who makes more $ investor or Turnkey provider / Property manager

[John M.]

see a case study what happens and who makes money when you buy a investment property from turnkey provider.

Say investor bought a property of $100 k from turn key provider. Typical profit for turnkey provider 100K property is at least 20 - 30k  minimum. Generally wholesale property cost  40-50 K , 20-25K rehab. 

Now investor pay 100K -110K for this product and appraisal is most likely less or same as purchase price. So no equity from day 1.

see what else:

$3500- $4000 closing cost (typical)

$1000 first month rent for finding tenant 

10% PM fee

15% surcharge on any maintenance fee

Let's say property has $200 cash flow..you will pocket $2400 at the end of year.  I am not considering tax benefit and equity for simplicity. Similarly I am not considering vacancy and maintenance to keep it simple.

It will take more than 2 years just to recoup closing cost and tenant finding fee. Within year or max 2 years...u will have turnover ...again u will pay 1 month rent - $1000 and $2500-$3000 most conservative estimate to make house ready for rent.  This cycle goes on. 

Now see property management company cash flow:

$1000 - tenant finding fee + $1200 (10% monthly fee) + $400 (resign fee) or $1000 - tenant finding fee.

When PM company is charging 10% every month ..can someone explain why there is 15% surcharge on maintenance invoice amount.