Turnkey Investing Feedback

[Michael Germano]

Hello

I am currently comparing 2 Turnkey partner RentToRetirement and REINation and I was wondering if anyone has had experience working with them both that they could share some feedback on. One seems to have properties with more cashflow but the other seems to offer better property management engagement. As a first investor I am trying to maximize my investment generating both cash flow and long term ROI with minimal property management headaches.

One of my biggest challenges is having a down payment of 20-25% with interest rates around 7% eating into cashflow. I was also hoping to leverage my HELOC and could go 30+% dwn payment but at 8.35% I am running negative cash flow numbers and just not sure if I need to prioritize cash flow now because I don't have a big capex fund to support negative cash flow or look at cash flow more now so I can build my that rainy day fund up year over year if needed for maintenance expenses.

Would love to hear everyone's thoughts.  Thanks

[Scott Lundgren]

@Michael Germano
Thank you for your interest in RTR. Both teams mentioned are highly regarded as leaders in the TK industry that have an outstanding reputation on BP & in general. However, the business model, markets, asset classes are different. REI does everything in house including property management which is important to know they take every part of the investment experience very seriously. I believe their main asset class is either rehabbed or new construction SFR in 6-8 midwest markets. RTR identifies and creates local teams in the markets we want to work in based on investment criteria, but we do not own our own in the markets. Our owner has had experience owning PM previously and helps to ensure each PM follows a strict set of guidelines to join our network. RTR mainly focuses on SFR & small MF in the midwest and SE. We also have a variety of different asset classes and investment options as well to include STRs, Syndications, larger MF, Creative Financing acquisitions, build to rent (BTR) with immediate equity, etc. Ultimately it depends on which team aligns with your goals more, or in my opinion, it's never a bad idea to invest with both.
For your point about interest rates, just keep in mind that the numbers you are running is year one analysis. Rents traditionally go up year after year, and interest rates fluctuate. Yes, it's hard to cash flow on many rentals only putting 20% down right now, but this will not always be the case. Year after year your rents should increase, improving cash flow, but you can always refinance when rates come down. I can tell you there are many people still acquiring REI right now in good markets, but they do not plan on keeping their 8% interest rate forever. They will refinance once the rates drop, but they still were able to build their net worth/financial situation by acquiring the property now to let it appreciate over time along with the tenant paying the loan down & using the significant tax benefits of investing while the rates are high, especially to offset inflation. That is why it makes sense to still buy REI in these times, is that you cannot think of things in just year one ROI/cash flow. This is a long game. Any positive cash flow is icing on the cake with all these other benefits. When there are less buyers, better deals can also be negotiated!
Hope this all helps. Feel free to reach out to the team at RTR to answer any questions you have at any point. Don't sit on the sideline. Create a plan & make it happen!
-To your success, the RTR team!