Author Topic: Turnkey Providers for buy and hold rentals  (Read 724 times)

midwesterner1982

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Turnkey Providers for buy and hold rentals
« on: February 04, 2018, 11:37:57 PM »
I'm interested in finding a good turnkey provider for buy and hold rentals.  I have 5 rentals in my local market I'm managing myself and feel it might be good to start to diversify into other markets with next purchases.  Millennials are buying up the starter homes in my area which is driving up the prices while Rents are not keeping pace.
Is anyone using turnkey providers to source their properties?
Does anyone have a company they can recommend?(PM if you feel more comfortable)  I appreciate any tips about finding local teams in multiple markets.
Markets I'm considering:  Orlando, Memphis, Nashville, Indianapolis, Jacksonville pretty much in that order.  Any thoughts on those markets?  Are there any others I should consider?
Thanks in advance!

Mother Fussbudget

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Re: Turnkey Providers for buy and hold rentals
« Reply #1 on: February 08, 2018, 09:55:31 AM »
I'm not sure about "turnkey providers", but one of the cities in your list (Indianapolis) also interests me. 
To my knowledge landlords here on the MMM forums build their own teams of Realtor/Handyman/PropertyManager in their target cities, and proceed from there.  You might consider asking this question at BiggerPockets.  Or ask Paula at AffordAnything. 

All the best,
MFB

MaikoTsumi

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Re: Turnkey Providers for buy and hold rentals
« Reply #2 on: February 09, 2018, 11:01:24 AM »
Turnkeys vary from outright scams to, at best, having squeezed all the profit out at the front end.  Then, in some cases, continuing to squeeze with PM/ maintenance services provided for convenience. I understand some people want to feel "safe" by letting someone else do all the legwork, but you really need to be doing the research( and footwork) into the properties and markets you're interested in whether you're using a turnkey or not.  If you take the necessary time to do that, you won't need the turnkey operator.


midwesterner1982

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Re: Turnkey Providers for buy and hold rentals
« Reply #3 on: February 09, 2018, 11:19:00 AM »
I appreciate the responses.  I'm currently living overseas for work and was thinking it might be a way to expand my portfolio even though I can't be present.  I understand the significance of building a local team and having those relationships.  Maybe I need to wait until I get back to the states to either build another team or at the very least properly vet a turnkey provider.

srad

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Re: Turnkey Providers for buy and hold rentals
« Reply #4 on: February 09, 2018, 12:11:43 PM »
Check out Jason Hartman.  He has a pretty informative podcast as well. Granted that guy loves to hear himself talk and its pretty self promoting, but once you get past that, the guests he has are usually pretty relevant.  I've learned a lot from his podcast over the years.  Its a top 3 podcast for when the wife and i are going to be driving for a while.

I've spoken with one of his "Investment counselors" a few times.  I never got that pushy car salesman vibe from them. I mean you are buying a piece of property and there are literally dozens of comps nearby so its pretty easy to see if you are getting screwed. The properties available have been recently updated with new everything so the price is near the top of the market.  But, everything is done so you shouldn't have too many expenses in the first couple of years.   A standard proforma of his is, you buy a 100k home with 30k down (25k down + closing costs) get 1k rent and you clear around 250 a month.  Considering the amount of work you do (almost none), I keep thinking this seems like a no brainer, but i end up just buying near me where i can control it all..  One of these day's i'll plop down the 30k as give it a go. 

Anyway, check out his site and see what you think. 

MaikoTsumi

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Re: Turnkey Providers for buy and hold rentals
« Reply #5 on: February 09, 2018, 01:10:31 PM »
Check out Jason Hartman....

Just did a quick dive on the Memphis inventory.  Taking his numbers as is, this is exactly what I meant by squeezing the profits. Cash on cash should much higher. The appreciation rate is just fluff.
This is where not knowing the market comes in, a shift in vacancy rates, higher turnovers, and turnover costs could obliterate those returns.  I don't know, obviously there are people who purchase these from him, but I can find better in my local market.  Maybe I should turnkey some of them.


srad

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Re: Turnkey Providers for buy and hold rentals
« Reply #6 on: February 09, 2018, 02:41:02 PM »
Yea, that's the thing if you do it all yourself you will make more money. Problem for a lot of us (me included) is we live in a HCOLA, properties in my area sell for 500k and rent for 2500.  I can't do that, there's just no yield here, so i have to look elsewhere for cash flow.  In my search that's how i found Hartman, but I found some properties an hour and a half away from my home with much more acceptable numbers and bought those.  But being 1.5 hrs away is kind of a pita.  So that's why these turn keys intrigue me, very little work with an 8-12% cash on cash return.  It would be a nice addition to my rental portfolio:
I've got my hcola rentals - minimal cash flow but boat loads of equity from appreciation.
my 1.5 hour away rentals - good cash flow with potential for some appreciation.
And if i were to add a number of turn keys - cheap to buy, reasonable cash flow, no appreciation but almost no work. 

I see them as a place for investors. But again, i haven't purchased any so i don't know how well they would perform over any given period of time.

 

midwesterner1982

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Re: Turnkey Providers for buy and hold rentals
« Reply #7 on: February 10, 2018, 10:04:09 PM »
srad:
Yes, this is the kind of thing I'm talking about.  It's tempting to take some capital and put it to use into something that's tax efficient and takes no effort on my part.  If I were in the States I think I would take a weekend trip to one of these cash flow cities and start making contacts but I think there are certain situations where this might fit in.  To me, I'm totally fine if the other guy makes some profit if he's doing all the work.
I'm not familiar with Jason Hartman's podcast but I'll check it out.  I also like TheRealEstateGuys podcast.  They talk about more than just real estate but that is a positive in my view.