I used to be a turnkey SFH investor and I thought I was a passive investor. It is not a passive activity, so be sure you understand that as you begin your journey! I spent a lot of time, money and effort managing the property manager and the whole process. It was a job. In my experience, you not only need to focus on the operator who is doing the rehab on the house - but just as important is how (or who) the property management is done. I went through multiple property managers and it was a constant struggle. A few years ago, I sold all of my active properties and found true passive investing.
Now, I am a full time passive investor in real estate syndications. I hire an asset manager - they deal with renovations, adding value, managing the PM and everything else. All of my effort and due diligence is on the front end - vetting the operator and analyzing the deal. After I send the wire, I receive reports and distributions.
The proof is in the results - my syndication investments cash flow much better than my turnkey properties ever did. The appreciation has also been equal or better on the backend. Why? Because I am hiring a professional to manage the asset.
I think you can beat syndication returns as an active investor - if you have a competitive advantage: you know a market better than others, you can manage the property better than others or you can do the rehab better - whatever it is, you need something that sets you apart. If you don't have an advantage, you will just be an owner of turnkey properties and, in my experience, you will struggle compared to active investors and syndication investors.
To be clear - there are people who have success with turnkey SFH, but in my day job I talk to real estate investors all day and most that have invested in turnkey properties seem to have similar experiences as I had.
