All Forum Posts by: Cliff Harrison

I had a meeting and showing with Mark a couple of years ago.  It went well, I thought Mark was very credible and I had a good impression of him.   The house I looked at (in the Bannister Road area) seemed to be pretty well rehabbed as well.  I ended up not buying Turnkey but I had a good impression of Mark.  Good luck.

Hello Brian welcome to the forum.  I live in OP and am investing in south KC and suburbs.  Regarding your plans to sell your properties after a 5 year hold period, make sure you account for the transaction costs.  Are you planning to purchase and hold with cash or use financing leverage?

Cliff

Ruskin Heights is a 'D' area, I personally don't even consider it.   But there are some very decent 'C' cash-flow areas not far from there where I do own, and I know there are some decent turnkey providers working in those areas.  The challenge to the purchaser is to know which locations will work in the long run.  

If you can get a referral you trust for a provider, then consider doing business with them. I also suggest just looking at MLS listings in the area you are considering purchasing as well, so you can compare prices to the Turnkey offering.

Be sure to verify the market rent for the house on rentometer or other websites, as the proforma will often have a top-of-market rent. Also check the proforma for capex layaway and realistic vacancy & pm costs.  Lease up fees, credit loss, and rehab expenses are significant and may be missing or under represented.   

The only one guaranteed to profit in your turnkey purchase is the turnkey company. Do your homework, and being here on BiggerPockets is a good start to that. The original point that the OP made is valid - there are many ways to be taken in on a turnkey deal. Be careful. Also I will say if you are going to be doing all this research anyway, consider buying nice houses off the MLS as an option and invest your time finding an experienced agent you can work with.

Zillow Rental Manager - ties into Hotpadz, Trulia, and others.  Works great.  I was a Postletts user and my account was imported to Zillow.

It looks hopelessly optimistic, in my opinion.  What is the budgeted vacancy loss?  There is not a capex budget that I see in the numbers, not sure what above references are about.  The repairs/maintenance budget is $1000 too low.  

@Mike David specific differences will be determined by specific deals.  I can just generally say that #2 is better financially, but comes with more tasks to perform.  #3 is an easier entry, but brings more risk of not making any return at all, or negative returns, over the hold period.  In #3, you are responsible for supplying both yourself and the turnkey provider with acceptable returns.  The turnkey provider WILL get theirs on the buy courtesy of you, the only question is if you will get yours in the hold and exit.  Be careful out there.  :)

On a per unit basis, you won't maximize your return through turnkey purchases.  Your mission statement might be 'maximize return on a per unit basis while investing only in turnkey'.  This would possibly maximize your return for minute of time invested in procuring real estate investments.  Common buy and hold strategies in order of highest return& work/involvement required:

1. BRRRR - buy distressed, full rehab, rent out, refinance, repeat.

2. MLS property - buy nearly move in ready property off MLS or other sources, hire PM services

3. Turnkey

Note - in my areas, it still doesn't take too long to find $200 cash flow properties in the $70,000 ballpark if you pursue strategy #2.  Or $300 cash flow in the $95k ballpark.  Now, if you are taking a turnkey providers proforma cash flow number as your $250, after looking at dozens of them I am confident you need to reduce that number substantially to reflect the true long term cash flows of the property.  If you post sample numbers I will point out why that is, or eat my words.

Strategy # might seem daunting to manage from out of state, but you are already here doing research, and with the right references and help you could do it.

Good luck!

Cliff

If you are not paying well over market value, this sounds like a GREAT DEAL. One thing I would mention is to be sure you have conservatively calculated the cash flow. I don't know if you meant for your list of inclusions to be complete, but you did not include Maintenance (this should not be the same account as CapEx) or Vacancy categories. What does each unit rent for?

It's a nice property in a desirable area.  It will sell, if priced correctly.  Are your parents in a hurry to sell (mortgage, need equity out, etc)?

In our tech-driven world and so many self-service real estate search engines, don't think changing listing agent makes that much difference on the marketing side, as long as it has nice photos in the MLS listing, access to the house is provided (no schedule for showings), and the listing agent is responsive to offers and inquiries. If it's priced to sell, it will sell if your agent is minimally responsive.

Note - I am not an agent, and I'm sure some listing agents are special.

Good luck,

Cliff

@Joseph Weisenbloom  I did a cash out finance early November at 5.25%.  I did have to pay a quarter point on the 1.6M 20 duplexes loan in order to get 4.5%, which I was going to get 4.5% in October without the extra quarter point.  They referenced rising interest rates.  I told them they were only locked in for 5 years so do the loan at 4.5 like they originally quoted, and the quarter point was our compromise.