see a case study what happens and who makes money when you buy a investment property from turnkey provider.
Say investor bought a property of $100 k from turn key provider. Typical profit for turnkey provider 100K property is at least 20 - 30k minimum. Generally wholesale property cost 40-50 K , 20-25K rehab.
Now investor pay 100K -110K for this product and appraisal is most likely less or same as purchase price. So no equity from day 1.
see what else:
$3500- $4000 closing cost (typical)
$1000 first month rent for finding tenant
10% PM fee
15% surcharge on any maintenance fee
Let's say property has $200 cash flow..you will pocket $2400 at the end of year. I am not considering tax benefit and equity for simplicity. Similarly I am not considering vacancy and maintenance to keep it simple.
It will take more than 2 years just to recoup closing cost and tenant finding fee. Within year or max 2 years...u will have turnover ...again u will pay 1 month rent - $1000 and $2500-$3000 most conservative estimate to make house ready for rent. This cycle goes on.
Now see property management company cash flow:
$1000 - tenant finding fee + $1200 (10% monthly fee) + $400 (resign fee) or $1000 - tenant finding fee.
When PM company is charging 10% every month ..can someone explain why there is 15% surcharge on maintenance invoice amount.
