Investor's Loan Guide by Graham W. Parham

• A larger turn-key company typically has economies of scale when it
comes to rehab costs. These savings are typically passed on to the buyer.
• Working through a turn-key company eliminates the hassle of trying to
manage multiple contractors (i.e. plumber, electrician, roofer, HVAC,
handyman, painter, etc.)
• Most turn-key companies have relationships with lenders who are familiar
with their product and know how to get an investment loan closed. There
are very few lenders who can consistently get investor loans closed.
Having a good lender already in place is a huge benefit to an investor.
• Turn-key companies almost always have property management in place.
With so many fly-by-night property managers out there, having a
property manager you can trust to place a quality tenant, collect rent
and take care of your property is crucial to an out-of-state investor.
• Having a relationship with a turn-key company gives you direct access
to a vested party when any sort of need arises with the property. Turn-key
companies operate off of referrals from their investors and as such, are
very willing to stay involved with any investor throughout the life of their
investment.
Cons of Turnkey Property Investing
• An investor may pay a slight premium for purchasing through a turn-key
company rather than managing the entire process on their own.
• If you are a do-it-yourself investor, a turnkey property might not be the
right choice for you. You have no say so in the acquisition, property
management or previous construction that took place. You buy
properties "as is" and might not love the decor or the interior or exterior. If
you prefer to dig in and do things all by yourself, a turnkey property might
not satisfy your need to have your hands involved in every aspect of
property ownership.
• Before you choose a lender, you might want to ask them, do they have
a problem working with turnkey providers, especially the ones that own
their own management company. Many lenders view these real estate
transactions as “Non-Arm’s Length” transactions. Non-arm’s length
transactions are purchase transactions in which there is a relationship or
business affiliation between the seller and the buyer of the property. This
relationship may add additional risk by masking of insufficient cash equity
or down payment, promoting a sales price that is not indicative of actual
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