Morningstar Ratings for TurnKey Real Estate companies

[TJ Walker]

If I want to know how a REIT or any mutual fund in any sector has performed relative to the market and relative to its peers in the last 1 year, 3 years, 5 years or 10 years, I can find this out through a rating service like Morningstar, which can't be easily gamed. Past performance is of course no guarantee for the future, but it at least lets me avoid dog funds that have lost money for years and/or have high fees. Is there anything comparable to this for Turnkey real estate companies? If not, why not (and is this something BP could start)? I am confused as to how to select a turnkey company on a rational ROI basis. Please don't say "pick a market first" as I have no rational basis for selecting a market other than anticipated ROI. What is best way to get best due diligence? Many investors seem happy as long as there are no problems, tenants are kept, and there is at least some minimal cashflow, as if they didn't realize it would still be possible to have negative ROI even while seeming to have positive cashflow in first few years. Help!

[Jay Hinrichs]

this is apples to Oranges...  in mutual funds or syndicated investments its someone else running the show.. when you buy a turn key property ( a home that has fresh rehab and is for rental purposes) your running the show.. its as simple as that.. there is no way to get any kind of meaningful data like what your looking for.

the only meaningful data that comes to mind for me and I have been in this space since 2001 .. is really asset or neighborhood quality.. low end neighborhoods generally are tough on out of state investors and will not perform as well as higher end neighborhoods.

and what do I mean by that... IE the least expensive rentable home in a given MSA  will not perform as one that is bought at the median of all price points.

Lets take Indy for example.. the median in 120 to 140k for the MSA... you can buy rentals for as low as 40 to 60k.. those simply long term for out of state investors will not perform as well as homes bought for the higher dollars that are in better school systems and less crime and other issues.

I know some will disagree with me on this those are usually those selling them LOL..

Or you can code it  A  B C D like commercial assets.. 

that is really the main metric you can use.. the turnkey companies can only manage the properties but they cannot be in the assets 24 /7 and you get a bummer tenant and you now have an asset that does not perform as expected.. its not the turn key company its the Tenant that is the main cog in this.

Also I have seen very poor owners over the years that have no business or clue how to be rental property owners.. they do not know or cannot imagine how others live and they freak out when some little thing happens and will bow their back on tenant issues only to have said tenant leave and create a vacancy.. and any vacancy is going to cost you money and ruin your numbers for that year.