New OOS Investor looking for a Trustworthy Turnkey Company

[Evelyn Kop]

Hi Everyone!

First off I want to thank everyone on BP for being incredibly supportive! I've mostly been browsing the forums and binge watching the podcasts, but  the few people that I've already reached out to have been really great! As a new investor the wealth of knowledge on this site is invaluable! So I figure why not tap into it and get some advice?

We are from Hawaii and are looking to find investment properties that provide passive income.  After research we were attracted to Dallas, Houston, Kansas City, Memphis, Ohio, and possibly Utah. I've contacted Memphis Invest, AREI, USREEB, Midsouth Homebuyers, Ohio Cashflow, Norada, and we're waiting to speak with Morris Invest. I'm kind of at a point of analysis paralysis...with our work schedules, the distance, and a toddler I don't think we can visit any of these sites in the near future. We want to focus on cash flow first but wouldn't mind appreciation as a added benefit. I'm anxious to start but also nervous about who to trust with our hard earned money. 

I would really appreciate everyone's insight and experiences with these areas and turnkey companies (or your own recommendations) Are we too late to invest in Dallas or Houston?

Would also like to connect with other Hawaii investors!

Eventually I would love to own properties in CA, and the east cost...possibly abroad!

Wishing everyone continued success on their path to passive income and financial freedom!

@Joshua Dorkin & @Brandon Turner - Keep the podcasts coming, LOVE THEM!

Evelyn

[John Collins]

I don't have any turnkeys ,I have just rehabbed a few for myself. It's been my job full time for the last year.

Market is pretty competitive here right now so some deals the W/S send out are gone in 20 mins or one phone call and I only say that for everybody's FYI .Do not jump in unless your are sure .

There's been plenty of OOS guys burned . Midwest is very different than what a lot of people are used to .

Alex from cash flow diaries has a good blog so you can see how things have worked out  over the last couple of years ,keep in mind last2 years been real good 

Good idea to be on wholesalers list from each market  you're interested in so you can see what guys pay for inventory 

Plenty of good W/s in Indy 

Best 

[Justin Young]

Originally posted by @Hank Keller:

Check out Tom Ott in Cleveland if you want to look at Ohio. I've been with the same Turnkey company for the past 3 years in Indianapolis with good cashflow and last year appreciated 16%. I have 7 SFH's in Indianapolis and 1 in Charlotte. The company has over 2000 homes under management and also has opertors in Dallas and Kansas City. PM me if you'd like to discuss more.

 If you don't mind me asking, who was the turnkey provider you used in Indy?

[Andrew Cheng]

@Evelyn Kop the analysis paralysis is SO REAL...granted it's only been a few (but intense) weeks for me as I'm still in the infant stages of learning about real estate investments. Right now, I'm trying to decide on a few markets to focus on by taking a top down approach and analyzing at a macro level (population growth, job growth, rent vs ownership %, etc.). Next comes searching the forums to try to find some reputable names of Turnkey providers so I am SUPER appreciative of you starting this discussion. Best of luck with everything and THANK YOU again!

[Ian Walsh]

Ask for referrals, learn the market you are investing in and know the management company very well.

[Evelyn Kop]

@Ian Walsh - Thanks for the tip!

[John Larson]

Mark Whitted once again thank you for the recommendation. Means a lot!

Evelyn Kop have you had the chance to speaks to a member of my team? We have investment opportunities in DFW, Houston, Kansas City and St. Louis.

We have in house management and a backend customer service support team of "investor concierge." Their main role is to keep in constant contact with our investors and their investments to ensure everything runs smoothly.

I have done this turnkey model for a long time and have found that this extra care results in truly successful and passive investments for our clients. I would love the opportunity to discuss this with you in more depth.

[Evelyn Kop]

@John Larson - Yes, we spoke with Marcus Reynolds over the phone!  

[John Larson]

Great! Let me know if there is anything I can do to help! 

[Par Attaran]

I will throw one out there for USREEB.  Responsive customer service, and good returns. 

We own 2 properties with them and no complaints so far :) 

[Evelyn Kop]

@Par Attaran - Great to hear! Thanks for the input!

[Joe Kim]

@evelyn kop

I used to buy only TK properties in houston, san antonio, chicago, Indy, memphis. 

But starting in 2016, I stopped buying from TK providers.   Until we hit another recession, I think personally buying from a TK provider is DANGEROUS.  

Last year I sold a TK property which I bought in 2014 and sold in 2016 (2 years later).   

Why did I sell?  Because cash flow sucked.  High maintenance, high turnovers really ate into cash flow.   And then when I sold I sold it for $124,000  (purchase price $116,000) .     

But I lost about $6000 on that deal.  LOST.   why because I spent about $6000 in repairs just to get the home in selling condition.  Then there are closing costs, and agent fees.  

I think 90%+ of all TK providers are selling homes at retail prices.  

Rehabs on many of these homes are suspect and you won't know how bad it is until you go to sell the property. 

Lastly, the quoted cash flow is likely to be 50% less or worse due to turnover (Vacancy), maintenance, and or capex (major cost like AC, roof, heater).  

I think you are better off buying a new construction (no maintenance) in a B+/A- neighborhood with solid cash flow.   I'm doing it in Atlanta with schools ranging from 8/9/8 to 10/10/10

$192,000 - rent $1600/month.  30 year fix at 4.125%.   Net monthly cash flow $450  (self-manage)

$313,000 - rent $2000/month. 7 year ARM at 3.875%. Net monthly cash flow $500 (self- manage)

$460,000 - rent $3000/month, 7 year ARM at 3.875%. Net monthly cash flow $850 (self-manage)

These three are BRAND new construction in Gwinnett/Forsyth county in Atlanta suburbs.

Right now I'm in the process of selling 2 more properties in texas.  TK properties that either peaked in value or not great cash flow due to rising texas property taxes.

[Sean Tarpenning]

We see great cash flow in Kansas City. My team is boots on the ground here and a wealth of knowledge and information! PM if you need some help!

[Christine Lee]

@Joe Kim, how do you know what to charge for rent?  Thanks!

[Shawn Ackerman]

@Evelyn Kop Keep pushing the right market for you will reveal itself.  The right working relationship with a TK operator will as well.  Just have you lines of questioning ready and prepare to cross reference and do your research on the company.  Find out if other BP'ers are working with the provider you choose and see what they have to say.  Remain diligent and informed. Always remember to persist and you will WIN!!!

[Joe Kim]

Originally posted by @Christine Lee:

@Joe Kim, how do you know what to charge for rent?  Thanks!

Rent price is not easy to get right.   I start at looking at what's currently on the market in the same neighborhood, same size, same bedrooms, etc....Basically looking at my competition (Also check how long it's been on the market.  if a home is for rent and it's been on the market for 3months+ and the price seems high....then the price is too high and that's one of the reasons why it's not being rented).  it's easy to do using zillow.   you can use the "Zestimate" but it's not as accurate as what is actually being offered currently.   But even the rents on the market may be overpriced (more likely) and a few places underpriced.

I would say about 2/3 of my rentals I end up dropping the price by 5% to 10% depending on activity, interest, traffic in seeing the homes.   I also listen carefully to the feedback from potential tenants who do not.     I don't feel bad about dropping the price since if you under price it,then you are locked in.

But my recommendation is not to wait to drop the price if there is no or little interest in the first 2 weeks.   Price is the biggest motivator (since you cannot physically change the location of your rental)

[Evelyn Kop]

@Shawn Ackerman - Thanks for the advice! 

@Joe Kim - Good tip!