All Forum Posts by: Michael S.

@Ali Boone

Thank you so much for these two links (especially the first) -- they are perfect additions to this thread! I especially appreciated the breakout of costs within PPT charts. PERFECT.

BTW, I've listened to a couple of podcasts featuring you in the past and really appreciate all of the knowledge you've passed on about turnkey properties through different outlets.

Thanks to the contributions of everyone in this thread, I feel much more informed on this topic.

@Shai Neubauer @Jay Hinrichs

"If market comps are $100k and someone pays $115k, who is to say they paid too much?" The market says you paid too much. What happens if for whatever reason you need to sell a year later and market comps are at $100k? You will need to take a loss.

"you want the best price possible and over paying will usually get you into an asset that you would have to cut a pretty large check to exit if you were to sell in the next 5 years."

Really good points and thank you both for sharing with me and anyone else who finds this thread. It sounds like I need to perform due diligence on the city, neighborhood, turnkey provider, property manager, property AND property price vs. open market.

Thanks again.

@Curt Davis @Account Closed

Thanks for your responses. It sounds like you both believe that prices CAN come in near and sometimes even below market value / resale value. 

Since i don't want to deal with renovations out of state, my two options seem to be buying turn key or buying rent-ready off of the MLS and then linking to a local property manager. If the turnkey option provides a win-win for buyer and provider, this seems to be the best option.

Curt's point about the inside of similar MLS listed houses having older floors / roofs / etc. is a valuable point and one I had overlooked. This makes apple-to-apple comparisons to recent MLS listings not 100% accurate.

I'm looking to make my first real estate investment and am seriously considering the turnkey option due to not being able to buy cash-flow properties in my area and a strong interest in jumping into my first investment with a bit of help. 

Prior to going down this path, I wanted to get a sense of how turnkey property prices compare to actual market values for similar properties on the MLS. Would I be paying a premium for a turnkey home or do turnkey providers generally make a profit from efficiencies in renovation, discounts in purchasing and long-term property management in order to provide a win-win situation?

Thanks in advance for the responses.

I went through a similar tour and had similar thoughts. While I don't know if the locations are "up and coming", there is an appreciation play if the growth of University City extends to those areas in the next 10+ years. 

Although I didn't get to do the tour with Jay (he was in Israel that weekend), I was extremely impressed by the rep and property manager who I met and toured with. Trust is big for me and both of them seemed like the type of people I would like to have manage my purchase, rehab and management. I was blown away by the insight and time they both provided to me. You could tell the company takes customer service seriously (for both the customer and tenant).

I'll continue to keep an eye on the company's properties while also looking into ready-to-rent properties in other parts of the city. I'd prefer to rent in areas I'd be open to living in and dealing with tenants myself in case I need to self-manage in the future. Using ABC rankings, these would probably be A / A+ areas. 

@Albert F.

I had been talking with a sales rep from HomeUnion and was intent on purchasing through them after my first two discussions. My third discussion, however, turned me away from them for a few reasons outlined below. 

First, the sales rep strongly discouraged me from visiting the homes I would bid on in person. The sales rep acted like I was being unreasonable for thinking it was worthwhile to spend a $200 plane ticket to see a market's active homes. Their model is predicated on customers looking at houses like the stock market (completely hands off bidding on multiple homes within an investment category regardless of location). Investing $200 to become comfortable with $100K bids in an area should be a no brainer in my mind, but was not a justifiable request to the sales rep I spoke to.

Second, I was told that, if I were to fly down to one of their markets, I would need to pay extra to visit with one of their local agents and, again, the rep found this request to be unreasonable. I don't think it's unreasonable to want to discuss my investment bids with the rep to fully understand why, based on local knowledge, the house should be bid on.

Third (and you can probably tell I was losing trust in the company), the rep acted like I was once again being unreasonable for wanting to get an independent inspection. If I'm discouraged from visiting the house in person and/or speaking with a local rep to understand the "why" of the home, I at least need someone outside of Home Union to be the eyes of the purchase.

Ultimately, I got the sense that I wasn't the right client fit for Homeunion. I was looking for a trusted investment agent / property manager who would help me pinpoint great investment opportunities in a cash-flow positive market while leading the end-to-end purchase, rehab and management flow. While I get the sense that the business model is efficiently streamlined on their side, I'd like access to more transparency and expertise (to justify the data) to bite on my side. Otherwise, I see more value in other turnkey companies that provide a closer connection to the home you are purchasing and provide a deeper local knowledge.

I'll keep an eye on their business to see how they adjust. With a few minor changes to the company's business model, I'd be very interested in working with the company for a rental in the future.

I hope this helps you or anyone else interested in HomeUnion. I'm happy to update this thread if things change and I end up investing in HU.

Mike

@Shawn M.

I agree -- I'm considering a move out there as well. If nothing else, it will eliminate my 3% NYC income tax. While I haven't looked into owner occupied units, I wouldn't be opposed to it if the right deal presented itself. Any thoughts on upward trending cities out there?

Living in NYC, I'm blown away by the cost of real estate in this area. I've also been blown away by the rate of appreciation for some homes in this area (the last place I rented in Jackson Heights increased it's value by 50% over the past 3 years). 

Knowing that NYC is a tenant friendly state, what are your thoughts on purchasing rentals in NYC vs. Northern NJ? Are there other nearby states that make more sense for a first rental (CT, DE, PA)?

Thank you all for the welcome messages. I look forward to getting involved.

@Tanya Potter 

http://www.biggerpockets.com/forums/521/topics/193686-may-28th-2015-meetup-in-manhattan-with-biggerpockets-podcast-co-host-and-author-brandon-and-heather-turner is the url for the NYC meeting.

Looks like a great community here with, fortunately, more than a few others in the NYC area!

My experience to date hasn't gone beyond research and a few open houses, but I'd love to get into rentals in this area or another nearby area (NJ, CT or Long Island). I do get the sense that the rental investment market isn't great here, but appreciation opportunity is high (the last apt I rented appreciated in value by ~50% in 3 years).

I'll be at this week's NYC meetup, so look forward to connecting with other real estate investors or potential investors in the area there or thought these boards!