All Forum Posts by: Chad W.

Just chiming in a little late. Also in the Sacramento area, currently in Roseville. My wife and I are actually in the process of finding a new primary residence and almost bit on a nice Streng home in the overbrook area off Madison but alas the flippers "North Natomas'ed" it out with too much granite and carpet. 
 
Also interested in any local meetups. I currently do most of my buy and hold in Memphis.
 
-Chad

Not sure right now Joel. I just paid them off this year. had I not done that I would have had a negative cash flow for the second year in a row with both of them. I am hoping, probably foolishly, that next year will be better, that the tenants will stay current and that nothing else will break, but you know, good luck with that right? If things just don't work out after next year I will likely sell both and apply the money to our next primary residence and go back to investing in stocks / primary residence only.

Cheers,

-Chad

Hi Joel, 

Noticed that you had only one taker for your post. I was thinking about the same thing and I think the problem is that this site, as useful as it can be, is not too keen on anything that makes the product or methodologies being pushed look unappealing. For me, I am getting better returns off of an un-managed index funds than I am on two paid off Memphis turn key properties year over year. To be fair, I am making money, but just barely.

Funny thing there, I bought mine in 2012 when they were going for half what they are selling for now. I wonder how new turn key investors in Memphis are doing? One broken AC unit and there is almost NO WAY to make a profit with conventional financing. Vacancy? Forget it, you're hosed...

For me, in Memphis, 

1) Vacancy / broken leases

2) Repairs

3) Evictions / other PM fees

Alright, well... thanks...

Hello folks, long time no write. I am here today to ask for advice while giving an update to one of my first BP posts from 2012 which you can find here.

Quick recap from the linked post: My grandmother and my cousin are currently living in the home that I own along with my grandmother (joint tenancy.) In 2012 we took out a mortgage on the payed off home to pay off some debt run up by my cousin and to fund down payments on two rental properties in Memphis from which income in turn would go on to cover the mortgage on the home.
 
Fast forward to 2015 and both Memphis properties are PAID IN FULL and flowing nicely. There is still a mortgage on my grandmother's (our) home which I pay. The cousin has now transitioned into a home care giver for my grandmother who is bed bound and suffering from dementia. This will soon change as my grandmother needs more care than my cousin can give so I am looking into moving her to a local board and care facility and renting out the home as my cousin cannot pay for any of the utilities, etc. My grandmother's fixed income will go almost entirely to the board and care facility.
 
So, to wrap up, I am now looking at ways to gently transition my cousin and her kids into a new life and out of the house she has been in for the past 13 years or so. I am trying to help, but there is no way I come out of this as anything other than the bad guy. I simply cannot afford to support her and her kids and pay the mortgage, utilities, food and maintenance on the house once my Grandmother is no longer living in it.
 
She has agreed to move out once my grandmother has entered board and care, but I am still nervous that she will change her mind after she enters care and I will be on the hook for the board and care and all of the expenses with the family house which I frankly cannot afford.  

Any advice? Lawyer up? Cash for Keys? Hope for the best?

When I had a HELOC I never had to justify what I was using it for, it was simply there. I was not forced to change the insurance policy on my home. In my case, even with the HELOC fully leveraged, we still had >20% equity in the home. So yeah, never heard of that before.

 I'm not sure. This was almost three years ago and I have been through several tenants on both properties since then. 
 
I do want to clarify some things I mentioned in my post since one of the turnkey companies reach out to me, I assume, after reading this thread. That home, has actually had a tenant in place since July of 2014, which is longer than 6 months, and I am very happy right now about that. Also, both PMs I mentioned have been improving in communications recently so some of these complaints are legacy complaints.
 
Still, my cautions stand for anyone looking to invest out of state. You really need your PM to be in your corner 100%. If what feels like an emergency to the investor isn't an emergency to the PM, that is a problem.

Well, let me get this party started for you Jon. 

---

1. How many out of state turnkeys have you purchased?: Two

2. Do you still own these properties or were any sold?: Yes, still own. 

3. How involved are you with the management of the property?: Not directly, each is managed by a separate PM company. 

4. What kind of cap rate, COC, ROI are you getting?: It's negative to the point that I am not even tracking it right now.

5. Was the estimated rent, cap rate, ROI that was advertised close to what you are actually getting?: uhhh, no...

6. Overall, are you happy with the investment?: I will be, eventually. Right now each property has a mortgage which makes breaking even hard with vacancies and repairs. Once those are gone, they will be less stressful. At least I bought low.

7. Which turnkey companies would you recommend or warn against?: I have no comment here, it was my choice to buy the homes and honestly they are what they were advertised as. I am more disappointed in the property management side of both homes.

8. If tenants were already in place, how long did they last and what caliber tenant were they? One was in place, the other came on board shortly after purchase. I will say this, both properties were purchased in May of 2012 and neither has had a tenant in place for more than 6 months at a time. Several have been one or two payments and out. I have also had a 7 month vacancy on one of the properties and there was very little communication at all from the PM during that time. 

9. Were you satisfied with the PM that came with the deal?No. Both companies are horrible at returning calls and e-mails, neither seems to put any effort into managing or using propertyware software correctly. The companies are Marathon Property Management in Memphis and Premier Property Management, also in Memphis. 

10. Do you have any advice for others looking to venture into out of state turnkeys?: Yeah, go ahead, just throw the traditional estimates for vacancy and repairs out the window and double them. If I had to do it over again, I would buy one "A" class home instead of two B/C homes. Buy with cash, do not borrow. 

Paying off your student loans has a guaranteed return on investment and doesn't require nearly as much effort as investing in real estate. I would always go after the low hanging fruit first while you learn about the market and what you want out of it.