My first Turn Key deal - its not impressive...

[Mike E.]

Ok so I am extremely embarrassed to put these numbers out to the public but hopefully someone can learn from my amateur mistakes...

I bought a house in DFW area from a Turn key provider, apparently the best in the business (Memphis Invest). I flew out, spent the day and was satisfied with everything I saw. So I am ready to make the move... Well hit some hiccups along the way and ran into much higher insurance than what was proposed - by about $500  The estimated number on the initial estimated sheet looked like this-

Purchase - 128,900

20% down - 25,780

closing costs - 1,500

Rent approx - 1,225-1,325

Est Prop Taxes - 2,329

Est ROI - 13.46%

Est cash flow after fixed expenses- 13.46%

Hooray! Right? Nope, wrong... Here are my actual numbers 

Purchase - 128,900

Down payment - 25,780

Closing costs -  2,966

Prop Taxes - 2,842.8

Insurance - 190.58

Rent - 1295

PM Fee - 129.5

Actual cash flow after expenses and 5% vac and 5% expenses - $92.80

Actual ROI - 3.7ish %

Folks, not that I didn't know before, but ALWAYS, I mean ALWAYS check ALL of your numbers. Also, never take anything for face value when dealing with anyone. I thought I could trust my "adviser" but that clearly is not the case. I am quite embarrassed as I clearly did NOT analyze this enough... I did work my numbers, but when everything shook out at the end these are the real numbers. I found myself half way into this deal with my earnest money on the line and almost walked away the day of signing as i wasn't feeling comfortable, but I clearly should I have.  I really wanted to make this work for me as I am a busy professional that doesn't have the time to go to auctions/hunt through mlls/finds deals, rehab, list, repeat... I am also in market that you cant buy and cash flow out the gate, we are also on the high end of the market fluctuations right now in So California. 

I am definitely going to look at other strategies and perhaps other turnkey companies to see what else might possibly make sense. I have a goal to acquire many more properties in the coming years, my primary target currently is 10 in the next 6 years. I have already bought 1, so 9 to go! Any tips, advice, strategies or opportunities are welcomed- please PM me.