Posted by Don (Fl) on April 11, 2002 at 02:22:11:
On the surface these “turn key” opportunities sound great. Some are, some aren’t. Here is what to look out for.
First, keep in mind that this is a “management company” whose sole income is the fees they collect for “managing” investors property. Usually 10-15% of the gross rent and they also charge for coordinating repairs.
Second, you are not the only investor whose property they are managing. If they are 85% occupied and you are part of the 15% that is not occupied, you are in a severe negative cash flow situation. You state they guarantee to make all the repairs and handle all the paper work. They don’t guarantee a tenant.
Most of the time I hear of these type of deals, the investor gets frustrated with the management company and ends up managing it themselves in competition with the original management company.
My advice is to check it out thoroughly before you buy.
Hope this helps.