Littleton, CO · Member since 2015 · 59 posts · 14 votes
For those that have purchased a turnkey property out of state, can you break down the numbers (purchase price, rent price, what you are factoring for vacancy, etc)? Were they what the site you bought it from promised? I'd just like to take a look at how they look compared to what you assumed.
I bought two units in 2012. Purchase price was $121000 for new build, in the Dallas/Ft Worth area. I use 6% vacancy, even though I've only been down one month. Because it was new, we had a problem with a dead tree that the HOA mailed me about, but the house was under builder's warranty and they replaced the tree. No other problems. I still have not been inside the units, but finally did a drive-by in 2015. The property management company charges 6% (rather than the more common 10%) but they take a month (if I remember) for new placement of tenants. All has been smooth with the deal. Rents went from $1200 to $1375 since I bought, while the PITI is still in the $880 range.
On an aside, I recently went on a Jason Hartman property tour in the Orlando-adjacent area. These were older homes, but the system for rehab covered the big stuff. PM me if you have more questions. The rehabber replaced the roof and all water-related items first thing...the part of a house that are apt to need attention. So new hot water heater, new taps, new hose bib. Kitchens might be painted if in good condition, or replaced. Flooring was new, paint was new. Carpet looked great, the linoleum was the thin variety, and I'd choose thicker on my rehabs. But not a deal killer, by any stretch. The numbers looked quite good for these, too. The website for this particular operator has proforma numbers to take a look at. You should be able to see proforma numbers for any property you are considering.
Run your numbers high (such as that 10% vacancy, even though everyone touts 4 or 6%) and you will naturally build in the extra financial cushion that is needed. If you don't have a vacancy, all the better, but count it. Also, call around at property mangers for their fees and what the owner would typically pay in your area. Areas have different things that are "normal" or "typical" and you can't know off the cuff, so call. Call on insurance. Call or check the county recorder for property taxes.