Ideas on Analyzing Turn key deals

[Cal C.]

This thread is meant to show new turnkey investors some of the things to look for when analyzing a potential turnkey deal. Please add yours!

First if you you haven't done this look for a highly recommended turnkey company. Ask your friends, fellow investors, or any one you know who might be doing turnkey investing. Ask here on BP. Tell those that don't want to say anything in an open forum to private message you.

2) check that company out online looking for complaints and non company related (if you can determine that) recommendations.

3) Talk extensively with a company you have found. Ask them things like how long have you been doing this, can you give me contact info for three turnkey investors, what has been the biggest complaint from their investors. What is the expected ROI? What kinds of repairs are they seeing most often? Compare what the company says to what the investors say. Also if the repairs seem strange, like repeated electrical problems, repeated plumbing or roof leaks, paint, drywall or siding issues just about anything that a rehabbed house shouldn't be expected to have are warning signs.

4) Analyze some of their deals. Take a look at Zillow and see what the zestimate is (sometimes that is very inaccurate though!). Look to see what things have sold for in the surrounding area. See what other properties are renting for in the area. If the property is way out of whack with the comps then see if they have done an extensive rehab to justify the extra cost. Hint if they are not showing you their after rehab pictures then that is a flashing red warning sign.

5) See how many houses they have for rent (if they are PMing it) compared to how many houses they have sold. If it seems like a lot then that may be a warning sign.

I'll add more later. But please add to this list if you'd like.

[Jon Holdman]

Ignore everything the turnkey seller tells you and verify every fact on your own. That's not specific to turnkey, it applies to all deals.

Verify prices. Look at for sale listings in the area. Get sold data and compare that. The turnkeys I've examined are almost always at retail. Many are above retail.

Verify rent. Rentometer.com and craigslist can help. Drive the area and look for for-rent signs and call them.

How do you drive the area? Go there. Unwilling or unable to go? Then you SHOULD NOT BUY IN THAT AREA. Boots on the ground is essential to making any purchase.

Examine the house thoroughly. Its easy to slap on some paint and laminate and hide a lot of issues. Assume the rehab has been quickly and shoddily done until you convince yourself otherwise.

Talk to unaffiliated PMs in the same area.

Drive the neighborhood. Almost anything will look good with the right pictures. Look for the bad, not just the good.

Again, all this really applies to any deal, not just turnkeys.