Dean Letfus YOU are selling turnkeys. So what you are saying is OTHER turnkeys are overpriced, but not YOURS?
Tiara Stewart-Cannon I have only been studying REI for about 3 months, but I'm pretty sure that MY first purchase (maybe 2-3) will be turnkey. If you're buying for long term buy and hold cashflow, appreciation is really just gravy. I believe that you CAN find reputable TK providers that might even give you a little bit of equity. And there are even some that will let you go both ways. You can buy post-rehab with a tenant in place (TRUE "turnkey") which will cost you more and leave you less equity but also less risk; OR you can buy pre-rehab (using the TK as a wholesaler), have them do the rehab (TK as contractor), place the tenant and manage the property which will be a little more risk on your part. Unless you are doing the rehab work yourself, it doesn't matter who does the rehab, your TK provider or some other contractor. I would argue that it would be better to have the TK provider do the rehab because they have an interest in you doing it again. And again. I'm also a fan of having the contractor who did the rehab also do the ongoing repairs. They would already be familiar with the property and what has been done to it and they would have an incentive to rehab well so that you would continue to buy from them.
A key to ALL of this is building RELATIONSHIPS. If you are buying TK, you want to build a relationship with the TK provider. You want a TK provider who has relationships with realtors/wholesalers, contractors and property managers in your market, whether that relationship is in-house or outside. If you are going DIY, you're probably/hopefully NOT actually doing it all yourself. So YOU will need to build relationships with realtors/wholesalers, contractors and property managers.
In the end, the bottom line is, do the numbers make sense and meet your criteria, or not? And yes, your time IS valuable, even if you're unemployed. If you're in a high $ W-2 job or business, your time can be better spent doing that job (or finding one if you're unemployed) and paying others to take care of the real estate work. (Under your supervision of course!) ESPECIALLY if you are a newbie. Your team are experts. (At least they BETTER be!) They can SAVE you money. Down the road, as your REI knowledge and experience grows, your REI time will become more valuable and you can begin shifting from full time W-2 to full time REI. But you will still want to have a TEAM doing most of the "real" work.
MY plan is to research and find reputable out of state TK providers and purchase my first properties fully TK. We are in it for the long haul so cashflow is king. Appreciation is gravy. The plan is to shift to a more active role as we get more comfortable and hopefully be able to BRRRR properties using the team that we have built relationships with to do the heavy lifting. We will probably need to do some "flips" using this same team in order to bring in more capital for the buy and hold business. We also plan on keeping our capital working between purchases with short term private money lending. But buy and hold will be our primary business. The goal is $10k/month of PASSIVE income.
My wife and I started building relationships last week with a road trip through the mid-West to tour TK operations and neighborhoods in Indiana and Ohio. We will be a lot more comfortable dealing with people and neighborhoods that we have actually met and seen. We have found 2-3 teams that we feel comfortable with and we will be building relationships with these teams over the next months and years.
Man! Did that turn into a ramble! I hope there's some good information in there. Good luck. And it's been about 7 months since this discussion was started; where are you now? What have you decided? How is it working out?
