Property management company that does the vetting for you.

[Thomas Hart]

Anyone have any experience with working or buying properties thru these type places? Meridian Property Management in Memphis Tennessee is one. Another is Georgia Residential Partners in Atlanta area. These types find properties for you and when will do the management going forward. Esentially creating a turnkey rental property. Thoughts?

[Curt Smith]

Just general comments regarding turnkey operators. You have to understand the whole business model. They make money by doing the least rehab possible for obvious reasons, asking the most on the selling price and charging the most for their maintenance. They sell properties sight unseen to foreign buyers who are looking for capital preservation 1st. That's a different customer than most of us US REI folks who look for value and cash flow. So right off the bad there's a business model mis match.

Turn key folks won't pull out dated kitchens and often even leave the counter tops, old toilets and bath tubs. So what you say as long as the renter pays? It a maters ALOT! 1) future CAPEX. No one is going to hold your hand and tell you that you're in for $10k rehab in 5 yrs updated all the things the turnkey guy didn';t do. 2) the quality of your perspective renter will drop over time as newer rehabs by the Funds flood these low end cheaper markets. I suggest everyone go to craigslist, for Atlanta. Search on the whole area, but enter Decatur for the search term, $900 max rent. Look at every rental in the first 2 pages. Notice the upgrade quality. You'll be SHOCKED! There's brand new flip quality being rented for $800. Check your area to see if these marginally rehabed turnkeys are competing side by side with much nicer quality. Your real NOI is at risk IMHO.

Look at the pictures from the turnkey folks for their properties: do you see old wood grained back splashes (Formica) and counter tops. Cabinets with those black groves cut into the doors etc. Old toilets and fiberglass tub/showers? You'll be budgeted for a rehab in the coming years. Re-calc your profitability based on re-doing a complete rehab within 5 yrs is my suggestion, it's going to happen. Budget for dropping occupancy, it's going to happen...

Your competition for these properties are the Chinese, Australians who just want their cash out of their country where cash flow is frosting. The turnkey folks are glad to give them what they want, less cash flow than what the ad sheets make it sound like.