Top 5 Turn-key Red Flags

The turn-key industry has had its ups and downs, and there is never any shortage of people who think they can make a quick buck selling real estate. Therefore, it should come as no surprise that there are plenty of less-than-scrupulous people out there calling themselves turn-key providers, but providing almost nothing of value to their investors. While this is a problem, it’s also a problem you can easily avoid.

Below, we’ll discuss are five key things that this type of ‘provider’ does that should serve as huge red flags for any prospective investor.

1 – Stumbling Over Stats

One of the primary things a scam artist will struggle with is statistics, so this will be your first opportunity to weed out the bad seeds. When you ask about things like maintenance rate, vacancy, move-out costs, and tenant turnover, any provider worth your time should have solid answers at the ready. These statistics are crucial to any turn-key provider’s business, so being able to provide that information on-demand should be like breathing.

2 – A Dearth of Data

Regardless of how quick-on-the-draw a provider is with their statistics, it’s crucial that you ask about where those numbers come from – and this is doubly true if those statistics seem… optimistic.

A good provider should be able to tell you how their statistics are calculated, what the look-back period is, and what is included in each figure.

3 – The Visit Inquiry Drop-Off

While we strongly recommend that investors pay a visit to their top one or two providers before pulling out the checkbook, there is something to be said for requesting a tour from any provider you’re considering. Many of the less-reputable providers will suddenly be unable to return emails in a timely manner, or have a litany of excuses for why a visit isn’t possible. Any provider worth your time will be happy to give you a tour, show you the town, and let you see some of their properties before you invest. If scheduling a visit is an issue, it’s probably time to look elsewhere.

At the very least, asking about a visit will give you a great idea of how highly the provider actually prioritizes customer service.

4 – The ‘Sunday Sunday Sunday!!’ Sale

Quality products, in real estate as in everything else, don’t need a lot of flashy propaganda. You don’t see Prada or Tesla paying for Superbowl commercials advertising blowout sales – people will buy quality products without all the pushy ads. The same is true in turn-key – if you see hyped up advertising, inflatable flailing-arm tube men, or hear ultimatum-focused messaging, then it’s probably time to look elsewhere.

5 – The Third-Party Handoff

One of the most important things to look for in turn-key is the full-service provider. Many companies refer to themselves as turn-key, but that may just mean they sell rent-ready properties. A true turn-key company will do everything in-house – from finding properties to rehab, marketing to management. This means you only have one company, one team, to vet. You end up with a smoother transaction and a better long-term relationship.

Full-service turn-key means that the company that sold you the property was incentivized to work in the investor’s best interest every step of the way. From purchase to rehab to management, a full-service provider is incentivized to make decisions with the future in mind, because they’re not just selling the property, they’re managing it for next 10+ years.

You Can Start With Us!

Of the many scam artists we’ve come across as we built our company, we noticed that the vast majority have quite a bit in common. By knowing what to look out for, you can ensure that you don’t fall into the trap. The most important thing is to ask plenty of questions and expect clear, concrete answers.

If you’d like to learn more about how Spartan is different, or why we love the Birmingham market, feel free to get in touch any time!

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