BRRRR Numbers not adding up - better to buy turnkey?

[Lauren Salvani]

New investor here. I was hoping to do a BRRRR on a property but after getting repair estimates and looking at the comps in the area I am wondering if it makes more sense to go turnkey.

Home details:

SFH approx. 700 sqft. 2/1 bath (Hot area in my city where many investors are already flipping houses)

Purchase price: $47,000

Rehab estimate: $38,000 - $50,000  (House has been abandoned for some time, needs new everything, roof, plumbing, electrical, mold remediation, the list goes on)

Total investment: $85,000 - $ 97,000 (I know this is a large range however its my first time and I haven't gotten back all of the estimates for work)

Comps in the area approximately average $110,000 - $115,000 a few months ago but now in the midst of COVID-19 are selling for approximately $100,000.

Seems like if there are flipped properties available for $100k I should take out a traditional mortgage and invest $25,000 down payment and save myself the headache of rehab and trying to refinance for about the same price, am I missing something or are my assumptions right?

[George Pauley]

I am a fan of turnkey.  It fits my busy lifestyle well.  However, you will pay a premium when going turnkey.  The turnkey provider wants to make money too!

On the surface it just like this particular deal isn't working.  That happens a LOT.  Most deals don't actually work out.  But there will be other deals.  Keep looking.  Tenacity is a virtue when looking for real estate deals.

On the other hand, there is something in the wording of your post that makes me think perhaps you really don't want to deal with the hassle finding new properties, getting quotes, calculating returns on successive properties until you find the one that works?  If so, that's OK.  The sweat equity approach isn't for everyone.  (Did I mention I'm a fan of turnkeys?) ;)

Robert Kiyosaki often talks about the difference between a job and investing.  With a job, you work for your money.  Investing is, should be, much more passive.  Pretty much check your bank statement each month to see how much you made.  (Gross oversimplification!)  A lot of people here seem (to me at least) to have turned real estate into a job.

If you'd rather spend your energy, say perhaps working a job that gives you $25k to invest in turnkey properties, that is perfectly fine and even reasonable.

If you do go turnkey, be sure to check the company and the deal out thoroughly.  Start a new thread and ask other BPer's what their experience with the turnkey company has been like.

Good Luck!