Turnkey Interview: 10 Questions With Anton Ivanov

turnkey rental propertiesFor all you wanting to invest in turnkey rental properties, I have created Turnkey Interviews.  In these interviews, I pose 10 great questions to actual investors who have and/or are currently buying turnkey rentals.

I post a lot about my own turnkey experiences and also want for you to get some valuable information from others as well who are doing the same thing.  I strongly feel that investing with turnkeys is a great way to reach financial freedom if done properly.   My plan to retire early will greatly be dependent on the passive income I make from rental properties.

If you have purchased a turnkey rental property and would like to be interviewed.  Please contact me and we can coordinate it.  Thanks so much.   I really think us turnkey buyers need to stick together and share as much as we can from each other in order to have the best chances to succeed.

Turnkey Interview #5 with Anton Ivanov

Anton Ivanov is a software engineer, entrepreneur and real estate investor with 6 rentals in San Diego, Atlanta and Birmingham. He is the creator of DealCheck, a powerful mobile app for quickly analyzing rental properties, which you can download free for iOS and Android.

Note from Alexander:  I downloaded his rental app for my android and must admit I was very impressed with it.  I am in the process of buying a turnkey right now in Kansas City so I had a rental to put in and it spit out all the same numbers I have on my spreadsheet.  This tool is a great way to get your numbers on the go.  Way to go Anton!  Cool app my friend! You guys should download it and check it out.

And here is the Q&A from Anton:

1. What led you to start buying turnkey rentals?

– I live in San Diego, where the real estate prices tend to be very high and the cap rates and cash flow on rental properties very low. This makes it very hard to find local buy & hold deals that are attractive to me.

Because of that, I decided to start investing out of state in other parts of the US. I chose the turn-key model, as I didn’t have enough local contacts to conduct rehab jobs myself.

2. When did you start buying turnkey properties?

– I bought my first turn-key property earlier this year. (2015)

3. How man turnkey houses do you own?

– I currently own 3 turn-key rentals in Atlanta, GA and Birmingham, AL.

4. Are you planning on buying more turnkeys?

– I plan to continue expanding my portfolio at a rate of 4-6 properties a year to reach my goal of 50 rental units in the next 9 years. I will continue buying turn-key properties when it makes sense, but it’s likely that not all of my future acquisitions will be turn-keys.

5. What kind of returns are you getting on your turnkeys?

– The rental in Atlanta has a current cap rate of 7.1%. The two rentals in Birmingham both have a cap rate of about 8.7%.

6. What cities are your turnkeys in and do you plan on venturing out to different cities?

– The turn-key properties that I bought so far are in Atlanta and Birmingham. I will most likely invest in other cities in the future as well to diversify my real estate portfolio.

7. Are you happy with the PM that was provided with the turnkey?

– For the most part – yes. I still find myself playing a rather active role in management decisions, but I tend to do that with all of my properties regardless if they are turn-keys or not.

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8. Have you had any bad experiences with any of your turnkeys? Either with the purchasing process or after?

– I had to evict the tenant that originally came with the turn-key rental I bought in Atlanta. I don’t necessarily blame the seller or the PM, as bad tenants can happen to anyone in any market.  The purchasing process for all my acquisitions so far has been very smooth.

9. Do you have any advice for others looking to venture into out of state turnkeys?

– My biggest piece of advice is to treat turn-key acquisitions just like any other property purchase. I see far too many people believe that buying turn-keys is a simpler and more hassle-free process. It’s definitely not.

Just like with any property purchase, you need to be very diligent and selective when picking the market, the neighborhood and the property, as well as the people you do business with. Not every turn-key rental is a good deal and not all turn-key providers have the same standards when it comes to doing rehabs.

But if you do thorough research and play an active role at every step in the acquisition and management process, turn-keys can be a great investment.

10. Overall, are you happy with the investment?

– Absolutely. My experience with buying turn-keys has been very good and pretty much inline with what I expected before I started.

This concludes the interview.

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17 Comments

    • Hey Anton!
      Thank you for doing the interview. I have been getting good feedback on these and yours definitely helps.

    • I really like Anton’s aggressive plan. I don’t know how many I want yet but I think I will need around 20 to be completely financially free while being able to do whatever I want.

    • It’s a lot if you start getting bogged down with the number right off the bat. My strategy is to ramp up my purchase rate/year as I get comfortable and build equity in my existing properties. I started with just 1 unit/year, then 2, this year the goal is 4 and so on. This way, it’s much more manageable.

  1. Another interesting interview.

    I also installed the app and liked it. About the only thing I usually like to do, which it didn’t provide, is that I’ll calculate the required purchase price to get the cap rate I want. For example, if I’ve input the rent and I know I want a 12% cap rate, it’s an easy calculation to determine an offer price.

    Also, may I suggest changing the default expense percentage to 45% (it’s currently 50%). John T. Reed makes a good case for 45% http://www.johntreed.net/positive.html. I *BELIEVE* this also includes vacancies, which you have as a separate item, so perhaps these 2 combined TOGETHER should be 45% by default.

    I like that you’re conservative with expenses. Most people talking real estate understate them.
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    • Hi John,

      Thanks for checking out my app and providing your feedback, I appreciate it! A few people asked me for a reverser cap rate/valuation calculator like you described, so that’s something I have planned for a future release.

      Regarding the default expenses, they aren’t really meant to be guidelines, just something that I felt somebody new to real estate investing wouldn’t go wrong with. You can change the default expense percentage (along with all other defaults) by going to Menu > Settings. The numbers you put there will be used for all new deals you create. You can then customize them for each deal in the Worksheet as needed.

  2. Anton,

    Have most of your Turnkey purchases been with cash? With your plan to continue adding properties, do you have another plan for financing.

    I am a brand new investor and have just started the education process on REI. Since I am working full time, Turnkey investing could be in my near future.

    Thanks

    • The three turn-keys I bought this year were $85k x1 and $50k x2. I bought them all cash. I am in the process of doing a cash-out refinance on the $85k home. I don’t plan to refinance the $50k homes at this time. I 3 other rentals that have conventional financing in place.

      Going forward, I plan to use a combination of conventional and commercial financing, depending on what makes sense at the time. Conventional financing will always be cheaper with better terms (meaning lower interest rate), but you will cap at 10 mortgages before banks will stop lending to you. Commercial financing has no restrictions on the number of loans, but the terms are a lot different and the interest rates are much higher. There is also portfolio financing, which I didn’t have the need for yet, but probably will in the future.

      I would like to do conventional loans as much as possible, up to the cap. The cheaper homes (< $50k, I plan to buy cash and then do a blanket commercial bridge loan for all of them). I also personally prefer to buy the properties with cash and then refinance them within 6 months. This gives me an opportunity to raise their market value with rehab work and also make sure it's stable before I take on a mortgage.

      Hope this helps!

      • Anton,

        Thank you for replying in such detail. Initially, I see myself doing just what you said: paying cash for some and then refinancing those within six months, to hopefully get a higher value.

        • I don’t think there is right or wrong approach here. Many people like financing up-front right away and do very well with it. It also depends what type of property you are buying. If it’s a fixer-upper (which won’t be a turnkey obviously), it makes sense to buy cash and refinance later because you are likely to increase the home value with your rehab.

          For turnkeys, you won’t be increasing the value of the home because the rehab is already done, so you don’t gain anything in that regard, other than having the time to stabilize the property, find tenants, etc. If you re-finance within 6 months of purchase you will be doing what’s called a delayed financing transaction, in which you can use the original purchase price to calculate LTV.

          Also you will probably find, like me, that financing homes valued less than $50k is much more challenging and, in my opinion, not very cost effective, because the up-front fees will be as high as a $100k+ loan.

          Regardless of the financing, I encourage you to plan your acquisitions a long time ahead (like about a year or two), which will give you time to come up with the down payment of full value in saved cash.

      • I agree with William! That is a great strategy. I wish I could buy all cash I just don’t have the funds. Once I have all my 10 conventional mortgages tied up, i will think of a new strategy.

        • A few people I know work up to 10 mortgages, then take out a single commercial loan on all 10 properties and pay all mortgages off. Because the commercial loan is not visible to conventional lenders, you will be able to start-over on your 10 conventional loan count. Then repeat, and so on.

    • Hey Jason! Im glad the interviews are helping you. Feel free to reach if you ever have any questions or need more info.

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