Is Turn Key a Good Idea?

[Ben Leybovich]

If I could have a dollar for every time this question was asked...

To be frank, I had always answered - No. However, upon closer examination the answer is - it depends. Depends on where, how, and with whom...

[Chris Clothier]

Originally posted by @Ben Leybovich:

No - 80'es refers to 1980+. 80es wiring / plumbing / foundation, etc.

A Class means 7 year old construction. No such thing as TK A class :)

B Class in Memphis is going to cost $120,000+. 1980 +. Sure - this is the space where Memphis Invest, if I understand correctly, @Chris Clothier, operates. And this is why they are able to achieve stable returns.

Is that the size of it, Chris?

 Not entirely.  First, there is such a thing as Class A Turnkey properties.  We have built close to 40 properties in  in-fill neighborhoods from the ground up and investors have purchased those properties for the purpose of long-term buy & hold.  They are absolutely A Class properties in great neighborhoods and our price points on those are between $160,000 and $189,000.  We've even begun working more and more opportunities in Germantown, which is absolutely A Class. There is a lot of demand from renters in these price points.

As for the properties you described as B Class, I would say that both Alex (as the owner of his company) and my family (as owners of ours) as well as at least one other vendor in Memphis all migrated up the chain to find better properties in better areas of town.  Do they all fit your definition, probably not, but a large majority - by a wide margin -  of what we sell in Memphis does.  Dallas and Houston are almost 100% your definition of B and up.  

I am going to agree with @Alex Craig that you are spot on with your criticism of Turnkey as it applies to those companies that use it simply as a marketing term to attract eyeballs to their subpar properties, management and operations.  There are a ton of choices for buyers today and much of what is marketed as Turnkey can be described as high-risk crap.  Here in Memphis there is crap marketed everyday that fits the warning label of your articles.  And to Alex's point, it is not just the house that is crap, but the company or operator themselves.  They have no way of being able to deliver a consistent experience for the investor.  They don;t have the business experience, acumen or team so the investor loses quite often.

Lastly Ben, the biggest risk for a buyer today wanting to purchase Turnkey is that there is no definition.  It has become a buzzword with no meaning.  Buyers have to be so cautious and really do their due diligence because it is difficult to tell companies apart from their marketing.  Today more and more companies are simply copying the marketing of companies who are bigger or more established and the buyer has no idea of what distinguishes the good from the bad.  Buyers Just have to be super cautious if they are going to purchase Turnkey.