New TurnKey Investor Requires HELP!!!

[Sunil Chauhan]

Hello to all BP members,

I am a UK citizen and have loved the US from a very long time. I am looking to purchase a number of properties in the near and foreseeable future and would like some honest advice. 

I've seen properties that are available for $20,000 to £70,000 with cap rates between 9% - 14% after i have done my calculations and the returns are good based on the cash spent on the property. What i am looking to do is seek advice from fellow investors to see if $30,000 turnkey properties are good/great investments and what i should be aware of.

PS i am looking to retire in the USA because that is where my heart belongs.

Regards,

Sunny

[Chris Clothier]

Originally posted by @Sunil Chauhan:

Hello to all BP members,

I am a UK citizen and have loved the US from a very long time. I am looking to purchase a number of properties in the near and foreseeable future and would like some honest advice. 

I've seen properties that are available for $20,000 to £70,000 with cap rates between 9% - 14% after i have done my calculations and the returns are good based on the cash spent on the property. What i am looking to do is seek advice from fellow investors to see if $30,000 turnkey properties are good/great investments and what i should be aware of.

PS i am looking to retire in the USA because that is where my heart belongs.

Regards,

Sunny

 Sunny,

The short answer is no - $30,000 Turnkey properties are NEVER a good investment.  Regardless of what anyone tells you, whatever they are selling and whomever they offer to let you talk to, a $30,000 property purchased turnkey is NEVER a good investment.  The economics do not work as there is not enough of a spread for a company to purchase a property, do a proper renovation and make a profit.  A company is going to be skimping somewhere and they will not usually skimp on their own profit.  That means they skimp on doing a proper repair or are buying a property so cheap that no one else wants it.  If they skimp on the repairs then you are left with a crap property that will never, ever perform at the level that you are expecting.

If they skimp on their own profit, then they will not be around long enough to help you out when the property goes south.  They will not be able to hire a staff to help with the business and at some point they fold up shop and leave the business.

There simply is not enough revenue to provide the service that any out of area investor should expect when buying passive investments.  The word turnkey doesn't matter.  There will never be enough revenue there to properly feed everyone....and the investor always loses when that happens.

@Ben Leybovich, that about covers it doesn't it?