All Forum Posts by: Anton Ivanov

@Alex Zuroff

I would say the biggest advantage of turnkey marketing companies is that they often have advisors who can give you insight into several different markets and help you pick the one that fits your goals and risk tolerance. For example, I personally know Marco who runs Norada and he is extremely knowledgable and has a lot of contacts throughout the country.

Along with advice, turnkey marketing companies also list properties from several different markets, so you can see what's available around the country. If you're a new investor and are not sure where to buy, this can be a good start.

If you already picked a market where to invest and you don't need extra step-by-step guidance, it will just be faster to find a turnkey company in that market and work with them directly.

@Alex Zuroff

Norada is a turnkey marketing company - they don't buy/rehab/sell properties themselves, they help other turkey companies sell their properties by providing marketing services.

There are several turnkey marketing companies out there, Norada and Maverick being the biggest, as far as I know. An easy way to tell which type of company you're looking at is if they list properties in different geographical areas - they are a marketing company. Turnkey companies typically operate in a single city or a few neighborhood cities.

@Phil DuChamp

There is nothing wrong with being "conservative", in fact that's the only way to run the numbers in my opinion. I think it's better to pass on a lot of properties and find a great one, than buy the first one you come across and then be disappointed when the cash flow doesn't match your expectations.

As far as your turnkey company - I'd say if they don't have around 2-3 new properties a week, they may be too small for you to be exclusive with them. I'm not familiar with the Indi turnkey scene, but I would imagine that there are plenty of larger companies there that you may want to check out in addition to the one you already found.

@Phil DuChamp

I was buying in Atlanta and Birmingham, not in Indi, but it took me on average 3-4 months to find a property that I liked. And this was with new properties arriving every week (usually about 2 per week per market), as I was very selective.

Your wait time will depend on how big your turnkey operator is and what's the current state of the market. If you're working with a smaller company that does just a few properties a month, you may want to consider finding an alternative company in the same city so you can see more inventory.

But regardless of what you do, I suggest you don't rush and be very selective, especially with the neighborhood where the property is located. Also, don't forget to always run your own numbers and never trust what's listed on their website. Here is a post I wrote recently about how turnkey operators inflate their cash flow projections:

http://www.cashflowdiaries.com/5-ways-turnkey-companies-inflate-cash-flow-projections/

@Justin Young

The benefit of doing a 1031 exchange is that you will not have to pay taxes on any capital gains you make from the sold property. For example, if you bought a house for $100k and sell it in 2 years for $150k, you will typically have to pay capital gains taxes on the $50k difference. With a 1031 exchange, you use the sale proceeds immediately to by a "like-kind" property (for example, another house). If you do this, you will not need to pay capital gains taxes on the $50k.

There is nothing wrong with 1031 exchanges - if you're going to sell one investment property to buy another, then this is the way to go because you will be saving money on taxes. However, beyond the tax savings there is no reasons to do it.

In my proposed strategy, you will not be selling anything. You buy your turnkeys and keep them forever and use their cash flow + your savings to save for a multi family property. I don't think it will take you longer, in fact, I think it will be faster than what you proposed and less risky.

It's less risky, because your plan depends on your properties staying the same price or appreciating in value. If they decline in value, you just poured all of your cash flow paying down the loans on the properties you cannot sell at a profit.

Hope this makes sense!

@Manuel Savorelli

In my opinion it's always better to physically go and see the property and the neighborhood. The second best thing you can do it send somebody you know, preferably also a real estate investor, to look at the property. If, for some reason, the above two are not possible, you should at least order a complete, professional property inspection, look at as many pictures as you can, research the neighborhood and a do a "virtual drive-by" using Google Street View.

@Justin Young

I agree with @Brent Coombs - this strategy isn't bad, but it will be very slow. You're likely to get only a few hundred dollars per month of cash flow from your properties and putting that toward their mortgages will not really pay down the principle that fast, especially considering that you pay more interest than principle at the beginning.

You're also buying turnkeys - so you will purchase them at market prices. This will give you minimum equity, so you don't have any wiggle room if the prices in your markets fall. You will then be unable to sell them or will have to take a loss, which is counter productive.

When you're first starting out with real estate, in my experience, your biggest growth potential comes from the money you can save from your regular job, not from your properties. After 5-10 years, your cash flow will be much higher, the properties will likely go up in value and your mortgage pay-off will be noticeable. But until then, provided that you have a relatively high paying job, that will be the biggest source of your growth.

I don't think there is anything wrong with purchasing turnkeys, but I don't think you should count on them to finance your multifamily property and I would not use their cash flow to pay down their mortgages. Why not just save all of the cash flow, add your personal savings to it and use this to save enough for a downpayment on a multifamily property?

@Keeya WangJones

I think you have the right mindset for getting started. What helped me a lot a few years ago was actually driving the neighborhoods around San Diego and looking at as many properties as possible. Even if you don't think they will work out as investments, just start looking at them regardless and you'll learn more than what you can just reading online or in books.

I sent you a PM addressing some of the things you brought up about DealCheck.

@Adrian Butler

I recall some people mentioning it, but the BP app doesn't get updated much, so it has not beed added. Like Michael said, there are apps that do this very well for both iOS and Android.

@Justin Young

Exist strategies with turnkeys are the same as any other rental property, it really doesn't matter how you bought it in the first place.

The situation that you described (buying at market, no appreciation) can happen with any deal, but purchasing a turnkey makes it much more likely since you WILL be buying at market.

Here is a great writeup on the general exist strategies you have available:

https://www.biggerpockets.com/real-estate-investin...

And here are some more "unconventional" things:

https://www.biggerpockets.com/renewsblog/2014/02/2...

I would say that if you've held on to the property for a long time, it's likely that due to mortgage pay-down you will not have to sell at a loss, especially considering all of the cash flow you collected over the years.