This is my 3rd turnkey rental property purchased in June 2015. Oh what a sweet deal this one is. Brand new rehab, new everything, low crime area, close to downtown in a gentrifying neighborhood and the numbers are once again amazing!! If I could just keep buying properties like this, I would do so all day long. The problem is after purchasing each one, I’m back in saving mode for the next down payment. Luckily since I get paid pretty good at my day job, it shouldn’t be too much longer before I can start on turnkey #4.
I went back to my favorite turnkey company from turnkey #1 so the process of purchasing this one was much easier. All the research on the company, property management team and locale have already been done. It was just a matter of seeing what available inventory was available and pulling the trigger. Because of that it made purchasing turnkey #3 the easiest one of them all.
The next phases included ordering the inspection, then appraisal, negotiating inspection repairs and dealing with final underwriting with my awesome lender.
Inspection – Came out clean only 1 page of minor repairs. The turnkey provider agreed to fix all the items on the inspection. WINNER!!
Appraisal – Came out right at purchase price. I’m happy, seller is happy and my lender is happy. WIN,WIN WIN!!!
Underwriting – this is now the third property in a row in which ive used the same lender. They know me now, already have my paper work and info. It was just a matter of sending them updated statements. AWESOME!!
Closing was a snap, a notary came out to my locale and we signed all the paperwork in about 30 minutes.
Here are the actual final numbers used for purchasing this turnkey rental.
21% cash on cash return! I love that number! Talk to me later this year to see how this property is going or keep track with my monthly net worth updates as ill notate it there as well.
What do you think of this turnkey deal? Good or bad?
Great job on the cash flow. I am curious to know how you select tenants, and what criteria you have, if any. If you let your PM handle the tenant selection, I think you will have issues.
The harder and more expensive it is to evict in your city/state, the more diligent you have to be.
Thanks for the comment NNL. Your blog rocks by the way! My PM has over 10 years experience as a PM so I let them do the legwork however I ultimately have final approval. So when they pick out who they think is the best fit, I will review all the documents from the screening process and confirm if they are a good fit or not. Its sort of like a partnership in a way but so far they have not let me down on the first qualified applicants they have sent me on 2 different houses already.
The good thing about where Im buying these properties is that it is a landlord friendly state. Evictions take about 3 weeks. According to what my PM says at least. Hopefully I wont have to ever go through that.
Congrats on the new rental! It must be a great feeling adding another rental to the mix.
Those are awesome numbers (on paper) and I wish you the best in achieving them in reality 🙂
Take care!
Hey FI Fighter! Thanks for the comment! Man those numbers are amazing and Im hoping they perform like that in the years to come. They are all fresh rehabs, not in a high crime area, they have good qualified tenants which I helped approve by the way and Im being conservative with my vacancy and maintenance estimates – I don’t see why they wouldn’t perform but only time will tell and anything can happen. Believe me I will write all about it each month so you’ll know if they start going downhill. Its been a difficult journey for me to find these. Most of the turnkeys being listed are not like this. Its a matter of being very patient and getting lucky.
Thanks for the great blog. Very insightful and encouraging for someone like me, just starting out. I haven’t purchased my first property yet, but am looking to soon. Do you care to share what turnkey provider and PM you use? (I’m in LA where cash flow is near impossible).
thanks!
-Chris
Hi Chris! Thanks so much for the kind words! Im really glad you are finding good information on here. I got your email, will respond to you there with details.
Are you worried that you’re too concentrated in Indianapolis?
I’d be quite interest in ongoing updates from the turn keys – any issues that have come up, that sort of thing. Maybe a monthly round up?
I think any more then 5 properties in Indy might be too much. I want to do 5 properties in every city I invest in. Indy is just the first one. Right now I am actually in the process of dipping into the KC market though for my next one.
Oh and as for the ongoing updates. I actually already do this but on my net worth update monthly posts. I talk about each property and if I have had any issues with them. To be honest, most months there is nothing going on with them. Which is great, so it would be a really boring monthly update post if I wrote just about that.
Ah, I overlooked that on your networth posts. Thanks!
Congrats on the 6th property and 3rd Turnkey.
Cheers,
Dom
Thanks! I appreciate it. Im actually in the super early stages of picking up my 7th now. (4th turnkey). Really excited about it.
Hi, great information by the way. Could you tell me a little bit more about your The turnkey folks that you use. The good , the bad and the Ugly. Also how were you able to get a loan for such a small amount? I have a difficult time ( atleast in Washington state) doing this.
Thanks again,
Liz Blazina
Hi Liz,
I would be more then happy to share that information with you. I will send you an email so we can talk there. Ill send it to the email you used to write the comment. My lender does loans under 50k. Its difficult to find these but they are out there and ill let you know who it is in the email as well.
Thanks for commenting.
Congratulations on this! Do you mind sharing this info with me as well? E-mail works fantastic. Thank you!
Hi can you give me info on that lender as well? Thanks.
I would love to get this info as well. I’m looking at Indy, Kansas City, and Memphis right now but leaning toward starting in Indy.
I just found your blog and I love it. I invest in dividend stocks now I’m looking for more cash flow so im looking at real estate. I live in San Bruno ca it’s really expensive here would you provide me with the info of your pm and turnkey providers thanks
Hi Alex,
To follow your step, I flew to Indianapolis yesterday and just finished talking to one of the turnkey providers here. Luckily, they pointed out one property you bought and it looks fantastic. The best of all, it has appreciated so much! Based on my research, the numbers (cap rate, cash on cash return) are worse than yours nowadays, possibly because more investors are interested in the area now and they are gone so fast. Hopefully, I can find one eventually this year to fit my stringent criteria.
Thanks for all the information you posted here!
Bin! Whats up!? That is awesome you were in Indy and saw one of my properties. Im glad to hear it still looks fantastic. Really happy to hear that.
I totally am seeing the trend in the ROIs dropping as well. It seems the market is just getting too hot up there for investors like us which is putting a strain on the returns. I may have to start searching for another city that is still flying under the radar. Tough to find those.
Thanks Alex, I just saw your post of firing the PM. That scared me and hopefully not the one I just met. They seem to be nice and at least the one in contact with me was pretty fast and smooth in communication. They mentioned to me your tough criteria on screening the properties. The only thing that worried me is that they are in business for not a very long time (maybe only a couple of years?) and the downtown area of Indianapolis seems shakier than I thought. Most of the properties are so old (older than my grand parents). I will meet another one tomorrow, which is also young I believe. I am also interested in other cities as well, but great to follow your footprint to start with Indianapolis first.
Ha yeah dont worry. The PM that I am firing I would never recommend to anyone and I have not disclosed who they were. What I can tell you is that the team you met in Indy is who is taking over that house. So that is good!
This is indeed helpful. Thanks so much for the information
Wow, congratulations. I am new to your blog but I really like reading about your real estate dealings. I have one rental property but the numbers are quite different. In my part of the country (Northeast) we can almost get that total you paid for the house for a years worth of rent rent if you can believe it. Happy to see that someone who is as motivated as you is succeeding. It just shows you just need drive and hard work and it is possible to make it happen. Kudos !!
Thanks so much! I appreciate the kind remarks. I am very familiar with the east coast and the real estate pricing there. It is crazy expensive! 🙂 I am super motivated to generate passive income and the plan is to keep going until I am financially independent. Hopefully within the next 5 years.
You have done well, and I am very impressed with your acquisition rate. I am an Air Force Officer, and on the side, invest in both the stock market (dividends/municipal bond funds), and real estate. I currently have 1 home in Texas, and 2 in Nevada. I too have been researching Indy, and would like to venture into that market as well. If you are open to sharing your sources, I would like to know who your turnkey provided and property manager are, as well as the financial institution you use for lending. I currently use navy federal credit union, but am in no way opposed to others. My email address is youngbuc325@gmail.com.
I have a few ideas that I would like to bounce off you (potential partnership?). I would prefer to have a small size of a watermelon, that a large size of a grape. Income velocity is the name of the game! We can talk more offline.
V/r,
Terrence
Love your blog! Thanks for sharing the numbers of your deals. I have a question- can you explain the Cap Rate? I can’t quite figure out how it is calculated from the other numbers in the spreadsheet. Is there a certain Cap Rate that is your minimum criteria for a deal?
Hi Darrell,
Thanks for loving my blog. I appreciate that! Cap rate is really only used for all cash deals and its the ratio of net operating income to property value. So for example If I buy a house for $70k and the NOI is $7k per month then that brings me to a 10% cap rate. I only put the number there for show but I dont really use that number for my deals since I dont do all cash yet! I strictly go by the cash on cash return and look for 20% returns on that. If I had to go by cap rate I would try and find anywhere between 10 – 15% to be happy depending on the market of course.
I can’t imagine buying property for under 70k. That is amazing. I may have to look at out-of-state rental property. My rental property is being rehabbed while I move to a smaller unit to maximize rent. The yearly rent I receive on 1 unit is almost as much as you paid for the house. I get $4900/month = $58,800 with no utilities. Sounds great right? The expenses to live here however are prohibitive and it is not easy to find a relative deal. You get more but you spend way more and it is not worth it. Plus, you are on the hook for a big note. I am going to look into other states soon when I have some time. Thanks for sharing. I have a lot to learn from you on how to get the numbers right.
-Brian
Holy cow $4900 per month!! That is insane, it is in the bay area? It really is crazy that I am able to buy these houses for so cheap. That is exactly why I dont buy in my local market. When I first started I didnt have nearly enough money to buy houses in the $100k + range so these cheaper homes are a much better fit for me. At least for now.
Im pulling for you and wish you good luck for when you do venture out of state.
Thanks for the fantastic blog, I have really enjoyed learning about your experiences. It sounds like you are working with a solid turnkey provider, can you let me know more about your specific provider for properties 1 and 3?
Hi there! Thanks for writing! Your 31 questions blog was incredibly helpful. Would you also email me with info on your turn key provider? I have also been looking in Indie and am curious if you are using any of the companies I have been looking at.
Hey, love the posts and blogs about real estate. I am interested in the Indy market and need a good turnkey provider and property management company. Can you advise? Thanks!
Hello, I have really been enjoying your posts. I am also interested in the Indy market as well as KC. Could you tell me which turnkey provider and property management company you are using for property #1 and #3? Thanks.
Love your blog and great article! I’ve been looking into buying my first TK home in KC area. I currently own two rental properties in Northwest Arkansas that I manage locally, but am looking to expand in a more affordable market. I know you’ve had it a couple years now; have you been happy with the TK company you chose? Would you be willing to share who you went with? I’m leaning towards Independence/Raytown area as well.
Thanks for the great article! I’m interested in buying my first TK home in KC area. I currently own two rental properties in Northwest Arkansas that I manage locally, but am looking to expand in a more affordable market. I know you’ve had it a couple years now; have you been happy with the TK company you chose? Would you be willing to share who you went with? I’m leaning towards Independence/Raytown area as well.
Really appreciate your blog! I also live in Austin and we have just accumulated enough to go into our 2nd rental property, but I’m not happy with the numbers in our city. So it’s great to come across your experience and even open that door of investing in another city. Thanks so much for sharing your experience! Time to go research cities ?
Awesome thanks so much. I lived in austin for 14 years before I decided to finally leave for Indy and finish building my empire.
http://www.cashflowdiaries.com/moving-midwest-can-help-speed-early-retirement/
I see that I’m a few years after the fact here, but congratulations on all your properties.
I’m retiring from my job in just a few months and want to be involved in Turnkey investing. Can you share your Turnkey provider and property manager, and anything else you would share with a newbie just starting out? The email I used to post this is fine to respond to. Thank you.
Hi Mike,
There aren’t any good turnkey providers anymore that I know of. The best way to find investment properties now that are “turnkey” are to just find houses on the MLS that require very little work if any at all in which the numbers work good for renting. That is mainly how I help people finding investment properties these days but right now is bad timing because inventory is so low. Its not easy finding good cash flowing properties right now (Dec 2020).