BP,
I've been contemplating writing this for a while now, but after the dust settled on my recent purchase from Bridge Turnkey in KC, I thought it's time to share. I'll try to be brief. No, never mind, I can see already that's going to be tough. Plus, you need details!
We have been "live-in flipping" in the SF Bay Area since 2012 to build capital for future investments. First house was a "duet" where I used a second, simultaneous VA loan (since the CoL is so high here they DO allow it!). I still own my first home from when I was in the Army waaaay back in 2010 :), but that's not much of an "investment". I lived in it for 4 years with my wife and newborn - didn't make sense to sell it since I put zero down.
Now, after 4.5 years of buying, minor/mid-level rehabbing, then selling for a profit, we've managed to get to a point where we can start the ball rolling towards our long-term goal, which is primarily buy and hold RE. If you are like me and have a fulltime day job (that you actually like or don't want/need to leave anytime soon), but want to get started "investing", live-in flipping could be a really great option for you. But you have to have a spouse who's willing to make several moves AND it helps to have kids who are not school-age yet (which was my case most of the time). You could also "house hack", depending on your living situation, location/market, kids, spouse, whatever.
Anyway, here's the basics of my first TK investment, fully rehabbed:
3 bed, 2 bath "bread and butter" house just North of KC.
PP: $149,900
Cash to close: $32,152 (deposit, down, closing fees, etc. - conventional loan)
Net profit (after PITIPM): $490/month
Cash on Cash Return: 18.2%*
*Please save all the comments about how it's not actually 18% CoC because I didn't include vacancy, repairs, CapEx, etc. I get all that. The home was nearly gutted, so CapEx will likely be little. New roof, new A/C, furnace, windows, appliances, garage doors and anything else that did not have at least a 10-year life span. It also has a 2-year lease in place with someone who has a 730 FICO. PLUS, like any good investor should, I put a CapEx fund in a separate account and I'm also not planning to take any of the profits - they're to be reinvested while I'm still working full time.
Things I love about Bridge (no, I was NOT paid for this, just sharing my story):
- Under-promised, over-delivered. I was ok with the numbers at the advertised $1,395/month expected rent, but they locked it down for $1,495! Good 'ol 1% rule and a heck of a nice surprise to me!
- Full rehab. Good quality.
- Appraised for $155,000 (more than I paid) - so overpaying was not an issue as it could be for some TK (so I've heard)
- Tenant in place by closing, or they would pay my first month’s rent (first contract only obviously)
- 2-year lease
- Weekly updates while rehab was happening. Team was a phone call away if I had questions.
- In-house PM. Have an annual inspection program "Bridge 360" (free or paid, depending on how many you want)
- In-house construction crew. Nice to have a full-time GC, I'd imagine.
- After my independent inspection, they fixed all the items that were found to be faulty - yes, they did. They sent a spreadsheet that outlined each fault, with the repair in another column.
- There are probably some I'm missing so I may have to update later.
Will I be buying more properties from Bridge? Based on this first experience, any chance I can duplicate this I will. I'm also encouraging my mother, father (both nearing retirement age) and "investor-minded" friends to do the same. Once I have 6 properties, the profit alone from those 6 will buy another rental each year.
While TK might not be for everyone, it's certainly one strategy that can provide great returns if you need to be hands-off. Bridge Turnkey has done a great job making it streamlined, simple and DOABLE. I'd still recommend evaluating each property to make sure the return fits YOUR comfort level, but I'm pretty sure Bridge is aware of what their clients want. I would definitely recommend them to anyone looking for turnkey properties.
Let me know if you have questions, please. My passion and purpose in life is to educate others and to help people grow! Love it.
Eric
PS. I’m also investing some of my money in large syndication deals, tax liens, first trust deeds, private lending – this TK purchase was the most fun and I'm really hoping to get into multi-family very soon. Hey, how about MF turnkey @Nathan Brooks?
