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Updated over 8 years ago on . Most recent reply

Searching for 1st rental...turn key or realtor/PM team???
Hey Community!
I am interested in purchasing real estate out of state (live in SF) and was leaning towards using a turn key outfit just for simplicity. I understand that there are some good ones and some bad ones and have done a lot of reading/research, and ultimately feel comfortable using a few outfits that are out there (i.e. Memphis Invest, Mid South, Elite Invest).
I also understand that I would be paying full retail price for turn key, but if it's truly passive with a good PM and good tenant (i.e. Memphis Invest with a 2 yr lease with hopefully minimal maintenance/repairs and an average tenant stay of 4 years and 4% vacancy) then it is probably worth it for me.
I also understand that if I had a realtor/PM team "on the ground" I could probably find a property below market value, but then would need to have the realtor/PM team fill in the gaps (possible repairs, possible vacancy, etc).
Things I am looking for: hands off (passive), decent cash flow ~10% after all expenses (mort, interest, prop mgmt, prop taxes, repair/mait, util, vacancy, etc), and QUALITY tenants.
Are there any realtor/PM teams out there that you can recommend over using the turn key providers???
Really appreciate any feedback...thanks,
Brian G
Most Popular Reply

1. Turn key companies usually buy further upstream at better prices than you would on the MLS.
2. Turn key companies are usually buying in large volumes and get large discounts on materials, supplies, HVAC and appliances.
3. You'll be paying carrying costs like taxes, insurance, utilities and mortgage while the property is being made rent-ready and then marketed for a tenant. This can add up to a couple thousand dollars easily.
4. You generally don't pay a tenant lease up fee which is usually the equivalent of 1 month rent with a turn key property.
I did a podcast on this topic which you can find on my website. Look for the 10-7-2015 episode.