Turnkey rentals... Too good to be true?

[Steve Prather]

I'm a newbie, so please forgive me. My wife and I purchased one rental property last year. We began looking recently to purchase another property. I stumbled across a turnkey solution. They will cover as much or as little of the process as you would like, from finding properties, to rehabbing, to property management. My question is not really whether or not it is too good to be true. My question is more about how to tell if it is too good to be true? What resources do you use to check out the company?

For example, this company says they don't have an inventory. They have a list of investors and when they find properties, they send the info to the most appropriate investors. But, to get on the list, they require a deposit to be escrowed. It seems a little strange to me, but it may be standard operating procedure to filter out people who are not that serious about the investments. These are things that I just don't know about.

Any advice would be appreciated.

[Todd Brittingham]

Steve,

I think I can offer some insight regarding the offering of turnkey rental properties as our company specializes in setting these types of properties up here in Michigan.

First off I would recommend you do a background check on the turnkey company you are dealing with. Start with a simple internet search, ask around on forums like this one, and engage in conversation with the company. Ask for references as well. You can tell a lot from a company or an individual by engaging them in conversation.

Next, as I tell all of my investors, it really makes sense to take a trip to meet with the company you will be investing with. This will be an opportunity for you to evaluate the people who will manage your investment, and you can also see the properties and the areas you will be purchasing in.

Regarding deposits...we do not accept the deposits from our investors. All of our deposits are placed into escrow with a title company and an escrow agreement is setup. If you are not being offered this service, I would be very weary. Furthermore, we do not take request deposits until a property is located...the deposit goes against the property, not for the service of finding a property.

If you have more questions on the turnkey process I'd be happy to help. Good luck in your search!