I would like to use conventional financing. My credit score is about 660 now. I was told by the company that it will take time to obtain conventional financing with my score and I can use their seller financing which is very fast. No terms were given though. I did remember however that some time ago the same company told me the rate of 10% and interest only. Now they changed to 10 year financing with option to pay down the principal, but again no rates or numbers given.
I am staying in touch with another company. They offer contacting me with local banks they work with. I never heard I am taking their time or ask too many questions. Quite the contrary. I am encouraged to ask questions and was invited to come down to meet the staff and see the work done. If I need to wait a few months to obtain conventional financing and purchase a home I am comfortable with, I will. I am not here to get rich. I want some stability and security. I am an immigrant and have worked very hard for 16 years to get established, started out with nobody believing me my diplomas are worth anything, finished another university to prove I can do my work, I got my other degree accredited, and have been working 6 days a week ever since.
I struggled and managed to buy my home two years ago. Now, I am very careful not to lose what I have worked for for so many years. I can wait and raise my credit score.
Just a story of my life. I do not think anyone has the right to tell me I am doing somethig wrong when I want to protect myself. The company I have not disclosed the name yet (I do not want to give a bad name to someone, who may be a suitable partner for different kind of investors) is not so forthcoming. I hear genralities, I hear I have to trust them. Thanks to yours and others inout, now I feel I can ask direct questions and expect answers. It is my money and they need it. Bith parties should benefit from the transaction.
Mariusz
Originally posted by
@Ali Boone:
Hey Mariusz! Well, a couple things.
First, just regarding your post, I was initially going to say (before you gave more information later) that there is a fine balance with turnkey companies in terms of the promptness in which you typically need to act. I've seen some investors spend so much time on due diligence and gunning after the turnkey company that it really does start to put the company in a bind for having to continue holding the property and turnkey companies usually move fast and have no interest in working with someone who will hold them up that long [often emotions-driven on the buyer's part] and they will refuse to work with that buyer. On the other side of that though, is more like what you ended up describing. It sounds like they were being jerks and rushing you to un-cool levels. There is a 'reasonable' amount of time for due diligence and acting. If they are pushing you to act faster than that amount of time, they definitely suck. If you are causing them to spend more than that amount of time, they could tell you to take a hike.
Second, between the company you initially posted about and then the company trying to get you to buy non-turnkey properties, it seems like you are somehow finding the shadiest of the shady for turnkeys. Where are you finding all these companies?
To answer your specific question about the legitimacy of a turnkey company trying to sell you, essentially, a non-turnkey property- no, don't do it, it's dangerous. One of the largest benefits of turnkey is supposed to be that you can verify everything before you close. If you don't, the risk ends up on you. Think about it- before you close on a property, all of the risk is on the seller. After you close on a property, all of the risk is on you. So you're not going to want to buy something you can't verify and accept that risk. Especially not if it's a turnkey property.
I have seen two exceptions to this-
- If there's some kind of unfounded delay on a turnkey property and the company really wants to offload it for whatever reason, I've seen sellers occasionally offer guarantees on the risk items so it makes it worth you closing. Rental guarantee to ensure rent amounts, etc. I wouldn't do this or accept this unless it was a provider you really trust, but I've seen it happen. I actually don't know if I would accept it from a seller I trust. I may just pick out a new property that can be ready faster. This happened much more back in the old days than currently, but regardless, you're still accepting the risk if you buy it undone.
- There is the BRRRR+turnkey strategy/model where you fund [in cash] the distressed property and the rehab, so you are definitely buying a property pre-rehab and pre-tenants. But this model goes back to the idea of who is holding the risk. It's you in this case. The turnkey provider I work with these properties on though offers guarantees for all the major risk items, and I had worked with them for years previously. So I trust them. A random company offering this, because the risk gets put on you, you should be leery.
What is your budget/price range? Is there a reason you have found seller-financing deals (of which I've never heard of a turnkey provider offering) and someone trying to sell you $30-50k properties? How low is your budget? Both of those have major red flags. And a balloon payment? You could lose everything you own faster than you could see it fly out the window. Fixed loans only whenever possible, as other posters said.
