@Andrew Brown Thanks for your service as a front line medical worker! I used to work as an EMT for 5 years in the greater Boston area. I've also been evaluating a ton of turn key providers. What you're fearing now is simply the same fear a lot of investors have (including myself)... where they're praying 'i hope this deal goes well'. You need to ask yourself why do you have fear? Here are some issues I've discovered from turnkeys and the steps I've taken to mitigate them. Right now, i'm pre-approved and am just waiting for the right deal to strike based on the providers I've chosen.
For example:
Risk of not analyzing deals correctly: I looked up all property tax rates by county myself. I estimated insurance quotes based on dummy quotes online. I checked to see if the property is in a flood zone on FEMA. I always up the repairs and vacancy rates to assume what would happen on a more conservative basis. For example, turnkey providers always say their rehab really limits turnover to every 2,3-4, sometimes even 6 for REI. The only time you'd adjust capex items is if you have proof that a new roof was just put in, then maybe you'd start putting in X$ per month for a new roof assuming a 20-25 year life depending on your climate.
Risk of not choosing a reputable partner: I PM'd a lot of other investors who have posted about their experiences, where they had hiccups with a turnkey provider or not, and find out whether they might be 'fake posters' (you never know, right? biggerpockets is just a micro version of the world, there will eventually be scammers lurking here). I need to know what these turnkey providers did when things went wrong for one way or another.
Risk of not knowing the property you're buying: I fully intend on using the turnkey provider's recommended inspector, and then hiring my own that has not been recommended. For a 200K investment, it's worth spending another $500 for an inspection to prove out the scope of work was performed as inspected. If you're worried about plumbing, foundation issues, get an engineer or plumber out for an assessment.
Risk of having a bad property manager: have you spoken to the property manager yet? I personally need to know that the property manager will help me save money. I don't want them sending someone out for something that can be resolved over the phone or with a handyman vs a licensed plumber. What do they take on every tenant placement (i.e., are they incentivized to keep a tenant long term or are they incentivized to keep turning the property over)?
Risk of having a bad tenant: learn where good tenants live, what are they looking for? Schools if you're in a family area, good bars if you're in a young professional area are all simple things to consider. What does the trulia crime map say? At the end of the day, you can't control who goes in there. But maybe the property management will let you make the criteria more stringent (like higher credit scores, no eviction history possible)
I hope this helps, this is a culmination of all my reading and research so far and how I've planned on mitigating my risk. The #1 rule here is to not lose money first. If you re-run your numbers and think you're going to lose money, just say NO. But don't say NO just because you haven't taken the steps to mitigate the risk yourself.
Would anyone else add anything? I must say, I am at odds with how much legal asset protection I need right now because I've gotten proposals from lawyers saying I need a LLC to be the living beneficiary of my land trusts (which I'll quit claim into right after closing, since I have the close with my personal name on the loan), and create a revocable living trust as the death beneficiary of the land trusts. This costs upwards of $5K, and is just a cash flow killer if I'm just starting out on my first 1-3 properties.
