First Time Turnkey Provider Investor w/Concerns

[Matt Scott]

Hi all,  New investor, have spent a few mos doing my research. There's a few concerns regarding Turnkey Providers (+ any investing in the common markets) that I have.  This might be slightly rambling and maybe i'm cynical, but tell me if i'm crazy:

1. With many investors investing in the same high cash flow markets (indy, memphis, dallas, jax, etc) if there is a downturn, there's super limited exit options without getting crushed.  I mean how many memphis low-middle income houses are owned by this board alone?  if you have a need to exit, could be tough

2. So many "average" people are investing in real estate and especially through TKP.  Always concerned when an investment becomes so mainstream

3. If it's possible even earn consistently 7-10% on a TK house, why aren't the providers just keeping them? I realize they are making money on the mgmt fees, potentially marking up the house, but why not just own and continue to operate themselves and maximize their value? 

4. Troubled by the salesman angle of every thing - i've listened to a bunch of podcasts and they're very informative, but I'm skeptical of an investment that's being mass marketed and sold to newbie/naive investors.  Like the get rich by investing mindset and conferences, feels slightly snake oil salesman to me again with so many middle/upper middle class americans jumping all in on these investments 

[James Wise]

Originally posted by @Matt Scott:

awesome comments everybody, i appreciate the guidance. 

 following up on this comment, "You can also buy at a higher price point but at a lower monthly cash flow to widen your pool of buyers if you need to sell."

what's your perspective on balancing appreciation with income?

I'd rather have a prospect of appreciation and feel like these more typical turn key markets (outside of Dallas) haven't had much appreciation.   Tying it into the potential exit strategy, i'm hesitant to go into a market with almost no appreciation as that shows to me there's enough supply on the market.    I don't necessarily need the income now so would rather have the chance of a sig. appreciation but do recognize the benefit of a model like this is the cash flow

 The real money is made by principal pay-down. $50-$100 per month per property is an irrelevant amount of money if you really look at it. Think big picture. What the big picture really is (the majority of folks on Bigger Pockets miss this point day in and day out) the PRINCIPAL PAYDOWN. 

You have the ability to quadruple your money while doing ZERO work. That's the real name of the game. Spend $1M funding the down payments of 10 houses & then have those tenants pay them all off for you. When you are all done and ready to retire you've turned your $1M into $4M without any appreciation. Ad in the appreciation & any possible cash flow it's a damn good gig.