All Forum Posts by: Kevin H.

Originally posted by @Anthony Dooley:

Putting more money down and negotiating the price down will increase the cash flow. Buy for cash flow, not appreciation. 

That is another thing that irks me about the turnkey providers. They don't negotiate the price, which is really hard for anyone who has ever purchased a home through an agent and feels like "not paying asking price" is part of the game.  It gives me the feeling that it's just because they know there is another coastal sucker on their list waiting for a OOS deal, many of whom are already conditioned to pay asking or over-asking price for their own homes in their local overheated markets.

So I read through this whole thread and seems the prevailing consensus is there are a lot of scammers out there and if you can find an honest, reliable turnkey provider it could be worth it, but no recommendations on how to find that needle in a haystack.  Maybe BP just removes those posts.  Anyway, anyone NOT affiliated with a turnkey provider who wants to tell me about positive/negative investor experiences with specific providers, please PM me and I would be very grateful to hear about your experience.

I am interested in people's thoughts on realistic expectations for turnkey SFHs across different markets, as I am just getting started and trying to calibrate expectations. 
I have evaluated a few dozen properties now from several well known turnkey providers on these forums, and while they polish up their marketing materials pretty nicely, when I run my own numbers with my own financing and assumptions these deals rarely look interesting from a cash-on-cash return perspective, so I feel like I'm either I'm only seeing the scraps that other investors have discarded, or my expectations just aren't realistic on what to expect out of these turnkey providers when utilizing conventional financing.

Returns I'm seeking:

- ≥8% Cash-on-Cash in year 1

- ≥18% 10-year IRR

- ≥$150/mo in monthly cash flow after all expenses in year 1

Properties I'm focused on (I am flexible on the area as long as the numbers work): - Class A/B neighborhoods (middle class incomes, low crime, safe for families, decent schools, higher rents (>$900/mo)) - want to stay clear of C/D properties to avoid tenant problems and depressed neighborhoods, even if it means sacrificing some cash flo - decent potential to be exited to an owner-occupied buyer in 10-15 year timeframe rather than a "lifetime rental"
- 3-4 BR / 1.5-2.5 BA, ideally built within last 40 years
- Major CapEx (roof/HVAC) either recently rehabbed or with 10+ years of life

Assumptions:

- 6-8% combined vacancy / maintenance / CapEx reserves (may be higher depending on the property)

- 75-80% LTV financing

- 2-4% annual appreciation, depending on the market (though this is just bonus for the IRR in the 10-year pro forma)

I feel like these are pretty modest objectives but I haven't really been seeing many properties that come close to meeting my expected returns, so I'm second-guessing if this strategy is going to make sense.
What is BP's take - are these unrealistic expectations given current market conditions in the popular turnkey markets?   Any markets where these criteria are more achievable?