Realistic ROI paying all cash on an out-of-state turnkey

[Jason Gutierrez]

Hi everyone,

BP newbie and first post in the forums. I live in Orange County, CA and am looking to buy my first buy-and-hold rental property. I've been looking outside of Southern California as I have not been able to find many properties that cashflow well in my neck of the woods (obviously).

Here's my question:

If I am looking to purchase a rental property with all cash, what is a realistic cash-on-cash return I could expect if I purchase from and utilize the management services of an out-of-state turnkey company? From my initial research so far, it's looking like the ROI is typically around 8% if you don't include vacancy and maintenance. I'm seeing that most of the turnkey companies don't like to include vacancy and maintenance in their calculations, because they are not fixed costs. So 8% seems decent, but of course there is going to be vacancy and maintenance, so in running the numbers at even a 5% vacancy and 5% maintenance, the ROI is more like 6.5%.

Is this a pretty typically return if you purchase from a turnkey company and have them manage the property for you?

6.5% is not sounding too exciting to me at this point.

Please excuse my newbie lack of knowledge, and thank you for any thoughts you might have!