All Forum Posts by: Daniel Mills

So, I got a little more information today on how the Turnkey company came to the list price. It seems that they used off-market comps, which they say are very common in the area. I can't validate that, but as an investor that's a bit troubling because when I go to refinance or sell the property I will most likely be using the on-market comps. Of course, this is a question I should have asked from the beginning. So, the company is offering this info to the appraiser and seeing if they will take it into consideration, but I think it is unlikely they will. Good lesson for me that will cost me the appraisal fee. 

Hi guys, Yeah, this is a SFH in one of the SMILE cities. I have 8 other rentals in the US, some conventionally bought and some turnkey, and all of them are cash flowing properties that I bought on that basis. Two of those properties appreciated and I decided to do a cash out refinance. Because the other properties are cash flowing and I have a well paid job I thought I might take a risk this time around and purchase a property “mostly” for future appreciation. The rent should cover PIMI and property management, but not maintenance and vacancy. I’ve been a bit worried about this strategy but...

Thanks, guys. this has given me a lot to think about. I really appreciate the insight from@Curt Davis as a Turnkey provider. But, this is such a discrepancy in price between what they are asking and the appraisal. I have bought some lower price point properties in Memphis that appraised a bit lower, a couple grand, and I did close. I am happy I did because the price came up quickly as investor demand has increased. however, those properties cash flowed really well even at the sales price. In contrast, this home was one that is just breaking even and I was buying it because I see future appreciation here. M¥ost of my properties are cash flow oriented so I thought it would be ok to balance the portfolio with one property more focused on capital appreciation. So I can't really see myself paying so much extra for the property here. 

As a side note, this is their preferred lender. I don't have much choice here because I live and work in Japan. I have been using this lender to get conventional mortgages for years (TN, AL and refinance in ID) and they really understand my situation. in the past, when I have used other lenders it's either taken a long time to close or the deal fell through. If the only way to move forward is to change lenders, I won't do the deal. I've already lost months doing this deal, so I think I will just return to my other markets. 

OK. So here is the situation. I was in the process of purchasing a rental property through a Turnkey company that was asking $261,000  that just appraised at $226,000. Of course, I am not paying the original amount and I have sent an email asking if they will lower the sales price to the appraisal amount. I haven't heard back yet, but I am guessing they will dispute the amount and say that they will pay for a second appraisal. This is a bit worrying because I know that some appraisers who get a lot of business from the company might try to fudge a bit to get the sales price they want, right. So, I am planning on asking if I can choose the appraiser. I am just wondering if there is anything else I should consider to make sure that I don't get taken here. Any advice would be greatly appreciated.

Thanks,

Daniel

Hi guys,

I'm on vacation in Honolulu for the next few days. Are there any meetups planned? I know @Brandon Turner was talking about doing something while he was here. 

Thanks,

Daniel

@Lucas Atencio, thanks for your response. I have four properties in Memphis, but I own another five in other States. If I buy one more house it will be my last slot, so I was hoping to consolidate.

Thanks, guys. I had to get someone soon so I went with another recommendation - The Home Inspectors. I'll let you know how it goes.

Hi guys,

I currently own 4 SFHs in Memphis, TN. I am looking at buying a 5th. I am wondering about the possibility of rolling all of these into a single commercial loan. A couple of questions...

1. Can I do this? Has anyone tried it before?

2. Do I buy the 5th house on a conventional loan and then try to refinance them into a commercial loan later or can I do the commercial loan purchase/refinance at the same time?

Thanks,

Daniel

That's interesting. From what I have been told you would need to take it out of the trust to get financing with most conventional lenders. But, with conventional lenders it's probably equally hard to get funding in an LLC. Are you sure they didn't say pull it out of the trust, do the financing and then put in an LLC which offers the asset protection a trust doesn't?

@Carol Kotchek, that's very interesting. I am currently looking at a couple of their properties in the Huntsville area and I was unable to find comparables for sale there at a lower price. I have bought several turn-keys in the past and have been happy with my returns (none from ROI yet) but I am just wondering if we are getting to a point in the cycle where turnkey isn't making sense. Their margins are getting squeezed and maybe we're better off just buying from the MLS. What do you guys think?