Explaining Turnkey Real Estate Investing & What's Wrong With It
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- Опубликовано: 27 июл 2024
- Turnkey real estate investing is often pitched as "passive income" to affluent individuals looking to buy rental properties out of state.
One of the biggest drawbacks with turnkey real estate is that unsuspecting investors are often sold a pipe dream of mailbox money when in reality they're getting rough properties in the worst parts of town.
I'm going walk you through the ins/outs of turnkey real estate investing as well as some tips to ensure that you don't lose your capital.
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Good information. Turnkey companies in general are usually not the best option. For the company to make a decent profit they are not giving up any equity.
Preach
I love turnkey properties, selling them to out of state investors is great.
Lol. That’s kinda the point of the video. Often a better arrangement for the seller than the buyer.
You enjoy scamming people.
Hi Ryan! Is your formula for something your going to wholesale different than your formula for something your going to BRRRR? I’ve heard some say for straight wholesale you should do ARVx.97 minus repairs/minus assignment fee/minus end buyers-investors profit..... does that sound out of line?
Something I’m keeping I’m looking for 75% of ARV - repairs - holding costs as my max offer.
@@RyanDossey thanks brother! Do you use same formula for something you wholesale?
Great video! I buy 30k pigs in Cleveland but I am local. I get what’s going on in these neighborhood. All of my rent are subsidized by the govt. ITS NOT EASY but everything from buying to rehab to mgmt is in house so we have full control. In Cleveland we have a lot of out of state and foreign investors buying shitholes and selling them 2-3 year later and never making a dollar off the property.
When are you selling your first Florida turnkey property?! You are in a market a lot of investors would love to be in! Tax write offs to go to the beach sign me up haha.
Great info! I looked in to a bunch of turnkey providers in 2018, there is definitely a lot to consider. Just google turnkey real estate scams and you can learn a ton... basically a lesson on due diligence if you want to buy turnkeys.
You touched on it with the syndications, it seems like people who don’t have time but have money (and no experience) turn to turnkey investing. There is a definitely a market for it and I think you would do a great job with it if you’re looking for your 10th job lol
If I’m doing that much work I’m just keeping them. ;)
Great discussion! I hire contractors for the government for a living, so it would be a conflict of interest for me to hire contractors for my side hustle. I’m interested in turn key as a way to get around this. Great suggestion on syndications, I will look into that as well
Darn that's a bummer!
As always, great content and this is something that should have a broader publication.
I always wondered why you would want to do this unless you have stupid money to throw around. I knew someone who purchased 15 properties in various locations around the country. No due diligence and no experience in the markets they were looking at. All of the properties were money pits. If they weren't needing constant repair, they were between tenants, or the tenant wasn't paying the rent. The company that sold the properties also ran the management company, that you had to use by contract, so you were basically indentured to their business model. They lost all of the properties to foreclosure because they could not afford to maintain them, they were negative cash flow on the entire portfolio almost from the beginning. The company that sold them had no shame, none.
If you are looking at this business model, you need to ask yourself what I believe is an obvious question. If these are such great investments, why isn't the company selling them holding them for the great cashflow and investment potential? Just don't do it.
I think for the folks that choose to do it it's a "better return than I'm getting on it sitting in savings" decision. The problem is that it doesn't always end up that way.
I own 7 turnkey rental properties. All but 1 (the one purchased in 2022 - break even) cash flow each month after PITI, PM fee, and reserves for vacancy, repairs, and cap-ex. I pulled all my money out of the first 5 a year ago with a cashout refinance (3.75% fixed for 30 years) and put those funds into a few syndications that cash flow. Infinite returns, baby!
Everything you said was great except when you said that buying a house for $250k and renting it out for $2,000 a month won't make you much money... That's close to the 1% rule and if the home is in a good neighborhood that would be an outstanding investment.
In my real life experience owning 1% rule properties in A class areas they cashflow around $100 a month truly after all expenses. That's simply not a large enough return for me.
@@RyanDossey Please explain this more for a newbie. You get 2000/month in rent but only left with 100? Where did the rest of the money go then?
@@HairyPixels "expenses."
I get it now. There are too many layers to it. Makes more sense to find your own deals.
Love this. Always got turned off by the idea of it
I have personally yet to see a turn key deal that still had equity in it.
If not turnkey what do you recommend
Rent to retirement is a good turnkey company.
Who would buy a house without an appraisal and inspection?
Out of state cash buyers do it literally all the time.
I checked all the boxes for this turnkey company and it's great.
Which ones, which turnkey companies would you recommend?
Interesting discussion! I hire contractors for the government for a living, so it would be a conflict of interest for me to hire contractors for my side hustle. Because of this, I am interested in turn key.
Everything he mentioned can be fixed with common sense , he mentioned location so y would u buy it if it’s not in a good location , turnkeys are just providing a service it our job as a invester to do our do diligence 🤦🏽♂️
Find me an A-class house at 75% of ARV at a 1.25% rent to cost ratio... I'll wait bro.
Dont be a nay sayer and keep people down.
Buying at retail right now in an inflated market doesn't make any sense at all. You're free to do it. I'm free to tell people the risks with it. Best of luck to ya.
@@RyanDossey Theres alot of turnkey new construction properties that's appraised above market value after purchase so your in a great equity position at closing and I have proof
@@hawaiiancowboy3439 I'm not saying that properties aren't appreciating while they're being built but that's speculating on appreciation. I'd much rather this deal I just did.
www.zillow.com/homedetails/3316-Cox-Ln-Columbus-IN-47203/85102795_zpid/ I bought it for 140k, put 10k in, and sold it for 235k.
No turnkey provider is going to sell someone a house for 150k that they can sell for 235k.
I can afford to buy a rental on the west coasr
Sending you a dm on IG. Mahalo for this video.
Nice to meet ya!