Turnkey Property Analysis

[Ashby Tyler Cappelmann]

Hey guys!

I wanted to get some advice from some more experienced turnkey real estate investors. I'm currently reviewing the purchase of some turnkey properties in northeast Ohio. The company is very reputable and recommended in the bigger pockets forums. I have reached to them and been put in touch with a representative. I've been very pleased with the level of communication I've received in addition to the quality of property they provide. I won't name them because I don't want this post to seem critical in any way. I simply want to get some professional opinions. With each of their listings they attach two separate "Year 1 Performance Analysis" spreadsheets. One is formatted around the property being paid for in cash and the other is formatted around the property being paid for with leverage, specifically 20% down. I'd also like to add that each and every property is freshly renovated with a tenant in place before closing. My questions deals with the costs they account for. If you buy a property from them they retain management responsibilities so they obviously account for the 10% of gross rents. My biggest concern is they account 2.5% for maintenance, no percentages for vacancy and no percentages for capital expenditures. If the property is paid for with leverage the cash flow numbers on all the listings I've looked at have been relatively small and my concern is that if true percentages were factored in for maintenance, vacancy and cap ex (specifically 5-10%) the property wouldn't cash flow at all. If the property was paid for in cash everything would be totally fine but it would take a long time to acquire properties at 80-100k a piece. My biggest question is what's the standard analysis percentages when a property is turnkey and freshly renovated? Is it lower that the traditional 5-10%? Are cap ex and maintenance accounted for in much lower percentages than normal? Are turnkey properties best paid for in cash? Thanks in advance to all those who provide feedback. Happy hunting!