need them to be ethical and efficient. I will trade some efficiency for honesty any day though because in the end, you have to trust them.

5. Don't sweat the small stuff. Whether a plumbing repair costs $50 or $100 will not make or break your ROI. Extra turnovers and vacancy will. Focus on the high value factors and optimize those as far as you can.

6. Don't put all your eggs in this basket. I wouldn't make turnkey properties more than 20% of my investment portfolio (i.e my cash in, not value). There are risks, many I don't even know about. Like any investment things can go wrong and I sleep better knowing it won't ruin my life if they do.

But overall I think I can get a solid high return over a 10 year period and so consider this a good strategy, at least for now. Money is cheap, rent ratios are decent and home prices are still low. If any of those factors change, I would stop buying more. No strategy is good at all times. You have to adjust as you go. But for now I am adding to my portfolio.