Turnkey Real Estate Investment Providers

[Brian Bradley]

I came across an interesting situation. It regards companies that offer turnkey solutions for investors. That is, investment properties that are already rehabbed, tenant-occupied, have property management in place, and producing cash flow. Sounds great right. But do they exist?

The reason of this is that I started to go down this path as a means to move on to other more affordable markets then where I live, but had zero connections in the area, and a partner with no investing experience, but who lived in the area I was going to invest in. Hence, the turnkey appeal.

I stumbled upon an turnkey company, conversation as going well, all until I started exercising regular prudent business judgment and started to vet the turnkey owner and what he was saying and asking if I can verify his numbers and talk to his property manager, as well as asked for prior customer reviews of clients who liked him, and preferable one who he had a problem with and how it was resolved.

Once I started doing my due diligence on him and his products and services his tone changed and turned to sleazy push back telling me how he does not need me or my money, does not need me in his portfolio, how he can pick up the phone and in one phone call sell any of his properties to his clients, and that he demanded my trust and no longer has to work for trust, that it should be given to him now automatically. No joke. This really was told to me. Probably big ego little ___.

Anyways, there are great articles written on BP about turnkey properties and how to do your due diligence and vet and verify all operation and all the numbers you are given. Do not take anything said to you at face value. If you get push back your spider sense should be going crazy and just walk away.

When working with turnkey operations. Still use your contingencies (Finance, Inspection). The property must appraise for the market value stated. Get Title insurance. Get your own review of the closing documents, DO NOT use their people. Get an agent or Attorney to review your closing documents.

Do your due diligence. Contact a real estate agent to run comps on the property and rental rates. Talk to property managers and get their rates and services, and compare their rental rates for that property with that of what you are being told and to your agent. NEVER take the turnkey providers work on rental income. Run your own numbers. Verify expenses, DO NOT rely on estimates. Look up taxes, get an actual insurance quote from insurance company, confirm with property managers their fees and services, and not just one. Conform if any HOA fees exist. Do not just blindly agree to use the property manager that comes wit the turnkey provider. Interview their property manager like anyone else. If they refuse to let you interview them like it happened to me, then walk away. Verify tenant status before purchasing and the lease terms. Ask for proof of renovations. Ask for outside references of investors who have worked with the turnkey provider and ask for records of seller success.

If your turnkey provider has any problem with this vetting and or pushes back on this because you are doing your due diligence and exercising good business decisions, then DO NOT go into business with them.

Good turnkey providers do exist. Just vet them.