All Forum Posts by: Moses W.

I don't disagree with that TKs can provide decent cashflows.  The problem is once I consider my exit strategy, the potential loss in value of the property pretty much eliminates much of what I've earned over the years as cash flow.

I agree TKs need to make money but as someone said, the idea is that they should be finding properties that are below market value, do their rehab, and sell to the investor at or slightly below market value.  The other problem I see is that for sub $100K properties, the eventual buyer will likely be another investor who won't be offering market value.  

Like I said earlier, I didn't invest in this property yet but it just didn't make sense to me after I looked past the attractive cash flows the TK provider was presenting me.

This discussion makes me wonder if TK is worthwhile at all..  I'm not sure what options a foreign or out of state investor has at all now!

@Vivek Khoche Thanks for the link to that thread.  Very good information.  I'm glad I didn't buy anything yet in these areas.

A TK company send me some "deals" and when I ran my numbers, something didn't sit right with me so I made this post to get some other opinions.

Thanks for your replies Alex, David, & TJ.  

So I think it's pretty clear this isn't really a good deal. 

@David Faulkner Thanks for giving me a dose of realism.  I'm just trying to identify my first purchase and I might be getting a little too anxious.  

@TJ P. I just picked a hypothetical length of time.  I will definitely hold for much longer if they do turn out to be good investments.

Btw, what's the best way to determine what the market value is?  I've been using Zillow and Trulia to look at recent sales in the area as well as city-data.com to look at the price trends over time.  

By the way, I'm looking at turnkey properties because I'm not local to these markets.

There's something I don't quite understand about turnkey properties. If I buy a SFH from a turnkey company, I know that they've made improvements to the property and the purchase price includes the cost of these improvements plus a profit margin.

If I then rent this property out and it's giving me a net cash flow.  

I'm looking at areas such as Cleveland and Memphis right now and since these areas are not really known for appreciation, my concern is as the years go by, the value of the improvements that I paid for when I bought the property has depreciated.  If I decide to sell the house, won't I most likely be selling at a loss?

Eg., 

1. Buy a house from turnkey company at $80K (market value in this neighborhood is $65k).

2. Rent it out $850/mo.  Calculated net cashflow is $450/month.

3. At the end of 5 years, after wear and tear and in need of improvements again, the house is now worth ~$65K-$70K.  

Let's say it's worth $65K now so does that mean my net gain on this property is actually just $12,000?

Math: 

$80,0000 purchase price - $65,000 value after 5 years = $15,000

# of months of net cashflow to break even: 15,000/450 = 33.3 months

Length of ownership: 60 months

60 months - 33.3 months = 26.7 months of profit

26.7 x $450 = $12,015.

That means after 5 years, I've actually made only $12,015 after you factor in the depreciation of the value of the improvements which is 15% ROI over 5 years. That's only 3% ROI per year!!

Am I out to lunch or does this make sense somewhat??

To make this purchase worthwhile the value of the house would have to stay at $80K and hopefully appreciate.  In these markets, I'm not so sure that will happen.  They'll produce decent cashflow but I'm worried my cashflow will be wiped out by a drop in the value of the property.

Hi everyone

I'm pretty new to BP. I just wanted to know what people think of the BP marketplace for someone who's searching for properties to invest in. I'm focusing on buying properties to rent out.. maybe with some light rehab if needed since I'm in Canada. Are there really any good deals to be found here? Looking for SFH & multifamily.

@Sean Carroll: I've contacted a couple of large banks that are Canadian owned and they either don't refinance investment properties or they have too many demands.  I haven't checked with local banks yet but being a Canadian, I'm not sure if they would even talk to me.  I'm looking to invest in the Cleveland area and KCMO.

@Copelon Kirklin I'm open to alternative financing for sure.  I'm just not sure where to look for it and whether being a Canadian will make it harder.  I see some ads in the marketplace offer seller financing.  I suppose this is one option.  

Has anyone successfully refinanced a property in the US?  I'm a Canadian and I'm hoping to refinance some of my properties in Florida to purchase additional investment properties.  I have cash available but I'd rather use the equity I have available. 

I've talked to TD Bank but their options are very limited, with lots of requirements like 5 trade lines in Canada for at least 2 years and I believe they only allow 2 HELOCs or 1 mortgage.  RBC Bank will only use owner occupied residential properties as collateral.

Also, are rates so high for non-residents that it's not worth it? 

Anybody know?

Thanks for the warm welcomes, everyone! To answer your question, Michael, my condos are in different communities and to be honest, I'm finding the Orlando area drying up a bit. Prices have gone up quite a bit while rents have been somewhat steady so I'm looking around other parts of the country to look for areas with better returns and cash flow potential.