Author Topic: Homeunion and Turnkey Leverage  (Read 554 times)

arach

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Homeunion and Turnkey Leverage
« on: March 01, 2018, 07:53:19 PM »
I wasn't a huge fan of turnkey properties because of a lot of limitations and returns.

I've read generally negative things about homeunion, but one thing they do no one else seems to let you do is leverage.

For example, other turnkey providers require you to pay cash up front, then offer a modest return of say 8-10%.

Homeunion on the other hand will help you buy with say 30-35% down. While the fees are higher, the fact that you have the ability to leverage means the same investment can get you a lot further.

Example: TurnKey A: $100k investment nets you $100k property generating $1000/mo in rent.
Turnkey B (Homeunion): A 100k investment nets you a $300k property generating $2500/mo in rent

This gets back to leverage 101, in turnkey A, I'm getting a higher cap rate/pct yield on the property value, but in turnkey B I'm getting a bigger yield on my actual investment. While annual cashflows may only be 5%, after 15 years you have a 300K asset on your hands, generating a 20% annualized return.

Is there something I'm missing?

srad

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Re: Homeunion and Turnkey Leverage
« Reply #1 on: March 02, 2018, 02:34:08 PM »
I'd look for some additional tk providers,  The Few I've looked into allowed for regular financing.  (i didn't buy any but this property type intrigues me)

If you did find a TK provider you liked but makes you buy with cash, you can always do a cashout refi to get your money back. 

arach

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Re: Homeunion and Turnkey Leverage
« Reply #2 on: March 04, 2018, 08:18:21 AM »
I'd look for some additional tk providers,  The Few I've looked into allowed for regular financing.  (i didn't buy any but this property type intrigues me)

If you did find a TK provider you liked but makes you buy with cash, you can always do a cashout refi to get your money back. 

Thats one of the things I was wondering about, if you can cashout refi once you buy the places. I'm going to ask that of one of the companies that I really liked that has the cash requirement. Thats something I would do.

I'll keep looking at other tk providers too. I'll scour other recommendation posts, but if anyone has recommendations let me know!

Thanks!