Turn Key Investments

[Kiran Alisam]

Hi we are on verge of closing our #1 Turnkey rental in Maple heights Cleveland Area, Price: 56900, Area: 1160 Sq ft, 3 bed 1 bath, Rent 850 to 900 per month, Management Fees: 10 percent , Taxes: 500, Insurance: 600

So Question its coming to around 14 percent ROI

How do i analyse the Turnkey deals where they are almost at a premium compared to buying and rehabbing a property 

Please provide me any pointers and guidance to analyse a turn key investment 

Regards

Kiran 

[Kyle Myers]

I'm still on my journey to purchase my first turnkey so take this with a grain of salt. 14% ROI seems surprisingly high for a turnkey. Don't forget to add in vancancy rate, turnover fees, maintenance charges and CapEx. I would do as thorough review of the actual turnkey company you are using as I would the property. Here are some questions I have gathered together from the forums and blogs to ask turnkey companies:

1. Are you an investor?
2. How many investors do you work with?
3. How long have you been in the business?
4. What has been your biggest mistake as an investor?
5. Do you own all facets of the operation?
6. Do you actually own the homes you are listing?
7. Do you defer maintenance?
8. Do you manage the properties?
9. What is included in the listed price? Cash Price?
10. Do you have renters in all your homes?
11. What’s your normal lease term?
12. Do you have a rent guarantee?
13. Do you have any other warranties?
14. What percentage of your customers are repeat buyers?
15. Can you give me a list of referrals?
16. What’s your property management fee?
17. What’s your placement fee?
18. What’s the average stay of tenants?
19. Average vacancy rate?
20. How many properties do you manage?
21. How many did you turn over last year?
22. What company is financing the homes?
23. What happens to my property if that company goes bankrupt?
24. What’s your appreciation rate based on?
25. What’s your rent growth rate based on?
26. Do you have any special programs in place to keep tenants happy?
27. What is your process for keeping owners up to date?