Turnkey Real Estate Educational Forum Q&A

[Todd Crippen]

One of the most rewarding aspects of my job is speaking with investors about how to generate rental income from a tangible asset without requiring active involvement.

A lot of people are familiar with the turnkey process, but it is a new concept for a lot of investors just starting out. I want to invite BP users to ask questions about the turnkey strategy, and what the most important factors are when choosing the right company to partner with. What are the main questions people have when deciding to invest with a turnkey company? What is are the biggest concerns? 

What are the most important factors investors consider before choosing the right turnkey market? Kansas City, Indianapolis, Memphis, Jacksonville, Dallas. How do you choose? Please ask me any questions.

[Jeff Schechter]

Hey @Mike H. when you end a comment with the words "getting hosed," it's hard for me not to chime in.  I'm going to side with @Todd Crippen on this one.  He makes some excellent points.  We operate a TK in Indy, and got there by doing a few things right...

1. We definitely DON'T charge more for our our properties. In fact, with our economies of scale, having our own construction team, etc, we are able to bring great properties to market more economically.

2. We give a warranty on our properties, and have them inspected by a licensed 3rd party inspector. All work is done to high standards. The investor is walking into a solid property from day one. In the great majority of cases, these are in better condition than if the investor had done the BRRRR themselves, and tried to do things through wholesalers, contractors, etc.

3. We have our own amazing Property Management division, that charges LESS for repairs and ongoing maintenance than outside PM's...again because we own our own construction company. This has the largest effect on long-term ROI, but is the least talked about aspect of Turnkey and it's advantages.

4. Because we do nice rehabs, we get better renters, and we get the properties leased BEFORE selling them to investors.  So, our customers are walking into highly cash-flowing properties from DAY ONE.  

5.  The only difference between us and most TK's is that we ARE in the lesser priced neighborhoods, as we can always get double-digit returns, after all expenses.  Mostly, that's due to knowing how to manage that tenant base, and giving them a better place to live than anyone else in that property class.  

6.  We always buy NEXT TO areas of great gentrification, and (although we don't promise this to investors), we are seeing some great appreciation.

7.  There is such little "meat on the bone" at these price points, that all arguments of forced equity are meaningless.  I do agree that an investor MAY get some forced equity on the more expensive (over $100K) properties, but that still leaves them working with and finding just the right wholesalers, contractors, PM's, etc, and they'll have to do EVERYTHING right to get that equity.

8.  We show ALL expenses on our pro-formas, and NO future projections that include appreciation or increased rents.  It is simply how the property is performing in the real world, RIGHT NOW.  We do NOTHING to make sure our returns look "better on paper."  In fact, we often downplay performance to manage investors future expectations.  As a result, we get a ton of repeat business.

FYI, we are not gurus... we are investors.  We got very bloody for a few years figuring this out, and now our customers can leverage off of that real-world knowledge.  This knowledge is across HUNDREDS of properties, not 2-3.  

Sorry for the rant, but it does get old seeing/hearing the same old stereotypes of TK's.  I do understand that there are some crappy providers in this space, but that does not mean that the entire industry is bad.  In this age of transparency and social media, the only way for a TK to be successful, is to have the systems in place to attract and keep good investors.