All Forum Posts by: Tom V.

I did what you said, @Ali Boone, and it's worked well so far for me.  I'm in the process of buying right now, but before I did, I spoke with 10 or 11 different Turnkey companies (I started by using @Jay Hinrichs turnkey-reviews.com site) and about the same amount of property management firms.

After all those conversations, it was MUCH easier to figure out the ones who know the area, know the numbers, and have confidence in what they offer.  When I spoke with them, I had a preset list of questions I'd ask (though I'd try to do it organically--not just read them off); their responses were telling.

The solid companies would answer quickly, wouldn't hesitate to give me direct answers, and had no problem with me digging deep into why they did certain things (ie why they don't manage in certain areas, or why they purchase in certain areas but not others--and I always wanted facts from them, not feelings).

There was one Turnkey provider that said "That's a really good question" to practically everything I asked... and then proceeded to give dodgy answers to direct questions like "Why should I invest in [city name]?" or "What's your vacancy rate in this particular area?" After that call, hearing somebody say "That's a really good question" more than once became a red flag for someone trying to figure out how to answer a basic investment question.

As a buyer, I'm relying the on the Turnkey to have their numbers in place and their reasons up front.  I should never have to pry anything out of them. It's up to them to convince me with facts and numbers to buy from them.  If they can't confidently do that, no way am I wasting my time by talking with them further.

New to BP, but not new to R/E .. So far have managed to stay quiet on various topics, but can't resist stating that many "Turnkey" operators are fly-by-night, switch company name every year, and essentially dodgy. This from first-hand observation as owner of a PM company in Kansas City. Too many new investors are keen to believe there's a quick and easy way to buy a rental property, and simply don't do enough research or analysis. If it's shiny, it must be good, right? But putting lipstick on a pig and paying a random person to move in to a house doesn't work as an investment.

Well, there's a little more you can do than that. One of the most simple things you can do, and I think one of the most effective, is call a couple property management companies in the area (unrelated to the turnkey company) and tell them you are an investor and thinking of buying property in such and such area/neighborhood and ask their opinions based on their experiences of managing properties there. Don't tell them you are thinking of buying from a turnkey provider (just so they don't think they are wasting their time talking to you) and if you have to, suggest you would be interested in talking to them about managing your property after you buy (if that's better incentive for them to give information), and see what they say. I could tell you fancy numbers and statistics and all sorts of stuff all day long, but why not just skip to the easy fix and ask people who have no stake in the game, yet have knowledge about what you are asking.

Then bigger picture, a lot of it is ensuring the strength of the overall market. Of course there are ghettos and bad areas in growing markets, but that's just one step in lessening your risk...in addition to getting info on the specific neighborhoods. 

Going to visit them does go a long way though too.

@Tom V. I think your question is more about what classes of properties and neighborhoods perform well rather than whether the property is turn key. How you acquire the property is irrelevant. You're going to have the same bad results if you buy in a declining neighborhood regardless of whether the property was turn key or not. This is where people get in to real trouble--investing in bad areas. So the issue is really whether to buy in low end neighborhoods or not. We sell turn key properties in Indianapolis and Kansas City but will never sell anything below a C class. So to answer your question, if you buy in the right areas, a turn key will perform as good or better than properties that you buy in some other manner as long as it has been property renovated.