Rental Property Number 15 is Under Contract (Turn-Key)

I set a goal at the beginning of the year to buy 7 rental properties in 2015. I was able to buy two rentals right away (numbers 12 and 13) and get a third under contract as well. I was able to get rental property number 14 under contract on March and it still has not closed three months later. I will discuss what is going on with that property and rental property number 15, which is under contract as well and should be a much smoother transaction.

An update on my real estate goals for 2015

Here is an article I wrote at the start of the year that detailed my goals for 2015. Below are the major goals I made for 2015 and how I am doing so far.

1. Flip ten houses. I flipped 12 houses in 2014 am on pace to flip many more than ten houses. I wanted to flip fewer houses this year, because of the capital and time it takes up. Instead of flipping houses I wanted to wholesale more, but that is not going quite as planned. I did wholesale one property so far this year and I made almost $20,000 on that deal. It is tough to wholesale and takes a lot of time dealing with buyers, most of whom are tire kickers. I hired one of my contractors to be a full-time rehab manager, which will free up my time and quicken up the repair process. Instead of wholesaling to fix my house buying addiction, I decided to improve my flipping process.

2. Buy seven rental properties. I already discussed buying rental property number 12 and rental property number 13. Rental property number 14 should close soon and 15 is under contract. This puts me right on pace or slightly ahead to buy seven properties this year.

3. Sell 200 houses on my real estate team. My real estate team is doing awesome. A couple of my agents who are very new to the business have been making a ton of money, which in turn makes me money. However we are no where close to our goal of 200 houses. Colorado has the highest appreciating market in the country and there is no inventory. My production comes from HUD and REO properties and there are virtually none, because our market is doing well. Luckily the dollar amount of the houses we are selling has gone up and my team is picking up my slack. Even though we many not sell 200 houses, we might make just as much money with the higher sales amounts. I also added a new team member last month and he is doing great already as well.

4. InvestFourMore goals.

  • 300,000 views a month by the end of 2015. I hit 270,000 views in May so I should blow this out of the water.
  • Implement a new real estate agent success system. I introduced the Six Figure Real Estate Agent Success System earlier this year and it is doing great. (if you are interested in the system, shoot me an email and I might be able to get you a discount; [email protected])
  • Borrow private money through the blog in 2015. I have not done this yet, but I did get a line of credit on my personal house, which lets me put less cash into the flipping business. 
  • Improve or create a new forum. We created a brand new forum where people can discuss anything and it is going great as well. A lot of really good questions and I try to respond to everyone.

Overall I have been doing very well with my goals. I realize now that they may not have been challenging enough at the start of the year.

Here is a great article on setting goals and why they are so important.

What is going on with rental property number 14?

When I got rental property number 14 under contract it was a traditional sale, but I could tell the seller was motivated. The house was a mess and they wanted a very quick closing. I got the home under contract and then we found out the city had $15,000 in liens against the property for code violations and water bills. The seller could not pay those liens off so we had to change the transaction to a short sale. This home was listed on the MLS so I am not worried about short sale fraud.

After months of waiting the bank did give us a price they would approve the short sale for, which is more than I had it under contract for. I decided to pay more, because I feel the house is still a great deal. This deal was supposed to close a couple of weeks ago and it keeps getting delayed by the bank. We were supposed to close today, that turned into later this week and we will see when we actually close on it. I will make sure to shoot a video and give all the details once I buy it!

My resources page has links to all my rental properties.

What is rental property number 15 and how am I buying it?

Rental property number 15 should be the easiest transaction that I have done. It is a turn-key rental property in Cleveland, Ohio and will take no work from me (at least that is the plan). I have been thinking about buying a turn-key rental property for sometime, because I wanted to see how the process went and to see if the turn-key companies live up to their promises. I know I will not make as much money from a turn-key as I would my other rentals, but I am okay with because of the following.

  • Turn-key would take no repairs and be rented right away
  • Turn-key would be bought with my IRA and anything is better than the stock market for me.
  • Since I am buying out of my IRA it would not affect my ability to buy local rentals or my plan to purchase 100 properties.
  • I have met the turn-key company I am using multiple times and even visited Ohio to check out some of their properties.
  • I refer turn-key companies to people and if I buy one myself than I am putting my money where my mouth is.

The property I have under contract is a 1997 two-story, with 3 bedrooms, 3 bathrooms and is $45,000. The home is rented for $800 a month now, but I have been told it should rent for $900 in the current market. I verified the rent with Rent Range and they came in right at $900 a month as well. Zillow came in at $1,000 a month, but I don’t trust them as much. Here are the numbers from the turn-key company:

Rent: $800

Taxes: $1,107 (yearly)

Insurance: $600 (yearly)

Management: $768 (yearly)

Vacancies and maintenance  $960 (yearly)

NET ROI: 13.7% based on cash purchase

What will I be watching for when owning the turn-key property?

I am curious to see how many things go with the turn-key purchase.

1. Will the vacancies and maintenance match their estimates? I see similar numbers on my rentals, but my rentals are more expensive. The turn-key company claims the houses are repaired and all major systems should last ten years or more.

2. Will the rents be on track for what the turn-key company claims? This is always a huge question mark, but my research seems to point towards the rent estimates being accurate. If the rents are higher it will have even better returns.

3. How will the property management company perform? The turn-key company says they have worked with their property management companies for years and trained them exactly how to do business. They get a discount from the property managers in lieu of giving them a lot of business.

Here is a great article on how the process works when buying a turn-key rental property.

How hard was it to buy a turn-key property with my IRA?

It took me a lot of time to finally decide to buy a turn-key rental property. When I realized I could use my IRA to buy a turn-key property that was the turning point. I contacted a couple of self-direct IRA companies and ended up using UdirectIRA. It took them about a week to get my account set up and transferred from my regular IRA. The turn-key company helped me choose the right property and I signed all the docs about a week after setting up my IRA. The turn-key company already has the house rented, it is managed and they even take care of the home owners insurance.

The process was very simply up to this point and now I wait for the IRA company to sign off on everything since technically my IRA is buying the house and not me.

Conclusion

So far it has been another great year and my goals are mostly on track. I have made some big changes in my business and I keep buying properties even though are market is crazy hot right now. I will be sure to write about the turn-key process and how it goes as well as my new rental properties.

71 thoughts on “Rental Property Number 15 is Under Contract (Turn-Key)”

  1. Hi Mark,

    I love your blog and thank you so much for sharing your knowledge and experience with your readers. I am new to real estate investing and am looking to deploy some of my cash into turnkey rentals.Would you mind sending the name of the turnkey company you use? Also is there any advise you can provide regarding the terms of the contract etc?

  2. Hi Mark great article can you send me the name of the turn key provider you used please as i am also considering to purchase turn key.

  3. Hi Mark – great article. lots of insightful info. Can you forward me a list of turnkey providers you trust and recommend.

    Big Thanks

  4. Mark, great breakdown for turnkey rentals. I am looking into getting one for myself and I see all the numbers you provided but have one question. Does your maintenance number account for cap ex as well? I know several turnkey companies go in and update several major systems so just wondering in addition to taxes, insurance, property management, vacancies, and maintenance – domI need to set aside a reserve for cap ex as well? Thanks for keeping up such a great site!

    Also, can you send me the company in Ohio you went with please? Thanks.

  5. Hi Mark,

    I am working with thme now looking to purchase my first investment property ever? I am nervous!!! How is your property doing with them? Are things still going well? It seems I may not get to see any of their properties since renters are already in them.

    Thanks,

  6. Hi Mark. Can you please provide the name of this turnkey company aswell as others you recommend? Thank you. I love your blog and have followed it for years and this will be my first venture – very exciting

  7. Hi Mark, could I please get the name of the provider you went with? Also, can you share some of the terms that went with the deal? E.g. maintenance guarantees, tenant guarantees, etc.?

  8. Hey Mark,
    I’ve been listening to your podcast and really enjoy the content. I have a number of rental properties in Colorado, but I have been researching buying in northeast Ohio. I was wondering if you have given an update on your Cleveland property on your website or podcast lately. Have you had it for a year now? How is it performing?

    • I have not done an update. I was waiting for some news from the turn key company. They had to replace/ evict a tenant and wanted to see what it is re-rented for. The turn key did make up for all the lost rent though.

  9. Thanks for all this info Mark. Could you please share why you pick Cleveland out of all locals to diversify from your Colordo base? What has been your experience so far? How has the property preformed?
    Could you please send me the contact of the turn key company you have selected? Did you consider others?
    Really like your blog.

    • That was where this particular turn key company had some properties that looked like good deals. A lot of my choice was based on trust with them, since I know them well.

  10. I have been reading your blog non-stop since I discovered it. May I have the name of the turnkey company that you used, and do you have an update how number 15 is going? Thank you

  11. Hey Mark,

    Great website and info.
    Appreciate all the education here.
    How many turn keys have you bought?
    Is it all SFR?
    I am looking into SFR and mutifamily..
    Could you please share the turn key providers info and your experiences?

    Thanks.
    Ees

  12. Love your writing! So informative and easy to understand. Can I have the name of the Turn Key Rental place too please?
    Thank you so much!

  13. Mark,
    This blog is extremely informative and fills in many of the holes in the process to start in real estate investing. I’m extremely interested in starting my journey by using turnkey investments. How has your experience been with this out-of-state property? Also, you can you pass along the contact of the turnkey companies you’ve dealt with/ could recommend to me?
    Thank you

  14. Just found this site, looks amazing!!! Going to have a lot of reading to do in the next few days… Mark, could you send me the name of the Turnkey Company you used. I just discovered this option and am doing a little research in it. Thanks

  15. Hi Mark,

    I love your blog and thank you so much for sharing your knowledge and experience with your readers. I noticed below that you are willing to share the names of turn key companies that you are using. Would you mind sending them to me as well?

  16. Hey Mark,
    I looked into this company and talked to a couple of the guys. Have you physically walked through and inspected the house you purchased? They sent me links of their listings saying they cant put them online like the other Turn Keys because they are listed through realtors right now at a markup. THe homes they sent me look like foreclosures that need $15-$30k just to make rent ready. And they say I can buy them for $35-40k completely fixed up with a tenant in place, or that they guarantee rent if it’s not filled at closing.

    And when I looked the 2 guys up online their facebook page is filled with nothing but pics of them on yachts, posting profanity filled sayings, boozing, traveling the world with different women, etc… it just came off as not the image I would want to project if I’m trying to bring in investors? After talking with them over the phone and seeing how they project themselves, I just get the nagging feeling that this is some sort of MLM scheme, or that I’d buy this place and be stuck holding a Class D property in a class D neighborhood.

    How did you find anything out about their management company, reviews from current investors, etc? The only reviews I’ve found are from the guys that work there.

    Thanks

    • Hi Eric, Yes Mark Evans who owns the company is very lifestyle oriented and he is not afraid to show it. I can’t blame him as I know he makes a lot of money and does a lot of consulting as well. The lifestyle piece helps him market. The turn key I bought was not listed with an agent they owned it at the time and it was already rented. I know they have some different products. I know one of the guys working there is no longer working there who I wasn’t real happy with either.

  17. Hi. Would you mind sending me the name of the TK company as well? My market in Missouri is getting too hot as well and I’ve started exploring other states, but am hesitant to turn over management to someone. I work full time and have built up enough rentals in my town that if I pick up many more I’m either going to have to hire management or look at a turn key company like this.

    Thanks for your great blogs! Always interesting to see how other people are doing it. I’ve made many mistakes over the years but buying rental property young is one of the best things I’ve done.

  18. Hi Mark-

    Great article.

    Can you explain how the IRA worked for you?

    As I understand it is not in your name but the custodian of the IRA?

    How about tax returns – can you expense any repairs and treat it like your other self-bought properties? If income is reported via the usual 1099 then it seems that expenses would also be allowed.

    Do you have to stick with the PM they have managing or can you switch to one you may have a good relationship with or have built over the years?

    When you say they pay the insurance of the property, was that a deal you worked out with the turn-key company or its just something they did?

    Congratulations on continuing to build your portfolio.

    Thanks
    Daria

    • Hi Daria, I believe the expenses are different since it is in an IRA, but honestly I need to look into that. It is not in my name, but a custodian as you said. You don’t have to use their PM as it is my house, but I trust theirs more than any I know. They didn’t pay for the insurance, but they got it all set up.

  19. Hello Mark,

    I happened to stumble upon your blog via biggerpockets.com. Congrats on all your success. Do you have a list of turnkey companies you trust?

  20. Hi Mark,
    You have a great website. Can you please let me know what TK Company you used and any others you considered? Keep up the great work!

  21. I would be interested in the turn-key co info as well. I have the same problem with my market being hard to find deals in.

  22. Great to read another update!!! Can you send me the name of the company you used or the companies that you looked into before you bought? Do you have any information of TK companies in Indianapolis?
    Thanks!

  23. Hi Mark, I enjoy all the information you provide regularly.
    I too would appreciated the turnkey providers information you used.
    Thanks!
    Thomas

  24. Hi Mark,
    Great blog! Let email me your list of turn-key companies. Most tk houses offered to me in Ohio have been built 20+ ago. Which area in Ohio did you invest in?
    thanks,

  25. Hi Mark,

    Do you have a list of trusted Turn-Key providers? I currently have two properties self managed locally, but am interested in out of town markets. Thanks! PS, really enjoy your site and am hoping to slowly build a similar portfolio.

  26. Hey Mark, I’m wondering who you used for the turnkey as well, I am looking to pick up a few this year so I’ve been shopping around. Thanks!

  27. Mark, you are my inspiration! I will soon be leaving a corporate management career to start a real estate investment company in Utah. I like your business model of steady growth and realistic goals and plan to do the same – Good Job

  28. Mark good to hear. What company did you choose to use in Cleveland? I am looking for one in Cleveland as well. Thank you

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