Texas Turnkey Properties in Houston

[Gaurav M.]

I'm trying to vet a few turnkey providers in Houston. Wondering if anyone has ever dealt with Texas Turnkey Properties in Houston? Please share your experience if you have. 

[Gaurav M.]

I've been a Texas Turnkey customer for more than 2 years now. Thought I should update this post with my experience. 

1.  Communication: First of all both Shawn and Joni have been very responsive right from the beginning. Shawn personally gave me a tour of all his properties and I spoke to Joni on the phone. They were both able to answer all my questions satisfactorily. Personally for me, communication with property management was a key factor. RPM is always on top of communication and you can expect to receive a response within 24 hours. I've been burned in the past by property management with poor or lack of communication. 
2. Quality of work: Keep in mind that this is a turnkey company. So you have to set your expectations. Don't expect top of the line appliances and granite counters. The quality of renovation was average and just good enough to get it rented out as quickly as possible. That being said, it is always important to get your own independent Home Inspection from a reputed company. My home inspection report had a few issues, nothing major, which Shawn quickly agreed to fix. Now I have to take his word for it since I have no way to verify those fixes. He did not provide me with any documents or receipts to back up his work. However, all purchases come with a 12-month guarantee. Again, throughout the rehab process, Shwan was always responsive and provided up to date status. The rehab did take a bit longer than expected but it wasn't a deal breaker for me. 
3. Maintainance: There were a few minor maintenance issues in the first year. Most of those were all covered by the 12-month warranty. Anything exceeding $75 is covered by the warranty. I had to pay for anything less than $75. Again, remember, that just because it is turnkey does not mean that you will have no expenses in the first few year. Things will break which are outside your control or the TTK's control. You just have to budget for it. And of course, you have to budget for CapEx which will happen a few years down the line. So set your expectations right from early on. Turnkey investing is not completely hassle-free and hands off investing as many providers claim. You have to stay on top of things all the time.
4. Accounting: This is one of the areas where I'd like to see some improvement with RPM. Every so often I see a few accounting discrepancies in their statements. RPM is quick to address it. But remember to examine all statements carefully and stay on top of it. Question anything that seems suspicious. 
5. Tenants: I believe RPM makes the best attempt to get the best possible tenant and carefully screens all applicants. But I have no way to verify that as RPM does not share tenant application with owners. The first time when it was listed for rent, it took about 2 months for the property to get rented. Now TTK and RPM will make claims that all properties get rented within 30 days. But that may not always happen and it is outside RPM's control. I did a comparative analysis in the area and many properties were on market for longer. Now I like to believe that my property is in A- to B+ area and should get quickly rented and attract the best tenant. But that was not the case. The first tenant left a year later when their lease ended and left the place in a mess. It cost me thousands of dollars in making the place rent ready again. I think RPM could have done a better job of inspecting the place and having the tenant maintain it. Especially since I was paying RPM for quarterly inspections. After the first tenant left my property was listed again and this time it was on market for nearly 4 months. I blame it on the time of the year and just too much competition in the neighborhood. 
6. Returns: Cash on cash return for last year was a modest 2%. Nowhere close to what I had hoped for. I had projected an 8 - 10 % cash on cash return after budgeting for vacancy, maintenance, capex, taxes, fees, etc. However due to the tenant turnover, longer than expected vacancy and expenses to make it rent ready, my cash flow was hit hard. The property also appreciated modestly. So after accounting for cash flows, amortization and appreciation, I had a decent 14% return last year. I do not expect stellar cash flows this year either. I have revised my projections down to 6% cash on cash. Also, I've not been able to increase my rents in the past 2 years. TTK will make claims that rents in Houston are going up x% every year. But that is not always the case. So in terms of cash on cash return, this is my lowest performing rental. To be realistic most of my rentals have seen erratic cash flows for the first 1 or 2 years. It stabilizes after year 2. So I'm not worried about it at the moment.

Overall, I think Texas Turnkey is one of the more reputable turnkey providers in Houston area. I do not necessarily hold RPM or TTK accountable for some the issues that I've had. As any landlord knows these sort of issues are inevitable and you just have to account for it from the beginning. As always it is very important that you do your due diligence. I cannot stress this enough. Have very realistic expectations and properly vet the provider and property management company.