Advice on Turnkey Investing

[Elaine Hester]

I just watched this great BP video: The Top 4 Reasons to Never Invest in Turnkey Real Estate ... although he has some goods points, there are situations where turnkey might make sense and I'm wondering what the BP community has to say about turnkey investing in general. 

Here in San Diego, we live in a market that is currently out of control and cash flow is just not happening. If I want to buy and hold properties, I need to be looking at equity markets out of state. Although I currently manage my own in-state properties, it only makes sense to hire a property management co to handle an out of state purchase. This is why I'm considering looking at turnkey opportunities. 

With turkey, I can fly into a market (Indianapolis for example) to personally check out properties, then any renovations needed can be handled by the turnkey co while they also take care of getting and keeping it rented. It would be nearly impossible for me to take care of all of that across the country, but this way I'm actually getting cash flow that I would otherwise not get in my own market. Is it such a bad idea? 

I would love to hear from people who have actual experience with turnkey investing and whether it' has worked or not worked for them.

Thanks in advance!! ツ

[Lee Ripma]

@Elaine Hester

Turkey means something that that is rent ready and already rehabbed. A turnkey company sells SFHs that are turnkey. I would not buy a SFH sold by a turnkey company. I would buy a turnkey apartment if I had a lot of capital. I would consider buying a turnkey home off the MLS in a good area with a lot of appreciation potential if I had a lot of capital. I mention the capital because if you're not doing value add then you're buying cash flow. There are a lot of places to buy cash flow that do not involve the headaches of RE. If you have lots of capital and you want to park it to get cash flow, okay cool. If you don't have a lot of capital you need to do value-add so you can reuse the same chunk of capital over and over.

I was in your same boat about a year ago. I bought a value-add small MF and rehabbed it. Now I have almost all my capital back and I'm looking to do it again. It was a huge project but now it cash flows well even without much capital in it. This works for me but it's not passive!