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Updated over 9 years ago, 05/05/2015
Retire-on-Rentals?
Has anyone had any dealings with this company? They are based in Charlotte, SC and rehab SFH, find tenants and sell them on together with the leases, and continue to manage them. The homes are generally in the +/- $100k price range, and rents offer a reasonable ROI. I'm guessing appreciation won't be big, but as a hassle-free toe-dipper investment, the risk seems negligible given the small amount invested. I'm sure there's lot's of downsides, but has anyone used them, or any companies offering similar services?
did you mean charlotte, north carolina?? if so, i'd love to look them up for you...100,000 is very high for rentals in my area
Bryan, yes, apologies, they are in NC and I see their physical address is in Cornelius, not Charlotte. Here's their web address http://www.retireonrentals.com/ I first contacted them 2-3 years ago, and they are still around, and haven't changed their business model, so that is a good sign.
Charles, I ran their numbers and for an all cash buy, it's better than a poke in the eye with a sharp stick, as they say. Still, I'd be interested in any views.
Joe,
Interestingly I was doing some research on the same company and ran across your post. I am looking around at some turn key companies and wanted to know if you had found anything else out about this company or any others. I could not help but think of the old adage "if it sounds too good to be true, it usually is". the deals they are putting together just seem to make too much sense and it makes me a little suspicious. if you find anything out let me know and I will do the same if you are interested.
Originally posted by Chris Torrey:
Interestingly I was doing some research on the same company and ran across your post. I am looking around at some turn key companies and wanted to know if you had found anything else out about this company or any others. I could not help but think of the old adage "if it sounds too good to be true, it usually is". the deals they are putting together just seem to make too much sense and it makes me a little suspicious. if you find anything out let me know and I will do the same if you are interested.
Chris,
What do you mean by "Makes too much sense?"
Turn-key properties are usually over-priced from my experience. They buy the distressed property, rehab it to rentable condition, mark up the price, then sell it to an investor. You could make more money if you went through the whole process yourself.
not only do the cashflow numbers not make sense in my opinion, but they're also selling the properties at or above retail...get an appraiser to check out the property you're considering from them....trust me...the property they sold on allegheny st, it looks like they were asking 75k...i bought a rental a block from that house in the same neighborhood for 19k this year, same size and style home too...does it still sound like a good deal? if you're interested in the charlotte market, PM me and i'll be glad to help and get you in touch with a good real estate agent or answer any questions you may have about the area and neighborhoods...
#3 Off Topic Contributor
- Attorney
- Viera, FL
Originally posted by John Chan:
John,
You're absolutely right that this can be done. I see you're in Cinci, a market similar to mine and I'm guessing you've put in a lot of dirt time in the field making this work, hands on. For guys like you and I and some others here, this statement is absolutely true. For some other, some of my friends included, this is not true at all. They buy some of the biggest money-pit crap properties I've ever seen. Stuff you could only rent after razing the building and rebuilding new. Some other guys (and ladies, not trying to be sexist here) just make too much cash at their other business and don't have time to put in the ground time here to make it happen. It all depends on the type of person really.
#3 Off Topic Contributor
- Attorney
- Viera, FL
Originally posted by Bryan Alenky:
They probably seller financed or lease optioned it to bloat comps. Btw, don't you mean you bought that house for 49k and are willing to part with it at 59k? 79% of FMV? :mrgreen: Oh the crap people pull in this business....lol
yes, i was thinking of saying, if you're interested in charlotte, i have propeties that are cashflowing that i'll sell you...
Seems like somebody associated with this company just joined BP:
http://www.biggerpockets.com/users/InvestCharlotte
Look at the website in his profile.
@Tim - I do see what you mean. For some people who make great income and want to make extra hands-off money, it's a good option.
I think the concept of selling turnkey properties is a great idea. The love the concept of the whole website, but from an investor's point of view, I wouldn't buy the properties because in my opinion they are overpriced.
Yes, I have been in touch with the company and they seem to run a tight ship. Are they priced a little over market? Maybe, but you need to take into account the service they are providing, and who they are targeting. This is a full turnkey operation, from rehabbing, finding tenants, and managing. If you come from California, or other expensive States, the numbers are attractive, and if all you want is passive income, it's better than bonds, and relatively risk free. There are a few companies tapping into this market due to a lack on fixed income opportunities available in securities, that many baby-boomers are dependent on. My approach has been to look for established turn key operations, and then use a buyers broker to do the leg work and advise. Sure you can buy foreclosures, and rehab yourself creating bigger margins, if you have the experience. But not recommended if you live hundreds of miles away.
I'm looking at other operations in DFW, and Las Vegas and will see how it goes, and then invest more, or disinvest according to results. SFH iro $100k with cap rates of 7-8% seems to be were it's at. Before anyone jumps on those figures, this is not about getting rich and making lots of money. It's for those who have their pile, and want an income.
For anyone interested in RetireonRentals or any other turn key operation, I strongly advise doing lot's of due diligence, jumping on a plane to visit, and using a buyers broker.
On a quick note about is it too good to be true, do your own number crunching. As is often mentioned in BP, allow for 50% for costs.
Originally posted by Steve Babiak:
http://www.biggerpockets.com/users/InvestCharlotte
Look at the website in his profile.
They have given the website (link doesn't work) but say they are a UK investor, so something not quite matching up there.
Originally posted by Charles Perkins:
I mostly agree with you Charles. The more people there are between you and the product, the less profit there is as everybody along the line takes a bite.
But as Joe said, some of these "Full Service Turn-Key Real Estate Investment Companies" come in handy for those that simply want an easy road to passive income. IOW, there are investors who just want to write one large check in exchange for several small ones. :wink:
Personally, I have the time, so I do a bit of the leg work myself for a more attractive return. However, I hope one day to have much more cash than time so I can simply hire one of these Turn-Key companies to handle all the headaches for me while I'm cruising the Med on my sailboat. :cool:
Originally posted by Joe Strickley:
I achieve a lot better returns here in California than they seem to be offering.
I have seen similar operations in a couple different cities and I am generally against them. Who do you think gets the best renters in operations like this?
1. The properties they own.
2. Their biggest clients.
3. You?
If you're paying cash, the returns aren't as hot... 8% using their proforma, 5.5% using the 50% rule.
You might as well invest in California... you could probably beat their returns if you shop right.
Now buying in the same neighborhood for 19k and getting $800/mo in rent like Bryan did, is maybe a different story.
my advice to youif you want decent returns, have cash to invest, but dn't want the headache is to do private lending...if you want the 'glory' of owning propeties, then partner up with someone in the areas you're interested and take a percentage of cash flow and equity...you'll get a much better deal, even after giving your new parter his/her split....this partner will acualy have an ownership interest in the property versus the mananges who will just make more money off of you every time there's a repair or a vacanty bc they'll ge applications,and probably half of first month's rent...there's plenty of competent people on BP who could buy the rental you need, get it rehabbed and rented for probably less than half of what you'd pay with these turn key companies
You need to understand the difference between passive and active investors. Turn key takes all the leg work out for the passive investor. They are two very different animals; both defined by their risk appetites an where they are in the life cycle.
If you looked hard enough in California you might find some properties that compete with the less pricier states, but as every investor knows CA real estate is mostly more expensive, and the returns poorer. I live in California, and we have seen precipitous price declines in places like Riverside. If you can find an established turn key operation (this is the key), offering decent returns, I'd be the first to be investing there.
Originally posted by Joe Strickley:
Originally posted by Steve Babiak:
http://www.biggerpockets.com/users/InvestCharlotte
Look at the website in his profile.
They have given the website (link doesn't work) but say they are a UK investor, so something not quite matching up there.
I looked at the link and she is with Retire On Rentals. I could not see the website link referred to (new to BP) but she is not a UK investor. I am working on a deal with them now and will let you know how it goes.
Am I paying too much? I don't think so. Am I paying more for the property than they did? Yes, but I cannot rehab the place. I am hands off per IRS law in regards to Self-directed IRA investments.
Properties overpriced. They purchased alot of HUD homes and resold as TurnKey. Compared to what they sold them for and after reviewing the appraisal, the work they done-properties overpriced.
Bryon, your suggestions bring questions to my mind. First, let's take your own situation. It is hard to see why you would want a partner unless you had a deal that was too big. An equity partner takes up profit and complicates things...right?
I've thought of this many times but partnerships seem to have problems that really can make life less fun. Am I missing something?
Not opposed, just curious as to the benefits to someone who really knows what they are doing and has money.
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#3 Guru, Book, & Course Reviews Contributor
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Joe, I hope you're not getting too far offshore in that sailboat.
Not to get off topic, but have you looked into REITs? Funding? Finding a good broker and using idle funds making transactional short term loans. Provide purchase money loans.
I have never heard of this company. There are many selling investors over priced properties with leases, even lease=purchases in place, we have been over those before. The tenant or buyer walks and the investors gets it in the end.
The only no risk deal would be that they sell it and guarantee rents, but what if they fold? You own a property a thousnad miles away!
Seem like a sharp guy Joe and I have watched your posts for....has it been a year yet? You're seem to want a hands off piece of dirt, they don't exist as a single family dwelling. Who ever manages such a property can be gone for a myriad of reasons.
Lending is hands off passive income. If the broker drops dead, the loan goes to a servicing company (or could be there from the beginning).
Buy notes with servicing, servicers will admisnister even through foreclosure and sale.
Easy money!
You get a property manager on a SFD and if they want to, they can clean your clock! They call maintenance for repairs, you're over charged and they own the construction company, bill you for ads, cleaning by their sister-in-law, vacancies, and what do you do, who you gonna call? Get another PM?
And, before you go to the Med, take some of that money and get a respectable yacht and leave the sailboat on the beach. LOL
hey jeff, the advice i gave a few months back was not hinting in any way that i was hoping he and i would partner up..i hope it didn't give that vibe off..i would never partner with a stranger on a long term investment such as a rental; i was just saying hed be better off giving 50% of his rental to a partner than buying from a company and having zero equity and hardly any cashflow(if not negative cashflow)....there are too many complications in owning rentals to mix in new business with new acquaintances' money..that's just my opinion...however, i would, and do partner with new colleagues on flips...in my opinion, these are different bc they're done in a few months and they have much less hassles and headaches...just my perspective... to summarize, i don't trust turn key companies (as you can see on the deal presented how robbed the property of all its equity by selling at an over-inflated price), and i wouldn't want to partner long term with someone i just met ..hope that clarifies :)
#2 Off Topic Contributor
- Real Estate Investor
- the villages, FL
Jeff- This was your question
Not opposed, just curious as to the benefits to someone who really knows what they are doing and has money.
I fall into that category, I believe. I have tremendous exxperience and a bit of money. Yet, I'm presently considering a partnership with others. This is why.
1. Area I like but don't live there.
2. Other partner does live in area.
3. I have funds not doing anything at present.
4. Other partners also have matching funds.
5. My input will be appreciated, but I won't be doing the day to day oversight.
6. This is a rehab project that will require more time than I want to spend.
7. Comparable morals and ideals in partners.
8. I wasn't recruited, I offered my input.
9. I liked the #'s on the deal.
10. I still have time to travel and finish all 50 States and 100 countries, and spend time with 6 kids and 11 grand kids.
I know many aren't in the same age group , etc. currently, but more me, I don't mind sharing. This deal has a long way before the trigger is pulled, but I'm interested because of the 10 reasons listed above. Rich
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#3 Guru, Book, & Course Reviews Contributor
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Rich, being in a similar boat I agree with all of your conditions, especially the skin in the game requirement, otherwise it's not really a partnership! I, unlike you, prefer to operate locally, no more than 50 miles.
Bryan, well said, you have come a long way in a short time, good job!
Good luck Joe!
Here's where I've looked at turnkey operations before. I'm in Illinois and have 12 properties. But its getting so incredibly difficult to get any more financing right now in this state, that I'm constantly looking at other states that have better financing available.
Basically, I'm at the point where I want to keep growing but am running into a pretty high wall here where I live. The turnkey stuff is clearly a bit overpriced than if you could do the deal yourself. And the numbers haven't really made sense to me just yet.
I actually wouldn't mind paying 10k more if it means the difference in getting more properties at $300 a month net cash flow as opposed to $350 to $375 a month.
But most of these places seem to want to get you in at 80 to 90 of market value which is ridiculous given that the actual sales that are occurring are probably at that number.
Again, if these turn key places were any good, they would be getting their deals at 60-65% of market and selling them to me at 70-75% so I could do a quick refi - rate and term and be all in with nothing down except some closing costs (2 or 3k).
They could make their profit on the 10% plus the rehab work (their GC fee), plus the property management fees going forward.
MemphisInvest, Norada, and Real Wealth Network all seem to be doing the turnkey stuff. A really smart GC could make a killing if they were to partner up with a property management firm and a couple of local banks and do this right.