What I found was the owners were very young – in their 20 ’ s and had only a couple years ’ experience in real estate . When they showed me their available properties , I thought we were walking through their newly acquired homes just out of foreclosure and in prerenovation phase . You can imagine my horror when they proudly told me these were their turnkey homes . It appeared that no renovation had been done at all . In fact , there was not even a handle on the very old , rusty oven . I told them their properties did not meet our strict criteria , and they quickly replied , “ That ’ s OK . We ’ ve already sold these to outofstate investors . We have a wait list .” I asked if the buyers ever came to see what they were buying . They said “ Never ”.
These kids were expert internet marketers . They were not turnkey rental operators . I was amazed at how trusting their buyers must have been to unknowingly purchase such garbage .
The 10 Most Common Signs of Dangerous TurnKey Rental Operators
Real estate investing is really not hard to get right – IF you use the protective measures available to you like property inspections , appraisals and rent verifications . When it comes to working with a turnkey property company , here are just a few of the things we look for at the outset when vetting teams .
1 . Inexperienced operators If they don ’ t have a solid track record , they will be practicing and learning with YOUR money .
2 . Not walking the talk If they don ’ t own a portfolio of rental property , they won ’ t really know firsthand what it takes to succeed .
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3 . Lone rangers If they don ’ t have a team to support them , you won ’ t be supported either – especially if anything happens to them .
4 . Lacking systems If they aren ’ t organized with the right software and systems , they will get overwhelmed and be unable to serve you over the long term .
5 . They operate in the ‘ hood C properties can look real good on paper , but reality is a different story . Stay away from properties under $ 50k because they tend to be high crime , high vandalism areas .
6 . Shoddy renovations If they are not fully renovating the property , they are just making a profit and leaving you with repairs . Demand that all plumbing , roofing , HVAC , boilers , foundations and electrical be upgraded to code – and get inspections to verify .
7 . Rental or vacancy guarantees There are no guarantees in real estate and a rental guarantee won ’ t be necessary if you buy right . Most operators who make guarantees have padded the price of the property at the outset . Make sure you really understand market rents .
8 . Overmarket pricing Many turnkey operators sell their properties above market value . Outofstate investors from highpriced markets are targets because they don ’ t understand local values and think everything is a deal because it ’ s so much cheaper .
9 . Inexperienced property management Many turnkey operators choose to do their own property management . If they do not have at least 2 years ’ experience with lower than average vacancy rates – don ’ t use them or you will be part of their learning curve !
10 . A history of fraud It is astounding how many scam artists are attracted to the real estate business . It ’ s worse than used car salesmen ! This is an easy fix – get back ground checks .
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