All Forum Posts by: Naveen A.

So a short update on the properties. Any repairs/rehab work required on the three properties have all been completed. The first Roofstock property located in Lithonia, GA has on time paying tenants and things are moving smoothly. The first property purchased using the property management company, Excalibur Homes, located in Canton, GA, also has on time paying tenants and things are moving smoothly. After closing the law firm who handled the closing had some sort of issue with the postal pickups which caused issues w/ payments being made to the insurance carrier and HOA from the closing disbursements, but that was ultimately resolved. The leases for Villa Rica and Canton are expiring this month, so back in the beginning of November I asked my property manager what the process was. She told me that they typically review leases 90 days out and give any recommendations on rent increases. Instead of giving me any recommendations they sent a proposed lease to the Villa Rica tenants last week without discussing any rent increases with me or even sending me a copy of the lease they sent them for review. The original lease from the prior owner had a built in rent increase. I've asked several times for a copy of the lease to review and nothing. Very poor communication on this front and I conveyed that to the property manager today that it was unacceptable. Also they didn't issue any payments to me in November. I think the property manager messed up some setting on the reserve amount which I need to talk to her about. On the purchasing new properties front, Roofstock pickings for Georgia have been slim to none these last few months. They just haven't been getting properties in. We did go into contract on a property in Loganville, GA last week through our agent but walked after the inspection report and contractors came back with estimates of over 25k in repairs when the property was expected to need very little work.

@Chinmay J.  some states are non disclosure states .. all deeds that are recorded will say 10 dollars..

Texas  MS and a few others.. Just FYI...

if your financing appraisers have to pull comps from somewhere and come up with a value.. now in some markets that can be hard because not much gets sold on MLS other than old houses that need lots of work.. and because in some markets were the turn key folks work there simply is not many if any sales happening to homeowners..

although things are firming up in that regard.. IE turnkey companies are putting things on MLS so they can establish good comps.

As for what is a deal.. its all across the board but as someone how has literally financed a few thousand of these turn key homes.. its nothing different than any flipper would do.. they want to make a profit

so you have the wholesale price what they pay for the asset in as is condition.. this is a cash sale since these are not financeable.. then you have the SOW which ranges from 7k to 40k.. depending on the home.. then you have carrying costs.. REMBER YOUR Not carrying the home during the construction and very few of these companies do this with cash they all have their money source's like myself.

Then you have marketing fee's many times .. the marketing folks are well represented on BP you know who they are.. then you have the profit for the flipper.. or turn key operator.. profits are usually 10 to 20% of gross and sometimes a little more if they get a good one..

So if you do it yourself.. you stand to buy wholesale and hire contractor you pay cash you eliminate the carrying cost although you will have tax's and insurance while your under construction.. and you eliminate a brokerage fee be it a local MLS broker or a turnkey marketing company.. and you eliminate the profit the turnkey operator is wanting to make.

now the key is can you get those wholesale deals and what happens when that nice rehabber walks off with your rehab money LOL or does a crappy job.. this is what turn key will insure against.. it takes a ton of work to put a team together some folks like to gloss over that or the new BP book building a team.. but I can tell you from 2 decades of doing this.. that is SO much harder than it appears.. UNLESS yoru doing volume if your buying 1 or 2 houses in a year its going to be a challenge.

Now I know when I build new construction I do maybe 35 homes a year personally.. we look at lot cost vertical cost of money to build  sales cost and what our profit we can make.. we factor that in before we bid on the lots you have to back into it based on end sales price.. you can't just build it and they will come and or it will appraise.. with the goal to make 10 to 15% on gross and if we do better than 15% that is a huge win for us.. but of course these are 400k and up.. so numbers are bigger but so is the risk. and we can't be like a high volume turn key company that does our yearly production in a month or two.

I fund a few VEndors that do a turn key light ( is what I call it) they will let you pay cash for the house and they will charge you a fee to use their rehab crews and coordinate it all. then hand you off to PM.

the reason PM is critical in turn key is you have a tenant base that is some what of a challenge to manage.. other wise none of these turn key guys would be in the business of PM unless they were going nuclear and growing it so big that it becomes a profit center in its own right.

I hope some of this makes sense. its simply not a big mystery you have certain components that go into bringing a product to market and make it financeable.