One Stop Shops- To Use Or Not?

This housing collapse and resulting recession have resulted in the proliferation of a large number of "one stop shop" type of businesses that cater to out of state/remote investors.  I have been watching what's going on in my markets and have done some research to boot.  I would very much like to weigh in on whether or not to use them as a investor that owns property remotely.

 I believe that if such a business is done correctly, it can be invaluable to the remote RE investor.  That said in a few cases I have also seen it done badly and have personally witnessed people sold overinflated assets that are destined to underperform the market.  How bad can it be?  How about 25% to 30% above actual CMV!  I would thouroughly check out any company that I was going to purchase a property through that will rehab it, rent it, manage it, and help you with your exit strategy all in one.  Guaranteeing you to profit handsomely all the while.  I personally like a bit of seperation in these areas.

I would only make an exception if I saw a serious benefit to my business.  For example getting properties for a total investment that is well below current REO sales in the area.  Once again though I would want my own realtor to verify all comps.  One of these companies should be able to leverage their resources and buying power to get great deal and then help the investor, their client buy with TRUE equity.

  The fact is a VERIFIED fantastic deal would hook me quickly in a market that I was less familiar with.  This would be a deal in an area that I picked out as a sub market that fit best with my particular strategy for the market I am in.  I would use the help of a buyer's agent that I chose to determine how good a deal this is before putting any earnest money down.  Please do not rely on the company you are purchasing the property from for comps.  If you believe that no one in this business would need to take advantage of others for personal gain, then you will very shortly be parted from your money.  

I also am not a huge fan of using an appraisal that someone selling a property provides me.  I think that for the most part you can use those as toilet paper.  Nope, I will get my own thanks.  Too easy to find a appraiser that "fits the bill" so to speak.  Not necessarily that they will be fraudulent, but some are slower to react to current market conditions than others.

Also beware of a bait and switch scenario that some have used.  That is to rent a property for above market rents to a tenant that has no intention of sticking around.  The cash on cash return is a bit different if your $800/mo tenant skips in month 2 and now you have to replace them with a $600/mo tenant because that is what the market will bear.  Verify what realistic rents for the area are by looking at local listings (I mean go there and actually look)as well as using the internet approach like Zilpy.com.  Please be aware that I have had Zilpy.com say that my property will rent for $825 a month and the market will only bear $625 a month, so this is not always a perfect number. 

 So to be fair, would I use the One Stop Shop to enter a new market?  Sure, but I will follow the admonition of one investor I know to: "Trust, but verify."  Please do the same in your endeavors.  Oh and checking with the BBB is not a terrible idea either.