Today’s REI Classroom Lesson
Steven Gesis explains the difference between a true, all-in-one, turnkey company vs. faux turnkey.
REI Classroom Summary
Discover what a true turnkey provider does for the real estate investor and where a faux turnkey provider falls short.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host.
Steven: Hey FlipNerd community, my name is Steven Gesis, and I’m with SmartLand out of Cleveland, Ohio, and today we’ll talking a little bit about the difference between turnkey and faux turnkey.
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Steven: So I want to dive in today and talk about the difference between a real true turnkey operator and a faux turnkey operator and define what those differences are. So I want to begin with, let’s define what a true turnkey is.
A true turnkey is going to be something where you’re going to hook up with an operator that has an all-in-one operation. They’re going to cover your acquisition, they’ve done the construction in-house. They have a management company as well as a maintenance company. They’re vetting and placing tenants on your behalf in advance of your acquisition. So in this case scenario we have a true cash flowing asset that produces income as soon as you’re acquiring.
So let’s break that down again. So a true turnkey operator is going to be someone who’s done the acquisition in advance with no prior commitments from the investor that has these homes in inventory ready for acquisition.
So they’ve done the acquisition. At this point they’ve implemented a construction strategy. Hopefully they’re using uniform construction materials and methodologies to enhance your ROI and increase the economies of scale across the board of assets that they’re managing for investors.
So we’re going to follow that up by making sure that that turnkey operator is also placing and vetting the tenants in-house, and that they have a legitimate property management company that’s servicing that asset.
So the point being here is that you’re going to get a global solution from one turnkey operator for pure accountability. So that’s a real true turnkey. So we’ve done the construction, we’ve vetted and placed the tenant, and then that asset is acquired by you and managed by the same operator that has done all those things. So it’s all about accountability here.
So now let’s talk about what a faux turnkey is. So a lot of people use “turnkey” very loosely, and we want to make sure that we drill down what that true turnkey, really, what that definition really means.
Some people represent turnkey, and I call it a faux turnkey, but some people call turnkey something like where they’ll help you acquire the asset, they’ll help you do the construction, but they’ll pass you off to a third party or tertiary property management company.
And alternatively they may have just helped you do the acquisition, connected you with an operator that does some construction and then they pass you along again to a property management company. So it’s not really lockstep. There’s really no accountability. However, they’ll dub themselves as turnkey.
So I think it’s really important that we dive into what the true standard of turnkey is and really define true turnkey. And true turnkey again, and we’re just going to just summarize it real quick and then we’re going to move on from today’s lesson.
So a true turnkey is going to be working with an operator that has done the acquisition in advance of any commitments of any type of investor. They’ve done the construction in house, they’ve implemented a uniform construction methodology and materials throughout their process and ensuring that you’re getting the most efficiencies and economies of scale at the property.
And then they’ve vetted and placed the tenants in house. And then they manage it on the back end when you do acquire it. So there’s full accountability. You have somebody from lockstep, every position you can hold accountable for any trials, tribulations, whatever may come.
And then let’s talk about what a faux turnkey is. Finally, we’ll summarize. A faux turnkey is going to be an operator that says they have a turnkey asset. However, all they’re doing is helping you with the acquisition. They’re helping you with the construction in one capacity or another. Then they’re passing you off to somebody else for management. No accountability. Don’t get the economies of scale. You’re not going to increase your ROI and you’ll probably pay a premium from that asset.
So it’s important that we understand and define those two differences and I hope today has been very educational and I wish to see you back in my REI Classroom.
Mike: VirtualStaffNow.com is the leading virtual assistant provider for real estate investors. As busy real estate investors, there’s nothing more valuable than our time. And VirtualStaffNow.com not only helps you find the right real estate virtual assistant for your business, they train them on an ongoing basis, manage them daily to make sure they’re staying productive and effective.
In the event they’re not the right fit or need to be replaced, they handle that for you too. Whether you need 1 or 100 virtual assistants for your team, start the process right now at VirtualStaffNow.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips, and lessons from leaders across the real estate investing industry. They’re available at FlipNerd.com/shows, or simply search for FlipNerd in the iTunes store.
Steven: Hey FlipNerd community, my name is Steven Gesis, and I’m with SmartLand out of Cleveland, Ohio, and today we’ll talking a little bit about the difference between turnkey and faux turnkey.
Mike: This REI Classroom real estate lesson is sponsored by VirtualStaffNow.com.
Steven: So I want to dive in today and talk about the difference between a real true turnkey operator and a faux turnkey operator and define what those differences are. So I want to begin with, let’s define what a true turnkey is.
A true turnkey is going to be something where you’re going to hook up with an operator that has an all-in-one operation. They’re going to cover your acquisition, they’ve done the construction in-house. They have a management company as well as a maintenance company. They’re vetting and placing tenants on your behalf in advance of your acquisition. So in this case scenario we have a true cash flowing asset that produces income as soon as you’re acquiring.
So let’s break that down again. So a true turnkey operator is going to be someone who’s done the acquisition in advance with no prior commitments from the investor that has these homes in inventory ready for acquisition.
So they’ve done the acquisition. At this point they’ve implemented a construction strategy. Hopefully they’re using uniform construction materials and methodologies to enhance your ROI and increase the economies of scale across the board of assets that they’re managing for investors.
So we’re going to follow that up by making sure that that turnkey operator is also placing and vetting the tenants in-house, and that they have a legitimate property management company that’s servicing that asset.
So the point being here is that you’re going to get a global solution from one turnkey operator for pure accountability. So that’s a real true turnkey. So we’ve done the construction, we’ve vetted and placed the tenant, and then that asset is acquired by you and managed by the same operator that has done all those things. So it’s all about accountability here.
So now let’s talk about what a faux turnkey is. So a lot of people use “turnkey” very loosely, and we want to make sure that we drill down what that true turnkey, really, what that definition really means.
Some people represent turnkey, and I call it a faux turnkey, but some people call turnkey something like where they’ll help you acquire the asset, they’ll help you do the construction, but they’ll pass you off to a third party or tertiary property management company.
And alternatively they may have just helped you do the acquisition, connected you with an operator that does some construction and then they pass you along again to a property management company. So it’s not really lockstep. There’s really no accountability. However, they’ll dub themselves as turnkey.
So I think it’s really important that we dive into what the true standard of turnkey is and really define true turnkey. And true turnkey again, and we’re just going to just summarize it real quick and then we’re going to move on from today’s lesson.
So a true turnkey is going to be working with an operator that has done the acquisition in advance of any commitments of any type of investor. They’ve done the construction in house, they’ve implemented a uniform construction methodology and materials throughout their process and ensuring that you’re getting the most efficiencies and economies of scale at the property.
And then they’ve vetted and placed the tenants in house. And then they manage it on the back end when you do acquire it. So there’s full accountability. You have somebody from lockstep, every position you can hold accountable for any trials, tribulations, whatever may come.
And then let’s talk about what a faux turnkey is. Finally, we’ll summarize. A faux turnkey is going to be an operator that says they have a turnkey asset. However, all they’re doing is helping you with the acquisition. They’re helping you with the construction in one capacity or another. Then they’re passing you off to somebody else for management. No accountability. Don’t get the economies of scale. You’re not going to increase your ROI and you’ll probably pay a premium from that asset.
So it’s important that we understand and define those two differences and I hope today has been very educational and I wish to see you back in my REI Classroom.
Mike: VirtualStaffNow.com is the leading virtual assistant provider for real estate investors. As busy real estate investors, there’s nothing more valuable than our time. And VirtualStaffNow.com not only helps you find the right real estate virtual assistant for your business, they train them on an ongoing basis, manage them daily to make sure they’re staying productive and effective.
In the event they’re not the right fit or need to be replaced, they handle that for you too. Whether you need 1 or 100 virtual assistants for your team, start the process right now at VirtualStaffNow.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you in your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips, and lessons from leaders across the real estate investing industry. They’re available at FlipNerd.com/shows, or simply search for FlipNerd in the iTunes store.
