Turnkey vs. Buy Remotely & Hire Local Property Management

[Art Maydan]

How is using a turnkey company different from just buying a property remotely then finding a local property management company and hiring them to manage it?

[Lee Smith]

Two different things:

1. Turnkey = property ready to rent, or already rented
2. Property manager = guy to take your property and rent it out or manage your existing renters..
   1. Maybe you meant a general contractor to manage rehabbing a property to get it rent ready, and then turning it over to a property manager to find and manage tenants for said rental? Sometimes you can get a GC/PM all in one.

If you mean 2.1, then the difference is that a turnkey guy may buy a house, rehab it. He may have 30k in it, but he would sell it to you for 40k... He makes money because he did the work of getting it rent ready(maybe even have a tenant in it for you)... You may be able to get a loan because the house is now livable instead of junk state where no bank wants to lend on it. Where-as if you go the 2.1 option you would have 30k in the property and have a guy getting you a tenant for it.... Best 2.1 options are when a house needs a lot of work, but are generally unlendable until after the work is complete.

There is risks involved with either strategy...
Turnkey guy could put a total loser in the rental and make it look appetizing, but you lose the tenant and they trash the place on the way out.. Turnkey guy could also do crap work, and you have to redo a bunch of it(inspection would tell you this hopefully)...

2.1 - you could get a crap GC or Property manager and they rip you off.. I see this day in and day out here in Indy... I can;t tell you how many people have been fed a bill of goods and the GC/PM take them to the cleaners...

Hopefully that helps and doesn't throw you into analysis paralysis.