All Forum Posts by: Kyle Scholnick

@Joe Kim

 Thanks for sharing your experience Joe.  The main problem I see with what you mentioned is that although the turnkey companies can buy a distressed property and then sell it to you they seem to be taking all the profit out and selling it to you at the highest possible market rate... Leaving no room for that after repair value equity when the investor buys it since the turnkey company is trying to maximize their profit.

What has your overall experience been in terms of percentage of vacancies, maintenance, capital expenditures, the responsiveness of property management, different insurances needed, lawn care, trash removal?

You do have 7 turnkeys so sounds like  you have been happy with your experience, what has your overall return been? is it what the turnkey promised or has it been more in the 6 to 7% range?

 Are you going to continue to buy turnkeys? And if not why and what will you be looking into instead? 

@Harry Zhou

That's a great idea Harry,  do you know many others like us on here ?

@Chris Clothier

What is your opinion on the sleight-of-hand pro formas I was mentioning before?

The fact that such a low  percentage is going towards vacancies especially since you said that 33% of your clients experience a vacancy... Many turnkey pro formas only account for 5%

 Or the complete lack of accounting for capital expenditures 

 Or overestimating rental rates and under estimating maintenance costs  which many pro forma's only dedicate about 3% to which seems ridiculous 

 This was my concern from the beginning, it seems like many turnkey providers are trying to take advantage of investors by using these unrealistic numbers.  What are your thoughts on that ?

@Petra M.

 Thank you for sharing your experience Petra,  it is again very consistent with my thoughts  and not what the marketers would have you believe....

 I know there are two types of turnkey properties, one where it is actually completely renovated , there is a tenant in place ,a property manager in place etc. The other kind is where you fund the entire rehab...which is not turnkey in my head

 It seems like you did the latter,  is that correct? 

 You gave some awesome recommendations though  about the inspection contingency and asking other property managers in the area about your property 

@Petra M.

 Thank you for sharing Petra,  I am so glad you found this thread because this is what I was alluding to from the beginning,  The marketers constantly make you think that these are flawless investments and there are not enough people like yourself who actually have experience as an investor in them to give an honest opinion 

 And just like you and @Jay Hinrichs  suggested, investors seem to more often than not end up with a really bad deal  and are not happy which brings me back to my original post about why there are very few if any people who just solely invest in turnkeys 

 This is all I was trying to do from the beginning is get some honest feedback from real turn key investors and your story seems to be consistent with the majority that most are not happy and it is not what it is cracked up to be 

 And I agree with Jay,  that I do believe there are good turnkey companies out there, but 99% of them are not....

 And just like Jay does, I want to learn and have others learn that most of these turnkey companies are not being transparent and you have to ask a ton of questions and know what to look for to find these top few companies to work with 

 Petra can you please elaborate a little more on your experience?  What did your current turnkey provider promise you in terms of rates of return , estimated vacancies maintenance , capital expenditures etc.?

 Where did they go wrong? In your opinion what could have been done better or what do you wish you knew from the beginning before investing with these turnkey providers? 

@Jonathan Mednick

 Jonathan, 

 I'm not sure how I am missing the point it seems pretty cut and dry, I understand that these turnkey companies are providing the most basic information but I am saying that a lot of them are being very manipulative and dishonest in terms of their expectations

 In my opinion many turnkey providers are trying to take advantage that many investors interested in them have little experience in real estate and think that they won't properly run the numbers... Again that is not missing the point but it is sleight-of-hand making the investor think they are going to make more  then they really will because they purposely do not account for many things....

 With your pro forma, can you explain why you don't account at all for capital expenditures ?  Are the turnkey providers trying to imply that you will never have to fix the roof or get a new HVAC, etc?

 Why so little dedicated to maintenance, in my opinion that is being very optimistic why not leave a little bit more cushion? 

 What about flood insurance or other liability insurance, what about trash removal?

 What about the possibility of turnkey providers overestimating rents in the area?  Sure they may be collecting the current rent now but what happens when that tenant leaves in the year maybe they won't get that same rent... No buffer there they're constantly quoting the absolute top rental rates in the area..

 A pro forma is supposed to be an estimation, is it not? So why in the world don't the pro forma's account for these costs??

@Leslie Pappas

And even  Reading @Jay Hinrichs post,  I didn't take it to mean like that either... A little strange,   or as you put it disturbing,  that you were so offended by something that we were just having a general discussion about 

Jay  offers nothing but neutral and honest opinion,  he did not say anything offensive to you 

@Leslie Pappas

 Actually Leslie, you're making yourself sound really foolish right now...you might want to  reread the forum posts because I never said that... Show me what in the world you are looking at  to get this delusional idea in your head

@Leslie Pappas

 What in the world are you talking about Leslie??

 You just said "disturbs me that you would characterize someone you've never even met as being so crafty and manipulative. You have it all wrong." 

 It disturbs me that you are pulling that out of nowhere where in the world did I say that about you ??????

@Jay Hinrichs

@Trevor Ewen

@Leslie Pappas

So how do people actually go about finding these syndication deals  if they can't market to you and you are not heavily involved in real estate?