Out of state success with turnkey companies

Grandville, MI · Member since 2015 · 79 posts · 17 votes

Who's having a lot of success investing out of state with turnkey companies? Where are you located? How many properties do you have? Any downright failures? Seems like most on BP are the do it yourself type and I would totally do the same if my local market wasn't so crazy!!!

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Larry Fried

Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes

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@Account Closed I know there are plenty of TK horror stories out there, and mostly they seem to have to do with buying low cost properties $30-$50k in undesireable neighborhoods or having poor property management. Sometimes both. I believe that buying right and having very solid property management in place is key to having a successful TK investment.

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Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
11y
@Account Closed
Hi and welcome to BP! I am an investor who lives in the West also, with local markets not really really accessible to my investments. So, all my REI are out of state turnkey investments. Its going well so far.
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
11y
@Account Closed
I think you should only be looking for people who have purchased from a TK company and have owned the home a minimum of 12-18 months to truly gauge how things are going. Its easy to have a good experience especially when you have some companies who are offering up every guarantee under the sun, maybe any TK company who is offering guarantees should be excluded from this one.
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Larry Fried
Investor/RE Broker · Eugene, OR · Member since 2014 · 3k+ posts · 968 votes
11y
@Account Closed I know there are plenty of TK horror stories out there, and mostly they seem to have to do with buying low cost properties $30-$50k in undesireable neighborhoods or having poor property management. Sometimes both. I believe that buying right and having very solid property management in place is key to having a successful TK investment.
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Ali Boone
Real Estate Coach · Venice Beach, CA · Member since 2012 · 6k+ posts · 3k+ votes
11y
Hey Peter! My properties are out-of-states bought through turnkey providers. I'm currently in LA. The only downright failure I had was with some PMs, but those PMs were with earlier turnkey companies who bottomed out. Back in the day when everyone and their mom was starting a turnkey company. There's been a lot of improvement in the field since and there are some really good ones. The only failure on my part was not changing out the PM sooner, but since I did all my properties are doing great! None of that was a turnkey-specific problem though.
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Mark Shaffar
Real Estate Agent · Madison, WI · Member since 2015 · 328 posts · 88 votes
11y
@Curt Davis could you elaborate on the problem with guarantees?
@Ali BooneI'm with you, some are great. If they are true to their numbers, you are happy with their numbers, and have a low drama experience on the property management side- then it doesn't matter if the house is down the block or across the country.
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Richard Dunlop
Investor · Detroit, MI · Member since 2014 · 755 posts · 462 votes
11y
Originally posted by @Mark Shaffar:
@Curt Davis could you elaborate on the problem with guarantees?
I've seen some that guaranteed rent payments for a year and then didn't even try to put a tenant in the property just left it vacant.
It was easier to pay the investor the promised $850 a month than it was to admit the real market rate was $525
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Account Closed there are plenty of opportunities in CA OR NV AZ...
As well as many other areas of the country.. anyone who says there is no cash flow in blah blah area is just pitching their product LOL !!.
Curt has some good points... talk to someone who has owned one of these for 24 months. and rental guarantee's ( have led many a company down the tube financially) I personally know of 3.. that went under trying to guarantee rents and actually honored the guarantee's..others like Richard Mentioned are out their and they are to be avoided as well... shop to you drop... talk to the horses mouth and choose the high end of the spectrum reality is very few rentals no matter were they are at do much better than 8 to 9% caps.. and you can get that close to home you may want to start there first. then work your way out to other areas.. Also don't fall for the Appreciaiton does not matter.. appreciation is the key to wealth if your only going to buy a handful of rentals. if your going to go into the business of running rentals like Brie Schmidt then appreciation is secondary.. but those that do well with cash flow own LOTS OF THEM.. not just a few. In my mind unless you can buy many I would stick to areas that you could count on some appreciation to create some wealth for you.
Lastly for what ever reason when anyone mentions turn key you get the same group of BP posters that are sales people with their exact same verbiage, you got that above.. nothing to add to the thread other than their subliminal posts... LOL.. its a joke really
Like I said at east Curt tells it like it is.. I have never done any business with Curt but I like the honesty.. and Clothier will tell it like it is as well
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Clay Manship
Indianapolis, IN · Member since 2013 · 549 posts · 310 votes
11y
Out of sheer curiosity:
Those who invest cash in out of state turnkey opportunities--who is lending you the money to do it? Or are they all cash deals? If you are not using a traditional Fannie/Freddie loan, I would like to hear about it...
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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
11y
@Mark Shaffar
When a company has to offer all the guarantees in the world, to me and many others is creates an image that they have to in order to make them a semi-decent investment. Its usually companies who sell low quality home thus attracting low quality tenants.
Free tenant placement, guaranteed rent, no mgnt fee, no repairs all for 12-36 months is usually the gimmick that is being offered. If your product was good to begin with you would not have to offer all this up and most people advertising this are small companies trying to build a name for themselves so I cant blame them for that, maybe if they focused on better quality homes in better areas they wouldnt have to do this.
Curt Davis - KAIZEN Realty538 Reviews
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Curt Davis Curt not to disagree with you but some very large companies (HIGH VOLUME PLAYERS) did rental guarantee's I bought paper from 2 of them and one is in massive trouble.. and the other is just hanging in there... I am fine because of my position in my notes... but the buyers are not happy and the TK companies are struggling or going under.
Most of the vendors I have done business with over the years. may not guarantee rents or repairs but if something pops up in the first 6 months they just take care of it.. usually by going back on the rehabber.. and if you get one of those 6 months tenants then they will replace for no placement fee.. that sort of thing.. But those that sell on full blown 24 month or what have you guarantee's have had problems as I stated. The one in massive fraud trouble was doing very low end INDY... and KC... the other was Atlanta and other areas and much higher end.. but even higher end you simply cannot guarantee rent there is not guarantees in the rental business. the only guarantee that there is is that no two properties will perform the same..
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JLH Capital Partners51 Review
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
11y
I don't see this so much as a question of investing out of state as it is the turn key company you work with. There's some very good one's and some very bad one's so the key is working with the right people. With the right property in the right area and the right management, it doesn't matter where it happens to be located. When looking at turn key companies, look at how many markets they operate in. It's very difficult to expertise in a half dozen or more markets which some turn key companies operate in. Without being able to provide expertise and knowledge at the neighborhood level, their not really providing much service.
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Mark Shaffar
Real Estate Agent · Madison, WI · Member since 2015 · 328 posts · 88 votes
11y
@Curt Davisand @Richard Dunlop
thanks I guess I haven't bought from those kinds of companies so I didn't know. I like what Curt said about if the numbers were good to begin with then guarantees wouldn't be needed. Sounds like a line from Tommy Boy about a guaranteed box of crap:)
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