All Forum Posts by: Joel Fernandes

Hello!

I was pretty excited about "turnkey investments" and what have you, at first.

I looked at a couple of markets, the only market that made sense to me was DFW. I'll explain my rationale:

1. Since I am borrowing 80%, the minimal returns coming from cash flow means nothing to me as long as the cashflow is not negative.

2. Due to operating costs due to loan payments, the only  thing that make sense to me to make good money is a growth market.

This immediately ruled out class C type and even many class B's to me.

I turned my attention then to DFW as a turnkey promoter who's name I don't want to mention told me to talk to a "turnkey provider" in the area. I was pretty excited. But now it is becoming a drag because:

1. They have very little inventory - 1 or 2 houses.

2. Their email turn around time is > 48 hours, this is very frustrating.

3. They apologize about point 2. but apologies mean nothing, if you apologize for the same reason on every call.

4. In their "cashflow" calculations in their proposals, they did not factor in vacancy costs, which was a bit of a red flag since that and if you factor in maintenance costs, does make the cash flow net NEGATIVE.

5. They had some listing discrepancies. A property on their website is listed on zillow with small square footage - and they don't answer me clearly why this is. Could they selling a dud on their website?

6. Some of their previous properties on Zillow's price history shows a > 80 day vacancy. This is quite scary for an investor.

All in all, this seems a really risky affair even if it means high growth. If the cash flow wasn't net-negative, and if these people were more responsive over email, then may be I would be more interested.

But right now I'm really demotivated, and I am thinking if I should turn away from "turnkey" and do all the dirty work that they do than giving them a pile of money. :-(  And may be do something local to my city, since the whole "send an email and wait for a couple days" thing isn't working for me. If my emails don't get responses now, what assurances I have that they will get responses after a deal closes?

Thanks a lot for the answers, guys. I really appreciate it.

Brian, About the " independent appraisal of the property".  Are you suggesting for me to do this before signing the contract? Or is this the appraisal that happens as a part of the closing process *after* signing contract? I agree this is a great idea. Since I am not going to be visiting the property, I'd really like to have someone independent go check it out (before signing contract). Do confirm this is what you meant.

Also when you say the property has to have a tenant already, is this realistic to expect? Isn't it true that if the home is in high demand, then by the time the home is rehabbed, it would have already been sold to an investor BEFORE a tenant is placed?  And if it wasn't already sold to an investor, and has a tenant, then that means the property sat on the market for a while and nobody bought it, in which case the property is probably not that great/hot?

Jason, yes I am "buying a property from a turnkey provider". What could possibly be the cons of having a tenant in place already?   Also could you clarify what you mean by a "turnkey property" ?

Ronan, thanks. The property in question is a high growth property. So I am trying my best to get a good deal and not get a negative cash flow while at the same time being conservative about rent/vacancy etc. 

I also forgot to mention, the property I am looking into is new construction.

Hi,

I was referred to a turnkey provider in a certain market, by another company called a "turnkey promoter".  I was disclosed that the turnkey promoter would be getting a fee, if they successfully sold me a home there.

I am curious if this "fee" is the same as a "buyer's agent commission".  My question is - Is the fee the promoter is getting, the same as a "buyer's agent commission"? Is there any difference between the "promoters fee" and the "buyer's agent commission" as far as the paper work goes?

One more question, Is it common to not have a tenant placed at the time of signing a contract for a turnkey property? I am told by them that - it is common not to have a tenant already, since the houses are in demand, so by the time they finish construction / rehab, people are already trying to buy the property. Is this true?  I really want a property that is already generating cash flow.  I am also told that since the mortgage payment is at the end of the first month (basically you don't pay for the first month), there is not really an impact - what do you think about that?

Hi Anjesh, did you end up using them?

Lisa, who is the competitor you are referring to? Could you let me know so I can check them out as well?