Podcast #14 – 22 Questions To Ask A Turnkey Provider

The turnkey world was explained in this previous post. If you are going down this passive investing path, here are some questions to ask. This is not an interview, but simply a conversation starter. Use the salesman to educate yourself and exercise your BS-Detector. A lot of people ask me who the people to work with are. I am afraid for those who think like that because they will not go through this important education phase.

  1. Can you break down the structure of your company for me? (Let them explain)
  2. Tell me how your process works from start to finish? (Let them explain)
  3. What does “turnkey” mean with your company? (Let them explain)
  4. Do you own properties close to the one you’re selling to me? (Determine if you are working directly with the TKP or middleman)
  5. Will there be a tenant in place before I close on the property? (There are pros & cons)
  6. Can I use financing to purchase the property? What happens if my financing falls through? (Determine if you are potentially overpaying)
  7. Is the home required to pass inspection and appraisal before I close? (Determine if you are potentially overpaying)
  8. Can I hire my own appraiser before closing on the property? (Determine if you are potentially overpaying)
  9. Do you use other companies to help you provide turnkey properties? (Understand where their deal flow comes from)
  10. What is your role in the sale of the turnkey properties? (Get a sense of the size of their operation, are they the sales guy, rehab guy, or everything?)
  11. Who are the “boots on the ground” in these areas? (Are you talking to the actual guy who manages the crews or just their sales person who never leaves the office)
  12. Who owns the homes? (Understand where their deal flow comes from)
  13. Who rehabs the homes? (Clarification on the buying process)
  14. Am I expected to pay for the rehab? (Clarification on what you are buying)
  15. Who manages the properties after the sale?
  16. How long have you been in business for?
  17. Is there a warranty on the property after the sale? (Beware if they provide vacancy assurance or warranties on work. They sound good but the provider could just be covering their work with a 3rd party insurance company)
  18. Can I see a scope of work with expenses for one of your rehabs? (Check out markups and what is fixed)
  19. How many properties are generally in your inventory month by month? (The more properties means better economies of scale but can also mean more bloat and more competition from other buyers)
  20. What sets you apart from other turnkey companies?
  21. What are some mistakes you make when you started out, and how are you doing those things differently now?
  22. Do you invest? If so what?

 

SPC Git Er’ Done Action Plan:

  1. Make a list of Turnkey providers, markers, agents to have a conversation with.
  2. Send out emails to providers and schedule discussions.
  3. Get on the phone, learn, and exercise your BS-Detector.
  4. Email (Lane@dev.simplepassivecashflow.com) me a screenshot of your iTunes review and I will send you the spreadsheet with some of the most popular Turnkey Providers to start your call list.

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