Long-term Turnkey investment numbers

[Andrey Y.]

Happy 4th everyone!

Given the extremely varied opinions about investing in Turnkey properties on this forum - specifically, on whether they are actually profitable long term. I kindly request if you have owned your Turnkey properties for 8-10 years or more, please post actual (annual cash on cash return, pre-tax cash flow, and IRR) data. I think this would serve both the data junkies out there as well those of us a bit skeptical or at least curious if Turnkey properties are a viable long-term investment.

[Jay Hinrichs]

@Diane G.  I first started financing turn key operators in 2002... so I am probably the oldest on BP in that regard or have the most time at it... MI came a few years later.

virtually all the turnkey companies went out of business in 08 to 2010 or had to reorg.

You ask WHY.. well I can tell U why since you asked.

1. turnkey in the day was the BRRR strategy... I know those on BP think it was invented here in the last 3 to 5 years but not so.

2. I was the BRRR.. I was the HML loaning to the CA. investor to buy the mid west rental.. then they would get a rate and term refi and cash me out. BRRR

3. in those days and I started in all Places Detroit.... buyer would buy 4 homes at once usually get about 5 to 8k CASH BACK at close.. so I would get cashed out and the investor would get 20 to 30k cash deferred in their jeans.. plus in those days. 100 a month cash flow was the goal..

4. Why 100 a month because they got all this cash at close..

5. 08 hit and I was basically put out of business I could not make loans because no one could refi and I ended up owning over 200 homes scattered throughout the mid west.. IE west coast investors walked on my HML leaving me holding the assets.

6. Those companies that reorged did so by targeting SIDRA  ( need to sell for cash only) and foreigners.. TK companies started going to AU and other countries with their cash buyers and making big presentations there.. Kathy Fehtke and many others.

Now that lending has come back in you have many that jumped into the fray in the last 10 years.. and you have the turnkey marketing companies.. which many are on BP... who market these for the local guys..

I think @Andrey Y. would need to talk to Local investors who have portfolios to see how they have done then you can back out management if they self manage.. Remember most folks only hold real estate 5 to 7 years .. and turnkey is no different lives change .. markets go up and down.. people realize they don't like landlording and exit all sorts of reasons.. I know many local investors in many of the turn key cities who live on their rentals and lived through the tough times and continue to grow their portfolios... but they are DIY all in house.