Caleb - I am talking to them currently but have not yet invested with them. I think they are a very professional firm based on my conversations but my concerns are the following:
1. They are very clear that there is an equal likelihood that your appraisal can come in lower than list price. While they say the appraisal is one person's opinion, that one person's opinion is what is going into the bank loan and I would consider it to be the market value. This is very concerning for me because I know you don't have built in equity going in with a TK provided but it the appraisal is lesser, are you not going in with negative equity which can only bite you in the back when you sell? Also, if this does happen, your down payment would need to be more.
2. Property management fee is around 10% and 1 month charge for getting a tenant in or between tenants. It goes down to 9% when you have 5 or more with them. I think this may be ok.
3. There is no tenant placement guarantee. When I look at other TK providers, they guarantee a tenant in the door when the property closes or a minimum period after that during which if the tenant is not placed, there are some recourse. I do understand their vacancy rates are around 4% but is something to think about as to what happens if you buy a property that is unable to have a tenant placed for say two months.
4. I would ideally like to shop around for a mortgage lender but since they have existing relationships, I am not sure if I will have the chance to shop around for rates or if the lender who I work with would take me for a ride.
5. I am yet to see listings but my understanding is that due to the extent of rehab they do, the prices of the properties are much higher. I would be able to comment on this after I have a chance to see listings.
Just my 2 cents.
Regards.
