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Updated over 8 years ago, 05/05/2016

User Stats

17
Posts
7
Votes
RI N.
  • Investor
  • New York City, NY
7
Votes |
17
Posts

Turnkey investment value

RI N.
  • Investor
  • New York City, NY
Posted

I've read many pros and cons of turnkey esp for out of state or country. In summary, the pros is for maximizing the "passive" portion of rei vs the cons of paying more to do it all yourself (cash or diff to access financing for purch distressed property, rehab, holding costs, and lack of doing this all efficiently etc). I think it all could be a fair trade off. However, I also think it's a fair ask to get a good price at or below MLS prices (assuming in good shape, not talking about foreclosure/shorts). I am not counting the turnkey's company money- I can care less their profit margin! But I should be able to turn around and resell my property on the open market for at least my purchase price- otherwise I am overpaying! I look at these turnkey companies- norada, hipster, memphis invest, ohiocashflow etc (no knock of these companies- I just seen you post and looked at some of your properties- and their cash flows are attractive but the purchase amts seem higher than what I see on MLS for what appears on surface to be comparable (I use this term lightly as I am not familiar with all their areas) properties.

First question, would you expect to over pay for turnkey? Secondly, assuming you agree with me, how could we protect ourselves to be sure we are getting a fair deal and not a provider taking advantage of a naive investor? An appraisal would be one tool but what many of us know is that it's not an exact science and many appraisals come in unexpectedly significantly higher or below without rhyme or reason- it's one tool but not the sole one I like to support for/against my purchase. 

Lastly, I believe in win win. The TK people can make good profit while offering a fully TK property at or below retail. The TK providers scale allows efficient rehab (cost/time/experience) and selling to investor which is much faster (and typically repeat business) than retail transaction allows for a win win that doesn't take advantage of anyone. 

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