All Forum Posts by: Scott C.

Great thread - would also love to know how long people have been at it.  Own 15 properties but 2 are personal and not rented.  Have 14 doors in the remaining 13 properties located in 3 US cities and 1 international country, all not in the state we live in.  2 of them are vacation rentals on AirBNB.  Started in 2006.  Over the years we have had 3 other properties that we've since sold.

For TKs I've purchased, the pm's have always handled the logistics of utilities when vacant - put it in their name and paid it out of maintenance reserve or charged me back for it along with turnover costs.

You have left out a details, including what city this is, how much you pay them and how many doors they have under management, which can help determine what 'typical' services they might provide.  What fee do they get to place a new tenant?  As suggested, perhaps they are too small to operate in a true hands-off fashion.  

Perhaps time to make a PM switch?  Are you happy with them otherwise?  Make sure in your PM agreement you have the ability to cancel with 30 days notice so if you become unhappy with something you are not stuck.

As others have said, the reason to go turnkey is to get up and running quickly.  You still need to do your due diligence (at the very least) on the property with an inspection, the location by visiting and seeing it firsthand, and the turnkey company by seeing some of their previously completed rehab work firsthand, but all that is much easier than locating a property yourself and renovating it.  Once you own it, the 'turnkey' aspect is done, since it is turned over to property management either way you go.  

I'll add that property management is where you need to do extreme due diligence.  Yes, you can use the property management that the turnkey company works with or has in house, but research others and don't hesitate to hire a different company that might be better at it.  And no matter what property manager you go with, make sure you have the ability to cancel within 30 days in case you become unhappy.  

I know this is straying away form the 'turnkey or not' question, since it applies either way, but the reality is that your tenant makes or breaks the investment.  Good tenant, and you'll hardly think about or worry about your investment, and you'll think your property management is awesome.  However, when tenant starts paying late or stops paying, or leaves you with several thousand dollars in damage when they move out after a year or 2, that is when you really find out if you like your property manager or not.  You won't know 'how tight their ship is' until you start running into issues.  

I recently also installed SmartLock (remotelock.com) on one of my units and I'm happy with it so far.  It connects to your wifi and allows you to fully manage remotely and monitor usage.  I believe it has all the features you are looking for, including integration with AirBNB for a small monthly fee, and even if internet is down, the door codes will work.

Full disclosure though, they had a pretty serious screwup recently that bricked some of their locks.  Hopefully they will prevent this from happening again, and I'm sure this kind of thing can happen to any of these sorts of companies.  https://www.theverge.com/circuitbreaker/2017/8/15/16151798/lockstate-6i-software-update-break-lock

I've done 1-year lease to start, then if tenant is good (pays on time, no problems, etc), go to the 2 year route when you renew.  My experience also is that typically management companies will charge 1 month rent to find tenant, regardless of length of lease.  Since it is a finders fee, it does not get charged again if tenant renews.  Some management companies have a nominal renewal fee to cover their time on the paperwork.  Also, some management companies push back on 2-year lease because (as mentioned) it means the tenant needs to come in to sign because witnesses are needed.

Not sure if you are getting financing, but basement foundation issue is possibly enough to kill the loan.  I backed out of a turnkey deal once for the same reason - after they reviewed the inspection report they asked for a structural engineer to assess foundation issue and was not satisfied with the fix the turnkey provider proposed to make.    

I've seen this kind of messy inspection report before.  At best case, the turnkey company is overwhelmed or has very poor internal communication, and simply didn't finish all the work before the inspection was ordered.  Or worst case, of course, is that they mis-represented the condition of the home from the start hoping you wouldn't bother with the due diligence.  

If you continue with the project, make sure the turnkey company is the one who pays for the re-inspection after they make all the repairs. 

Most I've worked with will give you a lot of information about their background although not confidential things from their background check for you to help decide.   

However I am working with a new PM now who (similar to what @Kim Meredith Hampton is saying) is very hesitant to share much because they are afraid of the owner saying no to someone who meets the basic qualifications and therefore subject to discrimination rules.  

Sometimes turnkey can be a grey area because often the sale is predicated on having a tenant in place, and so it is not in property manager's best interest for you to keep saying no as it delays closing - not sure if this is your situation (ie: waiting for tenant to close or if you are already closed)

I think you'll get a lot of that - people in the business suggesting their market, whether on your list or not - you are not likely to get an unbiased assessment of which market is best.  I personally invest in Jacksonville and Indianapolis, but I can't tell you those are the best for cash flow in 2017.  There are simply too many markets for me to understand them all.  But since Indy and Jax are the markets I know, they are the ones I'd recommend.  But I'm sure in any of the markets you listed, there are turnkey operators that have good cash-flow deals.  And of course in other markets.  

I like Indy because the cost of entry is pretty low with a strong rental market, and I'm working with partners I feel I can trust and have shown to do good work, and I like Jax because of all the job growth and infrastructure improvements, and again because I have partners on the ground I'm comfortable working with.  I passed on KC as a market because it is a bit too far for me to drive there myself and flights there tend to be expensive, although there certainly were deals with good cash flow.

My advice - pick a market based on criteria important to you, contact the turnkey operators, visit the market to look at deals and see their work firsthand (very important), find ones with cash flow that meet your criteria, and dive in. 

@Marc C.  For those of us crunched for time, which are your top 3?

I wouldn't exactly call @claytonmorris a BP regular - he has 2 posts.  In fact, he has been quite absent in other threads that were very critical of his company, which says a lot.