25 Questions Curious First-Time Investors Should Ask Prospective Turnkey Partners

Investing in real estate is an exciting prospect with the potential to totally transform your financial future. But it’s also intimidating for first-time investors, and understandably so! A significant amount of money is at stake, and there’s so much for new investors to learn.

As a result, many newcomers opt for a turnkey approach. That is, they purchase properties from an established turnkey provider that handles property acquisition, renovations, resident placement, and property management.

(Why not do it yourself? Read The Dangers of DIY Real Estate Investing!)

But not all providers are created equal. Part of your due diligence is ensuring the turnkey company you work with is worthwhile. And how do you do that?

Start by asking the right questions.

25 Vetting Questions for Investors to Ask Turnkey
Providers

Company Background & Track Record

#1 – How long have you been in business, and how many turnkey properties have you sold to investors?

Look for operators with a proven track record and extensive industry experience.

#2 – Can you provide references from past or current clients?

Speak directly with other investors, especially those who’ve owned properties for a few
years. Past clients are valuable as they’re more likely to tell you the good with the bad.

#3 – What markets do you operate in, and why did you choose them?

They should have data to back up why those areas are viable for cash-flowing rentals. Another good indicator? The company and its upper management/owners invest in the same model!

Property Acquisition & Renovation

#4 – Where do you source your properties, and how do you acquire them?

You want to know if they’re wholesaling, buying distressed, or cherry-picking MLS listings.

#5 – What does your renovation process include, and who does the work?

Ask for the scope of work and whether they use in-house or third-party contractors. How do they do quality assurance?

#6 – Can I see before-and-after photos or videos of recent renovations?

This demonstrates their quality and consistency in reno work. Bonus if there are video walkthroughs!

#7 – Do you provide a home inspection report or an independent third-party inspection before closing?

#8 – Who oversees the renovation process? Do you have a project manager on-site?

Financials & Returns

#9 – Can you walk me through a sample deal, including cash flow projections?

Pay attention to vacancy assumptions, repair reserves, and property management fees. Are they being realistic with numbers, or overly ambitious?

#10 – What are the typical cap rates, cash-on-cash returns, and appreciation trends in your market?

#11 – Do you work with preferred lenders?

Some turnkey providers (such as ourselves) have lender relationships, which can streamline the process for you.

Property Management

#12 – Is property management included? If so, is it in-house or third-party?

#13 – How do you screen residents, and what’s your average stay length?

Resident retention/lease renewals are key to maximizing cash flow.

#14 – What are your property management fees and leasing fees? Are there renewal or maintenance upcharges?

#15 – How do you handle maintenance requests and repairs? Can I approve repairs over a certain cost?

#16 – What’s your average vacancy rate and eviction rate?

Transparency & Legal Protection

#17 – Can I review a sample management agreement and purchase contract before committing to buy?

#18 – Who pays for what at closing — are there hidden fees or markups on renovations or services?

#19 – Do you hold any licenses or certifications (general contractor, real estate broker, etc.)?

#20 – Do you offer any warranties or guarantees on renovations or rent
performance?
Rental income guarantees can be a red flag, as they may hide poor performance.

Ongoing Support & Communication

#21 – What kind of ongoing reporting will I receive (monthly statements,
occupancy updates, etc.)?

Different companies utilize a variety of communication channels, from proprietary client
dashboards to a good ol’ phone call.

#22 – Who will be my main point of contact once I close?

#23 – How often do you reassess rents to ensure my property stays at market
value?

#24 – What sort of ongoing education opportunities do you offer?

#25 – What happens if I want to sell the property later? Do you help with listing,
sales, or resale to another investor?

Some companies offer buyback or resale programs for their existing clients. They may also help facilitate other options, such as performing a 1031 Exchange.

Bonus: Red Flag Watch

Ask yourself:

• Are they overly salesy or unwilling to answer questions in detail?
• Do they pressure you to move quickly?
• Are their projected returns significantly higher than those of other operators?
• Do they avoid providing hard numbers?
• Do they make income guarantees?

These are far from the only questions worth asking a prospective turnkey partner, but they provide inexperienced investors with a solid starting point.

Ask us about available properties now!