How do B Class and above turnkey properties numbers work? Please convince me.

[Martin Yung]

Hi all, 

I couldn't get the numbers pencil out after looking at tons of B class and above turnkey properties, here's a hypothetical example. 

SFH 3/2

Turnkey price: $100,000

Monthly rent: $1,000 (most turnkey providers can hit the 1% rule)

Monthly Expenses:

Property tax : $100

Insurance: $50

Property management: $100 (10%)

Maintenance allowance: $100 (according to the blog written by Eric D. 10% is the minimum 12 “Hidden” Real Estate Expenses That Blindside Investors)

Vacancy: $50 (5% vacancy rate)

Leasing fees: $40 (approximately half month rent)

Mortgage payment: $405 (20% down, 4.5% fixed amortized at 30 years)

Monthly net income: $155 which translate to about 9% leveraged annual return. 

This is before income and federal tax. Besides, I have ignored CAPEX and eviction allowance. And My calculation barely break even for turnkey properties in Texas (high property tax and insurance premium)

My question is there are real estate related private equity funds that generate net of state income tax which yield around 8-9% per year, so I'm really in a dilemma to choose between the both options. Or should I go the traditional way and engage a realtor to find good deals?