We invested with Ohio Cashflow in Feb 2017. Here's a review I'm posting around for all those interested in our OCF experience and story. It's long, but it was what I was looking for when I was looking through reviews :)
Ohio Cashflow Review
When I was reviewing turnkey operators to work with, I was looking for two foundational characteristics, trust and performance. How do I know I can trust them, and what is it about their performance that sets them apart from other turnkey businesses. I was looking for reviews which would give me some real information to help with my decision-making process in choosing the right business. So, I'm hoping to make this the type of review which would have helped me, in the hopes it will help you too.
The Australian market generally has a very high buy in price. It also has a much lower ROI compared with what I had seen in many of the US markets. Being a family without a large disposable income, like we had before children, we had to make a very considered choice of where to invest our funds. To get the best return for our investment my wife and I were considering investing not just from out of state, but out of country! Thus we started researching turnkey operators. We needed to find an organisation who could locate properties, rehab them, tenant them and manage them. Going the turnkey route made the most sense since we already had jobs and wanted a passive income, not another job. Finding a team we could trust was going to be paramount. However my belief is that no matter where you're investing from, your key starting point should always be forming relationships with people you can trust.
My wife and I have a great relationship. She trusts my financial judgement. So she was happy to let me do the due diligence and then make the final decision together.
The first thing I did was to start searching forums, particularly here on Bigger Pockets, to find other out of country investors, and in my case, Australians, who had successfully invested with turnkey operators in the US. I consider myself very blessed in having two key respondents, out of the many who did get back to me, provide me with the most helpful information. The first guy was a very experienced investor who amongst many, many other things, operated a turnkey review site. He recommended Ohio Cashflow as a business who had a 100% positive review status, and which was run by a fellow Aussie. This was great for me because I knew the US property market was a totally different beast to our Aussie market, and although I was getting myself educated in the differences, having a fellow Aussie on the ground would be very helpful. The second guy was a real-estate professional from Australia who had invested with Ohio Cashflow about a year prior. He was very helpful in educating me about the US market, his personal experiences and of course in Ohio Cashflow themselves. He was full of praise on how much integrity the team at Ohio had and how well they had looked after him. I particularly enjoyed his manner because he wasn't pushing me in any specific direction or being a salesman, but was just providing me with the necessary information with which we could make an informed decision.
So far I liked what I was hearing. I started building up a relationship with these two people who had made this same recommendation of Ohio Cashflow, and started building up some real confidence in their recommendation.
The man behind Ohio Cashflow is Engelo Rumora. Given he was originally from Australia I thought it would be prudent to find out from local sources what his back story was. I found out he was passionate about real estate. He'd had some early successes in Australia and then headed to the US to make his mark. I liked the fact that he had also had failures, but like all truly successful people, had learnt from these and become better through them. After a several years building his team, systems, network and brand, his US businesses are very successful. What was clear was that he had integrity. He was very transparent in all his dealings and didn't put any spin on what he was saying. He knew his product was valuable and was in a great position to partner with those he chose. Engelo has appeared on Bigger Pockets' forum posts, podcast and meetups, many other podcasts, blogs, news articles, TV news and his own YouTube channel videos. So there were plenty of avenues to get to know him and his companies. I particularly liked his philanthropy. One of his companies gave away a house to a needy family last Christmas.
Through my fellow Aussie investor, I contacted Engelo to discuss our goals. What instantly struck me was Engelo wasn't interested in building his business through quantity of customers, but was after quality. He was after a certain type of investor who was prepared to go on a journey with him and his team, an investor who wanted to build a long-term relationship of trust and commitment. So this interview wasn't just me seeing if I liked Ohio Cashflow, it was just as much to see if they liked me. We clicked. I was impressed by what Engelo had to say, and he likewise was impressed with our plans, outlook on investing, my research into him and his company.
Ohio Cashflow provide solid B class properties with a typical net ROI of 8-10%. The average investment is around the $70K mark. They were a true turnkey provider who locate properties in areas that would sustain the ROI through the property's life, they do a thorough and solid rehab, hand-hold the investor through the purchase, tenant the property and then manage the property with virtually no involvement required from the investor except to receive the great cashflow.
One key differentiator from other turnkey operators is that Ohio Cashflow (OCF) do all the property management in-house. OCF doesn't just sell the property to you and walk away, they have a vested interest in your continued success. Many unscrupulous PMs will try to increase revenue by inflating expenses and charging for unnecessary items. Being in-house and just a part of OCF's overall business, the property management team can keep costs to the investor low. Furthermore OCF do a great job on the rehab up-front to avoid many of the typical expenses you may incur downstream from the initial purchase, and they also look after any issues early on instead of passing them on to you. OCF also have a clear contract regarding damage caused by the tenant to ensure the tenant pays for those, so you, nor your insurance company, is liable. The investor just has to supply a $500 maintenance reserve with the PM to cover any of the smaller issues that require immediate attention. A courtesy email is sent to the investor for any expenses over $200. OCF provides an online web portal to view and track all the rental income and PM managed expenses per property. As is typical the property management rate is 10% of rental income.
One item which I found very impressive was that Ohio Cashflow do a rental guarantee. This means as soon as you close on the property you start accruing rent whether a tenant is in place or not. Generally OCF find a tenant within the first few weeks, but it's great to have that guarantee.
As for other expenses, the utilities and lawn maintenance costs are taken care of by the tenant. Closing costs are shared by you and Ohio Cashflow and are typically in the range of $300-400 on a $70K property. The investor covers property insurance (around $600-$700/year) and property tax ($800-900/year). OCF recommend an insurance company which specializes in insurance for rental properties, and is run by a group who are property investors themselves. You can however opt for your own insurance company. You pay the insurance company directly from your bank account, while property tax, maintenance expenses and the property management costs themselves are managed by the PM and come out of the rental income. The remaining income is then transferred monthly to your nominated bank account. If you don't have an account setup at the time of purchase, they keep your funds in a trust account which can be monitored through the online web portal.
So there were plenty of things that set Ohio Cashflow apart from the rest.
We felt satisfied that we had researched thoroughly. We felt we had established trust with Engelo and his team based on verifiable facts. We were ready to pull the trigger, and after bringing my wife fully up to speed on why I thought Ohio Cashflow were the team to go with, pull the trigger we did. Within a day we had been shown a property that was amazing value, and by the next day we had made the decision to buy. Having said this I want to emphasise that we never felt pressured into committing our money earlier, or above a limit that we felt comfortable with. It was the prefect first experience for a beginning investor.
Unlike most turnkey property businesses, Ohio Cashflow's communication is excellent. They regularly touched base with us through the purchase process and have continued this well afterwards to ensure we are happy and have all the information we require. They have all been very friendly and professional.
I'm someone who cares about details and I can say with confidence that Ohio Cashflow's team does too, being ready with answers to all my questions or having already taken care of items before I raised or requested them. This level of care and attention is one of the hallmarks of their business. Ohio Cashflow treats you not like a number, but rather as a valued member of their exclusive club, a part of their family. As I mentioned earlier, they eschew quantity for quality, within both themselves and also in the investors they choose to allow to partner with them.
Several months on I'm still just as happy with Ohio Cashflow. They've always gone above and beyond expectations.
A word about finance. Turnkey operations move properties very quickly. As such they generally have less time to wait for you to work through financing with the big banks. Most sales are thus cash. Now this doesn't mean you can't leverage. You can still get private money loans, cash out refinance or home equity lines of credit to fund your purchases, but just have all that worked out before you make the decision to purchase.
You might be asking what are the negatives. Well on a general level I've got to say I can't think of any. There were some things which they didn't have much experience with eg how to set up a US bank account without travelling to the US. This has become increasingly difficult to do since the Patriot Act, but I discovered ways to do this which were successful. Am happy to share if you contact me directly.
Turnkey isn't for everyone, so there are things which won't suit all people. Once you've established trust with the team it's very important that you let them do their job and not try and control every little detail of what they do ie if you're a control freak or don't trust them fully enough to let the team do their job the way they've found works best.
For my wife and I, we've found the decision to join Ohio Cashflow one of the best we've ever made.
Ohio Cashflow are known to turn down more people than they take on so my recommendation is that you have a clear understanding of your goals and do some homework before you contact them. Although they are very happy to chat, as with most turnkey businesses, they are quite busy and as I've said before, properties move quickly. So being ready to move fairly quickly and having most of your ducks in a row is advisable.
One of the most helpful factors in this whole journey was having mentors who helped me through the whole process. Having my mentors explain all the steps prior to introducing me to Ohio CashFlow, ensured I wasn't wasting their time. The mentors also helped explain exactly what sort of investors Ohio Cashflow were interested in partnering with, so we were confident that we fit the bill.
I hope this review has been helpful in your decision-making process. There's a lot more I could say about how to setup your company structure, asset protection, the legal documents, banking, tax etc etc. If you want to know what we did in more detail you can send me a colleague request and I'll be happy to help.
Wishing you all the best in your investment journey!
Hello, I'm newbie investor in Los Angeles and house hacking a duplex in East Los Angeles. I was lucky enough to buy a Property C at the right time where it began gentrify to Property B with crazy appreciation over the years since purchasing. It was a fixer unit and I intentionally placed my rental higher than my neighbors to attract A to B tenants and it worked out beautifully.
@Suvir Salins Trust me on this Class C is way more of a hassle than A class. I used to work as a rent collector and handling complaints for a guy who owned bunch of multi units from Class A to C in Los Angeles to Santa Monica. In my experience, Class C owners complained over little things all the time even breaking things on purpose to delay paying rent under the protection of 'Rent Control' in Los Angeles. I rarely had to go after Class A/B for rents mostly were just simple repair request or problem getting along with other neighbors so I don't know what Morris is talking about. Class C can be a nightmare to deal with and I can't even imagine how you are going to comprehend this from Australia lol. I understand the attraction is a turn key operations, but have you considered a backup plan when they bail out on you or bad things happens over and over finding yourself needing to find a new property management?
Having said that, I do like listening to Morris podcast with a grain of salt, first I love his voice, haha and he has really good episodes as well. But what I hate about his podcast is the way he markets his business like its relatively risk free and simple and easy "Just rehab really nicely and find 'hardworking honest' tenants" sounds way easier than done, all landlords want that ; ). In my experience there's no such thing as a risk free investment so you have to consider all the variables when things just don't work out. I personally consider "Turn key" business a high risk investment in any type of properties. Morris is just buying cheap and selling high without taking any risk. This is a great business for him for sure but I'm not so sure for investors.
Hope you find a good investment opportunity.
Thanks for your feedback Michael. Consider me convinced re C tenants :) Can understand rent controlled areas being a nightmare so was planning on avoiding those states. I was thinking that to remotely manage a property a PM was the way to go as I couldn't comprehend remotely managing myself. As for a backup plan if a PM fails over and over what would you suggest as the best way of replacing the PM? I'd want the initial PM to setup good communications practices with me ie regular emails/calls on a set schedule, send before and after photos of issues, let me know ahead of time what their strategy is for handling bad tenants etc etc. If they then start failing in this I'd have some other PMs pre-vetted and call them up to take over. Not sure if there is a defined protocol for replacing a PM ie certain amount of notice and paperwork, but those are my general thoughts.
I agree the podcast has useful info but that generally he makes it sound easy. That's why I turned to BP to test the hype.
I never believe things to be risk free but rather try to ascertain what the rough risk to reward ratio is in order to determine whether I should pull the trigger or not.
I understand I'd be paying a premium buying via a TK but the benefit for an international, new investor is you get the rehab, tenants and PM sorted locally, which for my first investment, I'm willing to pay for rather than trying to do this myself.
So atm I'm going to keep reviewing various turnkey operators and educating myself.
Hope the duplex deal goes well.
But as with most newbie investors, don't have huge sums to drop, so I guess that's why we're all drawn to these cheap properties with high ROI as a way into the market. Mostly no cashflow in Australia, so thus my interest in the US market.
If you've got $50k to drop on a turnkey property then you've just found yourself the necessary 25% down payment on a $200k multi family.
And depending on what market you're looking at, that could be something as small as a duplex in Ft. Lauderdale, or an 8-plex in many of the great midwestern markets...
Well my funds will come out of a HELOC on my primary residence here in Australia. So being new to the US market ie no credit history in your system, I was thinking I wouldn't be able to get further financing from your local lenders. Furthermore I'm not comfortable going that big for a first property. Maybe at the back end of this first deal I'll refi into something like the 8-plex. Happy to hear about alternative funding arrangements though.
Thanks for the comment @Joel Owens Yes agree if someone has money to lose then making a risky investment is fine. I'm still in the process of determining what is and isn't risky. My understanding from Clayton is A tenants were constantly hassling him about the littlest things and so were costing him in time and money. Also the ROI was very low for the As. While his C tenants are in a newly rehabbed property and don't complain about little things, only major items, which the rehab should put off for a long time. Also there are grades of C tenants and the ones his PM filters for are hard-working, blue collar workers who are dependable. Gotta have a good PM. As for appreciation it seems he's not so worried about that in the short-term, more interested in cashflow. If the PM is good hopefully I don't need patience to deal with residential tenants :) The more I research the more interested in either multi-family or commercial I am. But as with most newbie investors, don't have huge sums to drop, so I guess that's why we're all drawn to these cheap properties with high ROI as a way into the market. Mostly no cashflow in Australia, so thus my interest in the US market.
this simply is not TRUE C class tenants being less of a hassle than A class.. Oh man I can't believe anyone would believe that statement.. Your right having a great POD cast or TV presence is influencing people and giving them a total false sense of security.. I personally have been in this space about as long as anyone 20 plus years and a few thousands transactions under my belt.
People that lose these properties or have bad experience simply will not post they just slink off into the sunset never to be heard of again.. mainly they are embarrassed .
I fund a lot of this stuff as my day job.. I have been funding many buys this past year from AUssies selling out of their superannation funds.. and they have been selling for 6 to 15k per door for homes they paid 50 to 70k for.. taking huge financial loss's.. the guys I fund are buying them and they do this for a living they run them themselves... not on selling them to out of area investors.. there is a place for this C and D inventory but its not appropriate long term for out of area investors.
But then again Buy one and see what happens... LOL
That's why I'm glad you're posting. Newbies can be convinced of all sorts of things especially when the podcast features guests with 20+ year experience and 500+ units saying the same thing. Vested interests I think.
I've heard lots of stories of Aussies losing using their super funds. But the impression I got was they bought in crazy areas, didn't do DD and got caught with huge back taxes or other similar things, not C class properties that tanked. You've convinced me to aim for at least Bs. Seem to be a good compromise between ROI, sustainability and effort. Agree?
Thanks for the comment @Joel Owens Yes agree if someone has money to lose then making a risky investment is fine. I'm still in the process of determining what is and isn't risky. My understanding from Clayton is A tenants were constantly hassling him about the littlest things and so were costing him in time and money. Also the ROI was very low for the As. While his C tenants are in a newly rehabbed property and don't complain about little things, only major items, which the rehab should put off for a long time. Also there are grades of C tenants and the ones his PM filters for are hard-working, blue collar workers who are dependable. Gotta have a good PM. As for appreciation it seems he's not so worried about that in the short-term, more interested in cashflow. If the PM is good hopefully I don't need patience to deal with residential tenants :) The more I research the more interested in either multi-family or commercial I am. But as with most newbie investors, don't have huge sums to drop, so I guess that's why we're all drawn to these cheap properties with high ROI as a way into the market. Mostly no cashflow in Australia, so thus my interest in the US market.
Hi @Jay Hinrichs,
Have read this thread and all the others I could find on BP on Morris Invest. Believe me I'm naturally cautious but also mindful of getting caught up in analysis paralysis. So totally agree that just because it's cheap doesn't make it good. Doing my DD via BP and any and all other means. Clayton spends a lot of time talking about these places being C class but not a ghetto market. He classes the tenants as good, hard working types who pay regularly and don't damage the properties. However he only seems to have had about 5 years doing C properties, and about 15 years prior to that in A properties. His move from A to C, according to the podcast, was for ROI and less troublesome tenants. From this thread, other investors have had the opposite experience with C tenants ie big turnover and high expenses. Morris Invest avoids some expense by loading that up-front in rehab. I thought the rehab costs sounded very low, but being an Aussie had thought that just might be how it is over there, given your labor rates are much lower than ours. However reading the threads, you local guys are skeptical as well. There was an interesting BP article on turnkey providers that gave me some perspective as to why some on these threads were complaining about not enough communications from Morris Invest. See https://www.biggerpockets.com/renewsblog/truth-tur... which explains why. So this didn't bother me. Also not surprised given their podcast has become so popular so that they're getting 40-50 deal requests/month. I also agree that I doubt they're able to service that many requests per month. If they are I'd start to worry about how well they are vetting deals.
I'm interested in your comment about TK investors lasting only 7-10 mths. If that's the case we should be hearing soon, if they are brave enough, from Morris Invest clients, as many should be in that range now.
Both Clayton and Natali are seasoned television presenters so they market themselves very well. They've had a great deal of well known real estate gurus on their show. I was at first thinking surely these guys wouldn't rip people off to avoid their highly public reputations being tarnished. But then again, if they ended up ripping off a few hundred people, they'd make a heap of money and what's a few hundred people going to do to their reputations. So at this stage still not convinced either way. Maybe others haven't made it work in these areas, but maybe Clayton has. Time will tell.
Thanks for the recommendation re @Engelo Rumora, and thanks to you too @Ken Badziak. Will check out your site and definitely reach out to you in the near future. Itching to get started in this business but only when I feel I've got an accurate picture.
Many thanks to all,
Suvir
Hey Dave,
Yeah that's what my research is telling me too. Be great to confirm with someone who's done it. Also heard people using FX accounts to transfer funds from Oz to the US accounts.
Agree re leverage for best returns. But thinking that might have to wait. Thinking buy some outright then a couple years later the LLC will be able to take out finance. At least that's what I've read.
What areas you looking at? How're you planning to manage them, PM? Being a beginner my main concern is being taken for a ride so trying to hookup with experienced investors who can educate me as to what traps to avoid. Been looking at Turnkey as a passive way in. Thoughts?
Thanks,
Suvir
Hi Guys,
Any Australians on BiggerPockets used Morris Invest? Clayton mentioned on his podcast that he has clients from Australia. Would be interested in talking to find out what the experience was like. Have listened to all Clayton's podcasts and interviews on BiggerPockets. Sounds like he wholesales these properties to his client base. Guessing he uses the funds he makes in wholesaling to then buy and hold his own properties. He also mentions some are rehabbed prior to sale while others are rehabbed post sale.
Looking forward to hearing more stories on people's experiences. I'm planning on pulling some equity out of my house and getting into some turnkey properties soon.
Kind regards,
Suvir
Thanks for the welcome and feedback guys. Any Aussies out there who have any info on how to structure their investments ie trusts, LLCs, where the LLC should be located, tax accountants to use, if and how to setup a US bank account (heard this is hard and not sure if really necessary), etc etc. I've listened to several podcasts detailing some of this but would love to hear from actual investors who aren't necessarily pushing their own business.
Cheers,
Suvir
Hi Armand,
I live in Sydney. Just joined BiggerPockets. Would love to learn about your experience investing in the US. I've been following Clayton and Natali Morris of MorrisInvest. They have a podcast that is dedicated to Buy and Hold property investing and also offer a Turnkey Property investing service. Got introduced to BiggerPockets when both Clayton and Natali appeared on the BiggerPockets podcast. I have equity in my house which I'm looking to invest. As you know ROI here at home is very poor so was very interested to find out how good it is in the US and that Aussies like us can get into that market. Also aware there are a lot of bad operators out there looking to exploit people like me. So very interested in networking with people I can trust. Have been doing a fair bit of research over the last few months. Got a tonne of questions around tax, structuring LLCs, how to leverage safely etc etc. Current thoughts are to set up a Family Trust in Australia which then manages a Holding Company LLC in the US. The Holding LLC then has several Child LLCs which actually own the properties. Max $150K worth of properties in each child LLC to limit risk. Holding LLC also limits risk and streamlines accounting. Anyways could go on and on but would love to hook up and start a dialogue.
Kind regards,
Suvir