Specialist · CHICAGO · Member since 2015 · 680 posts · 650 votes
Hey BP,
I was wondering if there was a market of people looking to buy turnkey properties or a small or large portfolio of them? For you turnkey purchasers, I was hoping you could tell me more about your buying strategies are, ex. What CoC you look for, price range, rental range, or any other numbers you have earmarked for your investment system.
I've purchased 1 turn key property here in Davenport. I also have two properties that I self manage. For me, a local turn key company that offers a complete rehab makes sense for me. I work 60 + hours a week, so I will not be doing the rehab myself. However, since it is local, I can be very choosey with the areas I invest in and can monitor the rehab closely.
The group I have been using offers two options. 1) Truly turnkey with tenant already in place. 2) They will wholesale an investor the property, handle the rehab and then place and tenant and manage the property.
The benefit of the first model is there is immediate cash flow and conventional financing (20-25% down). However, you should expect to pay retail. With the second model, it will be 3-4 months until a tenant is placed, but you buy at a discount (all cash). With my last property there was $10,000 in equity (just finished the refi yesterday) after the renovations.
I think there is a market for turnkey properties in this area. However, due to the age of the majority of homes in the area, they rehab has to be on point.
I've purchased 1 turn key property here in Davenport. I also have two properties that I self manage. For me, a local turn key company that offers a complete rehab makes sense for me. I work 60 + hours a week, so I will not be doing the rehab myself. However, since it is local, I can be very choosey with the areas I invest in and can monitor the rehab closely.
The group I have been using offers two options. 1) Truly turnkey with tenant already in place. 2) They will wholesale an investor the property, handle the rehab and then place and tenant and manage the property.
The benefit of the first model is there is immediate cash flow and conventional financing (20-25% down). However, you should expect to pay retail. With the second model, it will be 3-4 months until a tenant is placed, but you buy at a discount (all cash). With my last property there was $10,000 in equity (just finished the refi yesterday) after the renovations.
I think there is a market for turnkey properties in this area. However, due to the age of the majority of homes in the area, they rehab has to be on point.
I am looking for a 12% minimum CoC return. I am typically more conservative with my estimates for vacancy, maintenance, etc. then what the turnkey operators advertise. Most of the properties that are truly turnkey do not meet that 12% minimum using my numbers. Therefore, the ground up model, with the built in equity is what makes the most sense for me.
Since I am just getting started with real estate I figure it is always better to be conservative and set too much aside at the start. Once I build up a hefty cushion, I will lower those numbers a bit and have a higher cash flow.