Is Turnkey Dead? ☠️

[Engelo Rumora]

G'Day folks,

I've been in this scared niche called "turnkey" since 2014.

There are many battle stories and wounds to share but we are still chipping away lol

3,000+ investor calls over the last 10 years and I feel that our beloved niche might be dead... 🤷‍♂️

It seems like investors nowadays believe they are "smarter" and want to do it all themselves.

Although I'm bias, I still believe this DIY approach to be a recipe for disaster for many.

But who am I to judge?

Many investors would rather source a property by themselves through an "investor friendly" realtor. Get the rehab work done through a "trusted contractor". And the property managed by a "preferred property manager" instead of buying a turnkey property through a trusted provider and keeping everything under the same roof.

Would love thoughts from fellow turnkey providers, lenders and investors.

Is the trend going in the DIY direction nowadays more than prior years?

It sure does feel like it on my end.

I feel like investors believe they are getting a better deal going down the DIY route, rather than purchasing turnkey.

Why has the concept of turnkey lost it's value and pizzaz?

I mean, it was a scared industry when I first started and still is so why is it dead now? 

Or is it?

Would love your thoughts and input.

Thanks 

[Paul Sverdlin]

Turnkey isn't dead. As an investor I am actually working with a couple of providers right now in Detroit. However, I do find that in general in many instances turnkey is selling at price point where all the profit is going to the turnkey providers these days.

Say the property is purchased at $100k. ARV is $160k with a $30k reno. It may seem like there is $30k equity in it. In practice the provider entered into the purchase agreement, wholesells it at $125k to the investor, renovates it for $30k+ takes $5k to oversee the renovation, and voila - the property ends up costing the investor the same $160k that it appraised at. No wonder we go for realtor-contractor-PM self-help way rather than blindly trusting a one-stop-shop to make the most for us. Leave enough meat on the bone and investors will follow. Imho.