using an "out of area" turnkey company

[Conor Kelly]

Hi guys!

I've just recently bought myself an apartment to live in, in Abbotsford, BC (about an hour outside of vancouver BC). Now, I'm looking to buy my first investment rental property. The problem is, in my area, the average price of a home or any property really is ridiculous. The price to rent ratio is completely out of wack. The average home is like a million dollars. So, I started looking into turnkey companies in my area. I found one and scheduled an appointment with them. However, I am unable to find many reviews on this company anywhere (Platinum Properties Group - if anyone has ever used them). So my other thought was, maybe i could use a turnkey company that is out of my region? Ive heard great things on this forum from other investors about companies in toronto and other companies in the states. So my question is, would there be any large downsides to me using a company in completely different area from where i live?

let me know guys,

thanks!

[Clayton Mobley]

@Conor Kelly Welcome to BP!

In terms of turnkey, many (if not most) investors are investing outside of their own market. The majority of our clients are from other states, even other countries. The key with turnkey (and you will see myself and other old pros harping on this endlessly) is to find a provider you trust to stick with you for 10+ years. The provider is much more important than the market in this type of investment because they will manage your investment long-term and that can make or break you. When you can't be there to keep your eye on things, even the greatest investment can turn into a money pit if your property management drops the ball. So management is more important than market.

Of course, this doesn't mean that numbers don't matter, they absolutely do, and any turnkey company worth your time should have solid data-backed stats that you can use to run your ROI calcs. But, assuming specs are equal, you want to go with the provider that you trust to be transparent, responsive, and stable.

Now, I am not in the Canadian market, so things may be slightly different up north, but generally, your vetting process should be the same. Some other quick tips for new turnkey investors:

• You shouldn't be paying more than market value for a turnkey property. Your purchase price should maybe be +/- $2000 from the appraisal price, but typically you should pay the appraisal value.
• Everything should be in-house - rehab work, management, etc - a turnkey company shouldn't be making you sign a contract for a third party management company because then they aren't really accountable to you long-term, the PM is.
• Beware of scarcity or scare tactics in sales. There are always more investments, people always need homes. Don't let a provider scare you into signing something by saying 'if you don't buy now you'll miss out'. If a used car salesman would say it, you shouldn't be hearing it from your TK provider.
• Ask questions. Good turnkey providers shouldn't obfuscate or hmmm-and-haw about their numbers. They should know them, down to a decimal point, and be able to explain how they were determined and how those figures impact your bottom line. Here's a list of questions I think new investors should get the answers to: https://www.biggerpockets.com/forums/55/topics/361999-new-investor-from-glendale-ca, it's not necessarily comprehensive, but it's a really good start.
• After you've done your research, go meet the top one or two teams on your list. Consider it an investment in your investment to go on a tour, meet the team, see their work. You'd be surprised how many providers can talk a good game over email, but can't facilitate a tour, stop communicating when it comes to actually showing you their properties. Even just asking for a visit can highlight red flags from less scrupulous providers. 

If you have any questions, feel free to shoot me a PM any time.

Best of luck!

Clayton