Purchasing from a turnkey company

[Angeli Castrence]

Does anybody have any insight on purchasing out of state from a turnkey company? Would you recommend this route for a new investor? Thank you!

[James Wise]

Turnkey works for new investor for sure. But whether you buy from a "turnkey" company or off of the MLS with a property manager in line to handle things post close you need to make sure you do the proper due diligence on the property and the area you are buying in. The area and the property are what really matters. You can swap PM's at anytime. Can't go back in time if you buy the house for $40k more than it's worth.

Whenever you are buying a property out of state below is a nice little punch list I put together for new investors to go by. Following this punch list should help you mitigate your risk quite a bit.

• Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
• Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
• Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
• Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
• Make sure your property manager is a licensed real estate brokerage.
• Google Clayton Morris and/or Morris Invest for a cautionary tale of what not to do when buying turnkey real estate
• Understand you can not eliminate all risk, only mitigate it. If you are risk averse, real estate, (especially out of state) is not for you.

In addition to the above, if you are curious about which market to go in I put together a list of some of the most popular ones for you below. 

• Cleveland, Ohio
• Cincinnati, Ohio
• Dayton, Ohio
• Toledo, Ohio
• Youngstown, Ohio
• Cincinnati, Ohio
• Memphis, Tennessee
• Saint Louis, Missouri
• Indianapolis, Indiana
• Detroit, Michigan
• Erie, Pennsylvania
• Louisville, Kentucky
• Milwaukee, Wisconsin
• Jackson, Mississippi

Myself, I work in Cleveland so that's the one market I have the most knowledge on. I put together The Ultimate Guide to Grading Cleveland Neighborhoods. I also have similar guides that you may want to look over for Kansas City, Missouri. & Birmingham, Alabama you may want to check out but full disclosure, I am not an expert in those markets by any stretch. Thing is, any of these markets should work for you so long as you do the right due diligence BEFORE you buy.

Good luck out there!