Interviewing turn key companies

[MarieChele Porter]

Hi all,

I am going to be in the market for out of state rental properties and most likely will invest with a turn-key company. What questions do you normally ask or would you suggest asking a turn-key provider in an interview?

Thank you in advance for the input,

MarieChele

[Clayton Mobley]

Hey @MarieChele Porter Welcome to BP! Your question is a very very common one and I'm sure you'll receive no shortage of answers. I'm actually surprised to be the first to respond...

So, being a turnkey provider myself I have a lot of experience with the blowback the industry receives due to the various charlatans running around calling themselves turnkey. As such, I advocate a truly thorough vetting process for any provider you consider. I write about this a lot, so you may have seen my list pop up elsewhere by now, but here are some basic questions you should ask of any provider. Bear in mind you should expect prompt, data-based answers - not estimates, not long-delayed emails with "oh, our numbers are really great, so great!" - you want actual figures here:

1. What are your short, mid, and long-term occupancy rates? Do you track them?

2. What is your annual maintenance rate? Do you defer maintenance? How quickly does the typical maintenance issue get resolved? What do you expect your maintenance rate to do as your portfolio ages and capex items need repair or replacement? (an estimate is ok for that last one, of course, but it should be based on the age of the property and the life expectancy of capex items etc)

3. Does your maintenance rate include move-out costs? What is your average net move-out cost?

4. What is your minimum lease term? What is your average lease length?

5. What is your property management fee?

6. What is your leasing fee?

7. Do you charge any other fees?

8. What is your average time to first lease on a new property? What is the average time between tenants?

9. Can I see an appraisal for the property I am considering? (you can also consider ordering your own appraisal, but any good outfit will provide one from a reputable source)

10. What was done to the property during rehab? What is the expected life on new appliances/flooring etc?

11. How is your ROI calculated and what does it include? Can you walk me through the math?

12. What type of service can I expect once I've made an investment? How do I know when rents are paid, when maintenance issues are resolved? How can I see rental or PM contracts to review terms? How do I get in touch with you if I need something?

Another tactic I advise new investors to employ to ferret out the time wasters is to ask to visit the property. Of course, I think an actual visit to the market and provider you are considering is very important prior to cutting a check, but it seems that even just asking about scheduling such a visit can give you a lot of information about a provider and how they actually treat their clients. Any provider worth your time should be happy to have you for a visit, offer a tour of the town, the neighborhoods and (if possible) a property or two. It shouldn't be rushed and it shouldn't be a year-long wait list. Of course, successful companies can't typically accommodate a random drop-by, but communication should be positive, clear, and prompt. If they try to dissuade you from visiting, require a deposit or signed contract prior to scheduling, or tell you it's not necessary, walk away. You should be able to visit without any strings attached.

Ok, I think that's enough of a wall of text for today (my greatest weakness!). If you have any questions about anything I've written, feel free to shoot me a note any time.

Best of luck in your new adventure!

Clayton