All Forum Posts by: Mark Shaffar

@Cecilia Arnulphi I used Midwest Equity Partner (now Home Invest). You can check out my podcast review at http://turnkey-reviews.com/turnkey-investing-podca...

You are right that most turnkey providers shy away from financed buyers. Here are the reasons I am aware of:

1. takes a lot more time and hassle to get a deal through

2. neighborhoods that are good for cash flow are a challenge to source, rehab to a high standard, pay all your management costs, realtor costs, make a worthwhile profit, and still have it appraise out for financing

3. Milwaukee is especially tricky because appraisals are all over the map

@Account Closed FYI I made this purchase about a year ago and it is cash flowing very nicely but then again it was in a fairly average neighborhood that is not likely to appreciate much so in the back of my mind I'm planning to set aside money for capex and not bank on an appreciation play.

I invest in Milwaukee myself. The city is fairly active on inspections making sure you keep up appearances, costly as @Brie Schmidt mentioned but that can be a good thing for the neighborhoods too. I like MKE for the low price to rent ratio and the low vacancy rates.

@Simen Gundersen and @John Powell The hard part is comparing apples to apples. I paid 55k for my nicely renovated Milwaukee turnkey that rents for $875/mo. Even if I factor in prop. mgt., taxes, insurance, 10% vacancy, and 10% maintenance and a roughly $200 debt payment I'm still cash flowing in the $200-$300 you mentioned. Add in debt reduction, tax incentives, inflation and your looking at a pretty nice return even if you do add another 5-10% budget for capex. Throw your down payment into a bigger house in a nice neighborhood you think will appreciate better and that wipes out the cash flow (or worse, throwing money at it every month) and now you're just crossing your fingers hoping you didn't buy at the top of the market. There are myriad ways to make money in real estate investing, this is simply the argument for turnkey rentals

thanks @Mike D'Arrigo for the chart. Appreciation is a nice thing but I think of it as more of a roll of the dice, especially now at new highs. In my opinion cash flow is king. I look for low vacancy rates and a solid economy if I'm looking at turnkey. In the Midwest I like Indy and Milwaukee. 

@Dan Johnson I owned mine while working overseas. Just depends on how good your property manager is.

welcome @Jess Holston!

@Aaron Mazzrillo The issue is that in those neighborhoods not many are looking to owner occupy (renovated or not) so the other buyers will still be investors anyway. Those numbers sound like Milwaukee several years ago see Meeran's podcast #72? It certainly worked there at that time but like @Jay Hinrichs said 30-40k in the midwest now usually means rough houses in rough neighborhoods. 

@John Powell is your $200-$300 net after debt payment or without a debt payment?

@Adam Ulery I'm guessing what you mean is that the properties you are looking at have an acceptable price to earnings ratio on paper but you are wondering if they are real world long term numbers. Your turnkey provider probably won't be able to tell you because they've only owned it long enough to renovate it and sell it to you. What I think @Account Closed is getting at is that the numbers your turnkey provider gave you may not be reliable especially if the neighborhood is sketchy (usually involving more frequent and more expensive turnovers). I personally factor in 5-10% for vacancy and another 5-10% for maintenance but in a rougher neighborhood you may want to double that. 

@Brian Skinner I second turnkey-reviews.com for finding providers. @Brie Schmidt is a long time BPer. She interviews TK investors like me. The site won't answer all your questions but it's a great resource.