@John Lowe
John, I'm not necessarily an "advocate" of turnkeys, but I am actively evaluating one of the larger turnkey operators in Chicago and considering an investment there. And I've been reading some of the same Daniel Kay Hertz material that you linked.
The provider I'm considering focuses purely on single-family homes in the south suburbs. I've vetted around 30 of their properties and found 3-4 that I would consider buying. Though their focus is on SFRs, I think a majority of their inventory likely resembles what you've described (e.g. product priced based on the 1% rule in neighborhoods unlikely to appreciate.)
That said, the handful of homes I've found do appear to me to have potential.
These are homes in neighborhoods with average or above-average schools, 80-85%+ owner occupancy, very low crime, and trailing 5-year average appreciation of 2.5-5%.
The homes are priced at 5-10% below the median home value in their broader neighborhood and appear to be selling close to fair market value based on my comps analysis.
I wouldn't have tons of equity going in, I'd pay considerably more for this "quality" than if I just bought from their core inventory, and my returns on paper (using all of my diligence and conservative assumptions) look way lower than the pro formas.
But given that I do plan to hold for 15-20 years minimum and don't intend to get much more hands-on than periodic market tours and some spreadsheet jockeying, I think there may still be a fit here.
