Out of state turnkey investing

[Peter Heldstab]

Anyone from Minnesota invested in turnkey properties out of state? If so, which ones and how has your experience been? I would love to get some feedback as I am doing a lot of research and talking with companies in Indianapolis, Memphis, Kansas City and a few others. I am having a hard time narrowing down the best market and most reliable company.

[Todd Crippen]

@Brian Ploszay, , I understand the hesitation when deciding whether or not to go the turnkey route, but I think there are a lot of factors that an investor needs to weigh during the decision making process. Turnkey investing is very dependent on the market the companies are located, level of involvement desired, policies of the companies, pricing, warranties, and whether they have in-house property management.

For example, the seasoned turnkey companies realize that their demand is driven by investors looking for a safe, consistent return. That means that the market needs to provide the opportunities for turnkey companies to price their properties based on the rent to value ratio, instead of relying on top market price, they are providing those properties below market value a lot of the time. If you can cash-flow $200-$350/month, with 20% down, that is a solid long-term investment.

Also, the turnkey option is the best way to go if you would like the benefits of owning rental property without being completely hands on. At our company we like our clients to be involved as much as they want to be with the expectation of trust in our expertise for certain operational factors.

Also, if the turnkey company has well-established policies in place for leasing, resident on-boarding, standardization of renovation approach (replacing capex items first and foremost), and property management, then they could be a good option for investors.

Also, look to see if they have warranties in place to cover the renovations they have completed on the property. This is a good way for turnkey companies to hold themselves accountable for their work. If they do not cover any of the items on the scopes of work completed, then it could mean the company does not focus on quality.

Also, it's my opinion that if the company provides in-house property management services, that is another way they hold themselves accountable. There are mixed reviews on whether this is a positive or a negative, but if the other factors have been met, this is another great sign you've found a company dedicated to providing a quality product and resident to manage.

Also, even though some of the prices look like there is a premium in price point, you have to find the value in the services being provided: Extensive research in the submarkets in their city, leasing services, value add to the property, and property management.

I hope this helps start the convincing process. Feel free to ask me any questions!