[Calc Review] Would you take a lower ROI for an A-Class Turn Key?

[Adam Scheetz]

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*This link comes directly from our calculators, based on information input by the member who posted.

Greetings Again BP Community,

Here's my dilemma. In my valiant quest for a good value add property as a long distance investor, I've learned some stuff. 

• Stuff 1: Putting together a good and reliable team for your first out of state purchase is daunting.
• Stuff 2: Most turn key providers are sucking up every bit of equity in exchange for a break-even property at best that will still likely need some help in the near future because of rehab shortcuts and location. 
• Stuff 3: If I had the team in place and the deal ready, I'd bank all the equity and cash flow but would have to endure the process of getting to that point.

So here's my issue. I have actually found a good, trustworthy, and highly recommended turnkey provider who works with Investors and ARE investors themselves. I communicate directly with head of the outfit which is nice. They cover the property management in house. Only rehab in A & B Class neighborhoods. And have an average tenant vacancy of 3.4% over the last 10 years. The rehab itself is a bit above average but for good reason. They update all the bathrooms, kitchen, plumbing, electrical, and replace the roof. All hard surface floors and counters are installed for ease of maintenance. Their whole goal is to front load the property with all these updates so that the investor can ACTUALLY cash-flow. BTW, this is my review not a regurgitation of some advertisement from them.

So the question is, until I can get a good and reliable team of people in place that can execute the deals for me, Would a low purchase price turn-key property in a Class-A neighborhood that cash flows $150-$200 with lower CAPX, Vacancy, and MX costs really be such a bad idea? At least until I get some more experience and connections.

Anxiously awaiting your thoughts!

-Adam Scheetz

[Jay Hinrichs]

this subject has been talked about a bunch on BP.. why do people sell cash flow assets.

the argument that they must be selling the dogs and keeping the good ones is not reality.

I have been funding turn key companies for going on 20 years now.. they sell almost all their properties.

they are in the business of buy rehab and sell.. they are not in the landlord business per se.. now some will have some properties but its not their goal to own hundreds of homes.. 

its hard to finance all of those first off.

just like me who builds new homes why don't I keep them all.. well because I want to sell them that's my inventory to sell just like anyone else and I make more on one sale of a new home than I would with 20 years of cash flow at 200 a month.. so its what I choose to do.. Same with those whose business is flipping they just happen to concentrate on investors instead of home owners.

Keep in mind in many of these neighborhoods.. there is no retail sales to homeowners there is only sales to investors.. this is quite common in any area were 20% down gives you positive 200 a month.. 

I tried the big landlord gig I did not care for it.. I had over 300 SFRs the happiest day of my life was when I sold that portfolio so now its only build or rehab for retail or we sell a lot of product to investors as well. I have no personal interest in owning rentals..  so that's why I don't care how good they are I don't like it.. LOL  But that does not mean I cant provide a product make a profit when I sell for those that want to own cash flow rentals.