As an investor do you prefer turnkey or empty house at purchase

[Matt Harris]

Hi all experienced investors would you prefer a turnkey investment with a tenant and management or an empty unit to place your own? Same purchase price,rehabbed with new c of o. Just want some opinions based on what people are looking for. Thanks

[Anthony Johnson]

Empty at closing is the only way I would buy. In fact it is part of my inflexible "criteria". As Investors we want the highest rate of return. Let us assume it us currently rented at $1,000. In every situation like this the market is a little higher. So I would prefer to go in an do a wall to wall rehab including kitchen and go for the $1395 renter who wants perfect. So in other words, I like to "set records" with my rents for my market. Do the tenants stay and are they happy, the happiest. I do this formula more and more now. The extra $12,000 I spend on the rehab nets me another $200-400 in this $1000 price range and that is an extra 30% return above the turn key investor. Or non buy/rehab/hold investor, or the guy that just buys/holds without the rehab. I specialize in pretty houses in Pasco/Pinellas $675-$2500 rent range and this works on them all. So to recap, in my pretty house model, doing a wall to wall rehab, all floors, kitchen baths, walls will allow me to set a record on the rents, and when it comes time to advertise I attract the tenant with the higher credit/income and I would like to add that in March I closed on a SFR in Embassy Hills Port Richey for $51,000 A 2/1/1, 1100 SF. Right off the MLS. So it would have rented for 700-750 since it was super dated and ugly. I did a $13,000 rehab, opened up one porch to the house by taking out sliders and wall to wall porcelain tile, kitchen, baths, ceilings, all walls baseboards, anyways I am getting $895 and the list of applications has several 700+ credit scores. The tenant i chose pays the rent one month early every month they are so happy. So, for me they have to be empty, I rehab them all, if I do not have the cash at purchase, then at the first check out that I can do a rehab I do it and go for the record high rent. On that $51,000 purchase I did 100% financing, 6% 20 yrs private and it cash flows $409.00 and that is net before maintenance. I do not factor vacancies ever, I manage myself and it is a non factor. I also received a $1200 commission when I bought it. I approach the private lenders with this formula, they do 100% financing, I rehab after closing., we both win as I get a new house with a cherry tenant, and they get the equity position and the beautiful home. I actually learned this by accident, I just noticed the rehabbed new inside houses got us better tenants and the maintenance calls are almost non existent and they stay forever, seriously, they have nowhere to go when the house is new and even though we are priced at the high end, it is still a win win for all. Namaste.