Reputable turnkey provider (MemphisInvest)- thoughts on roi

[Samir Ali]

Hey BP,

Been working with MI/REI Nation as the general bp consensus seems to be that they are a reputable and well managed/respected turnkey provider. I'm looking at some pro formas they've provided and running my own numbers and wanted to get general thoughts...

They claim their average rent to price ratios are around .7-.8, well below the 1% rule.

Basically, their historic data is used to justify low estimates for expenses such as vacancy, maintenance/capex (4%).

The resulting cash flow looks appealing ($2-300/month).

Their justification is that since their rehabs are robust, since they replace typical capex items (I.e. roof) and since their average vacancy and maintenance rates based on historical data are so low, the lower estimates are feasible from an roi/cash flow calculation perspective. The resulting CoC is 10%+.

My guts telling me that their estimates for expenses are really low. When I increase them, the cash flow number is wiped out, and CoC dwindles to just a few %.

Simply using the 50% expense rule, you can tell that cash flow is also minimal.

Do y’all think that based on the “white glove” service that they provide, coupled with historic data trends to back up low expense estimates, that an investment like this could be feasible? Or am I doing myself a disservice if using low estimates?

If it was another turnkey provider I’d probably pass, but I know a lot of investors use them. I’d like to think that part of this is the “cost” of your sanity using a company that does all the heavy lifting for you. At the same time, with price to rent ratios so low, how is anyone making a decent return unless their low expense estimates are truly accurate (which I know, is a gamble, right?).

Has anyone else used this provider, or a similar white glove type service? If so, how are your returns?

Appreciate everyone’s time reading and helping guide me in the right direction for my first investment.