Is success with turnkey properties actually possible?

[Michael Perry]

So I've been looking at different options to get into the rental real estate arena and for someone who works at a senior management level with a full time job it seems that Turnkey properties would be ideal to at least start out with and start attaining cashflow but I've read good things about TK's and not so good things. My real questions are:

1.) can one actually get real cashflow from a turnkey? 

2.) Is success with TK's something that is just theoretically possible but highly unlikely?

3.) What about exit strategies? It seems for a TK provider to actually make their own money and be successful then their markup would put you in the retail price realm which leaves very little equity if any to start and it seems the properties in the areas that many TK's operate in have a very slow rate of appreciation so how do ever really increase your true net worth or implement a true BRRRR strategy?

I apologize if these questions are very naive, I'm just trying to understand and vet my options for entry into buy and hold very carefully.

Thanks in advance for any time taken to provide info and guidance, it's appreciated.

[Jerry W.]

@Michael Perry, the simple fact is why would a seller sell to you across the country for less than what he could sell it for locally?  You do pay a premium for turn key properties from turn key companies.  If you buy privately then it is not really turn key in the business model sense.  there are good and bad things about turn key properties.  The rental market may be better or worse than in your local area.  it was not possible to buy a property that met the 2% rule in my area.  I was very surprised though to find out I lost money on a property that exceeded the 2% rule.  Not all markets are the same.  Repair costs, vacancies and especially taxes I learned can really eat into your profits.  I bought a house for low $40K rehabbed for $12K , rented for $900 per month and lost money.  The property taxes were more than 6X what I pay locally in my area.

The biggest concern with turn key companies is integrity.  Some will put frosting on a dog turd and sell it if they can, others are very open about prices, repair costs, and have sold thousands of houses over decades and are still doing well.  The only way you will know the difference is buy a lot of due diligence.  One problem is that local markets and common business practices can vary wildly from area to area.  You have to have folks who see the area for what it is and communicate that to prospective buyers effectively.  Take your time, get appraisals, inspections, and use the finder service on BP to meet and talk to local investors who can give you an independent appraisal of the property and market in their area.

Good luck

[Andrey Y.]

Originally posted by @Derrick Dill:

1. Cash-flow is very possible, depends on which market you choose.

2. Success is very possible, although turnkey hasn't been around for too long, it's harder to determine long-term success.

3. Depends on which market you are choosing. If you go in Texas or Florida chances of appreciation are more likely higher, with less cash-flow. If you choose somewhere like Ohio, you will have better cash-flow, most likely less appreciation.

I increased my true net-worth by purchasing 2 turnkey properties last year. They cash-flow and lowered my debt to income ratio.

 If you put 50% down or less, you LOWERED your financial net worth by purchasing those properties. Its just simple math.

For arguments sake, lets say Bob's net worth is currently $0. He purchased a $100k property, and put $20k down. His net worth is now negative $80k.. savvy?

[Max T.]

Andrew Johnson
> 12 months : greater than 12 months.

Sorry. I'm a math teacher.

[Ali Boone]

Absolutely. Ping me anytime!

[Ian Walsh]

Yes, but make sure you know your comps, how much debt is being taken on, what kind of work the company is doing and what management company they are hooked up with.  There is a lot of responsibility on the owner even though it is set up to be hands off.

[Alex Zemianek]

Hi Micheal!

So our company offers Turnkey Properties and we can offer more information regarding the succeeding statistics involved with the whole deal and for more information into the topic, here a link; https://www.jzvacationrentals.com/education-1/vaca...