Biggest thing is quality of the area and future projected cash flow being affected by poor or gloss over rehabs (paint,carpet,etc.)
Just like an old car it is dirt cheap to repaint that thing and make it shine with the tires but what is under the body and hood is what counts.
The guts of a house is critical to long term success. This is why the cheap houses under 50,000 is hard to buy anything quality. For a turn key operator to buy something and do a gut stud up renovation the numbers rarely work. In those price ranges many companies just replace carpet,paint, some siding etc. and call it (newly rehabbed) to resale to an investor.
Problem is that 200 a month cash flow you are banking on with just one roof replacement, plumbing being replaced, knob and tube wiring,lead based paint, heating and air going out, water heater,etc. can wipe out years of positive cash flow.
You are then left with a neutral to non-performing property cash flow wise in a marginal area.
It's better generally to buy a property in a better area for instance that might be 75k or 100k. Better areas have more chance for rent growth and long term appreciation of the asset. Low income type areas the tenants tend to be poor with limited rent growth and chances for income increase with their jobs is more limited.
The lower end tenants need a very good PM company to keep them paying and taking care of the asset as the tenants have on average more social & economic issues.
Some buy ultra cheap stuff and make it work but many investors also take a beating with returns and dump the assets years later for what they paid or less for the property.
Research bigger pockets top right and you will see many cases of nightmares with low end houses.
I do nothing residential but James has been on this site for awhile. Maybe others can share actual experiences with his company. My information above is talking in generalities of what I have seen with the turn key industry and not a specific company.
