Turn Key Real Estate Investing

Mike Hambright (00:00.622)
Hey everybody, welcome back to the show. Today I’m here with my good friends, Preston and Andrew Letts. They’re real estate investors, run a turnkey operation in the Southeast and doing some really cool stuff. We’re be talking about the power of the turnkey model, both from an investor standpoint and the benefits for passive investors as well. So what’s up guys, welcome to the show. Yeah, good to see you. let’s talk a little bit about, I’m interested to talk about this. I guess I probably know more about your background, Preston, as a…

Preston Letts (00:18.059)
How’s it going, Mike?

Mike Hambright (00:29.08)
property manager, then you got into fix and flips, did a lot of wholesaling and then kind of made your way to Turnkey and pulled Andrew into the business at some point. maybe you guys could just share your background and your path of, I know we’re gonna talk about Turnkey today, so like don’t steal the thunder of everything we’re gonna talk about, but kind of how you found your way to Turnkey, because you did a lot of stuff before this.

Preston Letts (00:49.355)
Yeah, I mean, we had a little bit of a kind of roundabout way in terms of how we got to kind of the business model we’re in and kind of focus. A lot of it starts with my background. I’ve been in real estate since 2006. And from really from 2006 to 2017, I actually did a lot of turnkey investing for myself, for clients.

built a large property management company, sold that company to a nationwide company, and then got to really continue to see other markets, see into other markets and the power of investing, not locally, through that. then as we were building our business, Andrew and I realized we

We love the volume side of the business. We love the buy and rehab side, but we don’t like, we want to do things at a higher volume and not only that, but we do wholesale a little bit. We don’t love wholesaling. And so kind of around 2021 when the market we were in was really starting to kind of turn and really into 2022, we were like, you know, we’ve got to find just a better path.

And also something that I think fits more of the experience that we have. so we actually switched markets and we both live in the Southeast. And so we were investing in Chicago and decided, let’s, start doing things locally. That’d be a lot easier. And I was a little hesitant. didn’t necessarily want to go back into property management, but you know, we’re like, Hey, you know, we can be successful.

running a turnkey, you know model I’ve done it before and And so from that we started just kind of scouting markets and saying hey, where is a really good? We want to start buying more rentals Where’s a really good area and market that you know really fits the criteria that I feel like Would make great You know great rental, you know that produce really good rental opportunities and really good markets to invest in

Mike Hambright (03:14.872)
Yeah.

Preston Letts (03:14.916)
over the next 10, 15 years. And so that’s really what kind of spurred us to get into this.

Mike Hambright (03:22.23)
Yeah, that’s great. Yeah, know that like historically, having been in the business for a long time and having had a podcast for a long time and interviewed.

everybody in the industry at this point, but a lot of turnkey folks too. I’ve just seen this evolution of I remember the early days of where people were trying to convince people, especially on the coast, like in California, like you can buy rentals in far off lands, you know, and there was a time where there was no technology to like monitor that. And now the tech is, you know, there’s always room for improvement, but it’s amazing. Like you can be there without being there. Right. And so, and I think there’s been a, there’s definitely been an evolution of property managers too, because a lot of the early turnkey

Andrew Letts (03:54.024)
and

Mike Hambright (04:00.688)
providers were not necessarily great managers, but in order to make that model work you have to be a great manager. I think that’s probably what you saw was like there’s other turnkey providers out there but we’re pretty proficient as property managers and they kind of go hand-in-hand, right?

Andrew Letts (04:07.03)
you

Preston Letts (04:15.691)
So a lot of my experience was, did for my last business in Chicago, I did lot of turnkey business myself. I then was asked to manage for two good sized turnkey operators. And I saw the absolutely what you don’t wanna do side of turnkey investing. And we took on a bunch of clients that…

you know, didn’t know really where, what they were, had invested in, didn’t really understand the investment and weren’t really, you know, very well educated. And so, saw a lot of the, the, the bad of it and, some, some good, mean, there, you know, certainly some stuff that worked out. And so when we, you know, we made the decision to get into this, we literally sat down and we’re like, okay, if we’re going to do it, we need to build it from the, the back forward. Let’s not so much worry about.

the property, let’s really focus on this is only successful if your clients are successful. And we know we’re committing to a five, 10 plus year relationship with a property and a client. And so it’s one of those things where we look at everything we do is like, hey, you know, if we don’t do things the right way, we’re creating a bad scenario, not only for us, but to investor. And, you know, that’s certainly not going to allow us to be successful long term.

Andrew Letts (05:18.838)
Thank

Mike Hambright (05:19.265)
Right.

Preston Letts (05:42.591)
And so we really built everything backwards, forwards, and with a massive focus on the property management side, how it has to run, how it needs to work, how we run it today, really so that the goal is to have the best experience for our owners as possible and for the properties that they’re buying to be great deals and for them to do very well.

Mike Hambright (06:10.636)
Yeah, and Andrew, I know on the sales side, I know you’re heavily involved on the sales side of this. One of the benefits I think from talking to you guys that you went down this path is,

Andrew Letts (06:15.264)
Mm-hmm.

Mike Hambright (06:21.176)
Wholesale and fix and flip, although you guys have been Investor Fuel for a long time now, we’ve got a ton of people doing high volume and probably tens of thousands of deals through our group a year, right? But it’s so transactional, right? I think one of the benefits of the turnkey side is you’re looking for repeat business. You want to build portfolios for people and it forces you to perform at a higher level too because it’s not a one and done. It’s like, if we ever want to do business with this person again, we have to treat them right, right?

Andrew Letts (06:49.436)
Absolutely. going back to Preston, of mentioned that we’re tying, you know, we know we’re going to be attached to the property and the investor for, you know, 10, 15 years. We always, I kind of say it to the investors when I’m having a conversation with them. It’s our baby. You’re married to it.

And it’s, if we take care of it, you know, if we take care of it and the properties perform, they’re going to keep coming back and they’ll want to, you know, they’ll want to continue buying more properties if they’re cash flowing and there’s appreciation and they’re not getting, you know, a ton of work orders and all of that. So, yes, it’s absolutely.

you know, selling and it’s really the number one thing that I start a conversation with is my brother’s background is he built a successful, you know, property management company.

sold it, you know, all of that. And so everything, our company is all built on that. Our staff, you know, we’ve got a good bit more staff on the property management side than we do in other any other area. And it’s really to make sure that our owners, tenants are, you know, having the best experience as possible.

Mike Hambright (08:03.704)
Yeah. So given your background, you guys’ background in property management, talk about why, maybe if we’re talking to other real estate investors right now, why the turnkey model makes sense over fix and flipping.

when and why that makes sense. I know why it makes sense for you because you have the background there, but maybe if you were to be selling a course, we’re not doing that here, but if you were to be selling a course on why they should pivot their model, what are some of their pros and maybe even some of the cons of running more of a turnkey operation?

Andrew Letts (08:40.758)
I do you mind if I, I think the biggest and the reason why we are where we are being from Chicago, we both grew up in Chicago, Preston stayed there, I came down to the Southeast, the rest of our family moved down. When we started looking at pivoting, it was,

Preston Letts (08:43.904)
Yeah, go ahead.

Andrew Letts (09:04.104)
and where can we find good rental properties? We could buy rental properties in Chicago all day long, but the three really big things that we focus on are rental yield, high rental yield, low property taxes, and landlord friendly.

or landlord, know, the being in a coming from Chicago where everything is very tenant friendly to being in a situation where, you know, we’re in a very landlord friendly. So I think that that could kind of if you were to look around the country.

and what areas are good for or what could be good for the Turnkey model. I would say that those are really kind of the three biggest things and I’d say the tenant landlord is really one of the bigger parts of it.

Preston Letts (09:57.269)
I’d also say to piggyback on that is, and Andrew’s absolutely right, I that’s exactly the reason why we chose the areas that we did, for someone that was like us, that was doing just a lot of investing, we kind of really looked at it as we like things that are consistent and predictable.

One of the things that we wanted is we wanted to build our business on consistency and predictability. And the fact that, we hit a lot of singles and doubles.

And that’s really what we kind of talk to our clients about is like, look, we’re not here. This isn’t a get rich quick. is, we, you know, we make, you know, we don’t make massive margins. We don’t have large, you know, $80,000, $60,000 pops when we, you know, when we sell property, it really comes down. It’s, know, it’s a volume business, but there’s consistency and predictability in, in, you know, what we do. We can go in and a lot of cases,

you know, we compete against, you know, some other decent companies in our market and we win a lot because they mostly wholesale and we can go in and our offer is usually better because we’re going to take it down, we’re going to buy it. We’re, you know, we’re going to do a really good rehab and then turn around and resell it. And so really for us, it’s that consistency predictability. And then the other side too is,

We do a ton of direct to seller marketing, we also do right now, it’s like almost 40 % of our transactions come from MLS, wholesaler, non.

Preston Letts (11:36.747)
scenarios where we have to spend a dollar in marketing. Now we have a cost because we have relationship acquisition managers out driving hundreds of miles to uncover properties, but we really like the idea that we can go out and find deals without having to outlay money in marketing.

Mike Hambright (11:56.056)
Yeah. And I think the model from an investor standpoint is good.

you know, if you have all the other pieces buttoned up, if you’re, basically you have to be a great property manager, but that you have a recurring revenue stream, right? It’s like so many people, especially wholesalers, they sell it and they never make another penny from that, well, rehabbers as well, but it’s a chance to have some recurring revenue model from the deals you found and maybe over a longer period of time, squeeze more juice out of that fruit, I guess.

Preston Letts (12:26.303)
And I also think too is along with that is, you a lot of first time investors, they’re starting from ground zero and our clients are not starting from ground zero. They’re starting from, you know, we’ve done hundreds and hundreds of rehabs. I’ve managed, you know, thousands of properties. And so we’re picking properties in areas that we say, Hey, this is the kind of property you want to invest in. This is, and here are the characteristics, cetera. And so,

I think when you piggyback on, we’re giving them a really big jump and head start into

you know, success with a rehab property, you know, to minimize, um, you know, potential work orders or problems, uh, you know, a tenant in place that, know, is, you know, a good management company. Um, and not only that, you know, along with the ability to invest in other markets, I mean, we have clients that are, they kind of laugh when they hear the prices that we’re selling properties for. mean, we, you know, we might go up to two 75 and some of our sales when we get into, you know, some,

Atlanta product but a lot of our stuff is 165, 195, 220. We get a lot of West Coast clients that like, they haven’t heard, they automatically assume that we’re investing in the ghetto and we’re like, no, these are actually nice areas, come visit. And they drive around and they’re like, holy cow, we didn’t think there were properties at these price points.

Mike Hambright (13:55.148)
Right. Yeah.

Right. Yep. Yep. So how do you guys how do you guys navigate the current market for rentals? I guess we’re talking to your clients given the current interest rates and the dynamics going on. And so how do you how do you navigate that?

Andrew Letts (14:15.702)
So we give…

Andrew Letts (14:20.438)
When we’re selling a property, there’s some kind of promotional stuff. we give 2 % seller concessions to buy down the rate.

we have the ability because we are the property management company to give, we can give a certain amount of years of free property management to help the investment kind of kick off on the right foot. So those are two of the bigger things that we’ve done to kind of go at the interest rates.

Mike Hambright (14:44.867)
Mm.

Mike Hambright (14:55.694)
That’s great.

Preston Letts (14:58.911)
Yeah, a lot of our clients right now, we had one of their lenders that reached out and they’re like, look, you know, you know, they were kind of trying to get some of their business and they’re like, hey, are you know, the average, you know, with buy down rate wise we’re seeing is like, you know, you know, a little bit below six to maybe six and a quarter. So from an interest rate standpoint, and then when we, you know, throw in, you know, we offer some, you know, to help buy down and then, you know, a little bit towards closing costs and then some, you know,

management, the year-free property management, know, that makes up a, you know, that offers a significant discount and gives, you know, put somebody into, you know, a property that, you know, we have a good interest rate now, you know, 6%, you know, low 6 is still a very good interest rate, which most people, you know, still don’t think is true. But yeah, it’s still a very good interest rate and

Mike Hambright (15:46.476)
Right. Very spoiled, yeah.

Preston Letts (15:54.056)
And then all the other benefits associated with being in a turnkey property. We have a lot of very smart clients that know and understand the benefit of doing that now as opposed to waiting.

Mike Hambright (16:09.592)
Yeah, no, and think we all know rates will go down at some point, especially, I think we all know now for sure they’re going down at some point in the next year for sure, if not sooner, but.

That’s great. Yeah, when I look back, mean, you know, having done thousands of podcasts, having a rental portfolio myself, having flipped, you know, hundreds of houses myself, like I, my biggest regret is that I didn’t keep more rentals. I, cause I, we’ve generated tremendous, you know, net worth from a relatively small number of rentals. And I was only keeping about 10 % of what I was flipping. It’s like, man, I wish I would kept another hundred or hundred.

But that’s hindsight, but it’s easy to look going forward. It’s like yeah, whatever’s going on with interest rates I mean the truth is is most of my rentals were we bought from 2009 to 2012 and a lot of our interest rates

were around six, six and a half percent, even over those years. So even in the years where interest rates were relatively low, coming out of the last downturn for investment type properties, the interest rates were higher than what an owner occupant was getting, at least for me.

Preston Letts (17:14.347)
It’s funny you say that because Andrew and I, we don’t argue about it, but it’s like a constant. We should be keeping more. And we keep saying, we’re going to set a goal of X number for the year. And then we get so much demand. We get so much demand for our properties. It’s like we have more buyers that want to buy a lot of times than we have product. And it’s like, we said we were going to keep more. And so.

Andrew Letts (17:34.347)
Mm-hmm.

Preston Letts (17:42.232)
We’re constantly in that, that kind of fighting a little bit of that battle. We’re happy right now we’ve got seven that are headed towards getting refinanced. so we find that we’re like, look, the year ends coming. We have got to start putting some more because we’re gonna be really upset next year, cash, tax wise if we don’t.

Andrew Letts (17:56.566)
Mm-hmm.

Mike Hambright (18:04.206)
Yeah, you just have to buy more. That’s the key, right? Yeah, so with that said, mean, you guys, you told me, I don’t know if you want this out there, you bought a lot of houses last month, one of your best months ever, which is great. And you’re starting to build now too, right? Ultimately build to rent, which has been a theme for the past couple of years, especially with more institutional type companies. So talk about that model a little bit and the benefits of that.

Preston Letts (18:08.159)
That’s what we’re working on.

Preston Letts (18:30.155)
Yeah, we’re really excited about it. We kind of stumbled across this kind of into last year when we were out at a big investor conference and Andrew and I were working the booth and we had people come by and they’re like really love, you they love our markets. love Southeast, middle Georgia, close to Atlanta, et cetera. And a lot them, you know, kept asking.

I like the rehabs, but do you have new construction? I really want new construction. And so we just kind of figured from that and then a couple other events we were at where, you know, I’d say seven out of 10 investors were going, hey, we want new construction. And so we started looking at it going, know,

We hadn’t even really thought about heading that direction. And then after kind of seeing the demand, we started doing some research and looking at it. like, all of the markets that we’re currently in, there is a housing shortage in all of them. And there’s not a lot of builders that are.

know, making massive plays in those markets. So we said, you know, why don’t we look into that? so we’ve, within 30 days, we’ll break ground. We bought 12 lots. We’ve got another, I think we’re getting ready to put another five or six under contract. And so, you know, we’ll be breaking ground on our first batch here in 30 days. And we’re really excited because we are able to take.

kind of all the years of, this is what we really see our tenants really want, investors really want, like all of that and put it together to, and then looking at what other build to rent communities are doing and where they’re having success and to be able to kind of package that all together.

Preston Letts (20:19.595)
Really, really excited about that and putting together a lot of three bed, bath, maybe a four bed, bath, single family home on a slab.

you know, in good emerging markets that right now the migration path is showing a lot of growth and there’s a lot of community investment, a lot of external investments coming in. so we also really like the idea of being able to really get really targeted and pick the areas that we want to invest in as opposed to we’re waiting for the phone to ring from all the marketing we’re doing. And it’s like, man, we really like to do something there, but we just don’t get any phone calls. don’t get, you know, we send mailers,

Andrew Letts (21:00.522)
Okay.

Preston Letts (21:02.349)
We run our TV, we do all that, but nobody’s calling. And now that allows us to be really targeted and say, no, we want to be in these markets and areas because we know and we see and know the growth will be there.

Mike Hambright (21:13.59)
Yeah. So Andrew, share a little bit about the benefits. If we’re talking to investors now, like those that are interested, I say, talking to the passive investor, got probably a lot of your passive investors are professionals, executives, doctors and lawyers and folks that are good at making active income and need a place to put a pass away. That probably describes a lot of your avatar that’s buying, I would assume. Maybe talk about the benefits to…

Andrew Letts (21:24.822)
Mm-hmm.

Andrew Letts (21:35.893)
Thank

Mike Hambright (21:41.966)
those that there’s, and I’ve had it around me for years, like there’s always people that are, like I teach active investing and I surround myself with active investors, and there are always people that like wanna do it, but they don’t have time, but they have money. And so, you know, this is the beauty of that model is they can do it passively. So maybe talk about some of the benefits to them if some of them are listening.

Andrew Letts (21:52.822)
Mm-hmm.

Andrew Letts (22:00.894)
Absolutely, and I think the…

the kind of hands-off approach in terms of you’re not getting a call about somebody who doesn’t know how to change their air filter. And so it’s caused more issues. there’s just a lot of the folks that we have invested in our stuff, the majority of them I’d say are from the West Coast. have a lot of, everybody’s coming from a decent,

distance to us. But I’d say that the keys and some of bigger things that we do is, Preston from his background and being a GC and renovating properties and back when him and Kyla originally joined Investor Fuel, all of the knowledge and what that’s brought to us and what we can do. So every property that we sell is, you know, fully, when we say fully turned key, it’s a full renovation. Everything is brand new.

So we’re selling like new construction properties. We personally like to stick with four sided brick ranches if we can. We don’t do a lot of basements, we prefer anything.

as few issues as possible. know, the big capex types of issues that we could have come up. the renovations, everything is, know, even light switches, outlets, everything is fully brand new.

Andrew Letts (23:36.986)
And then the property management side and what our property management and our expertise and are, you know, really building the business around our property management side and what that can provide to the investors. And then really us being able to show them the numbers and what we can do in terms of the purchase price and the rent and the taxes and all of the items that go into, you know, making a really good investment, a good investment.

You know, we kind of go through all of that stuff and check off all the boxes and Really, you know, that’s where we’re making, you know, our biggest headways and get in a lot of repeat buyers that so

Preston Letts (24:22.475)
I think the other thing too, along with that is, I we do, mean, kind of the way we structure everything is a lot of the buyers like, they love the price points, they love the returns, and they like the fact that they’re buying into immediate cash flow. I we have, we offer.

Andrew Letts (24:32.789)
Thank you.

Preston Letts (24:41.543)
If they ever buy and it doesn’t happen often, but if they do buy property from us and it isn’t rented, we actually sign an owner lease with them that we will sell at least that we will cover the rent payments until we have a tenant in place.

Mike Hambright (24:58.626)
Mm.

Preston Letts (25:00.253)
So they love that. mean, it just, you know, it lowers the risk for them from, you know, you know, the default or, just not having a tenant. And then the other piece is, you know, lot of our clients really like the time and, you know, time intensive, you know, just it’s less time intensive. They just don’t have to, you know, there’s not that much time that goes into not only the management, but the, you know, the, the, the sourcing and all of that associated.

Mike Hambright (25:29.164)
Right.

Preston Letts (25:30.157)
And then the professional property management, we overstaff our property management company. The reason, one of the things I see is, the reason why a lot of property managers struggle is it’s a really tough business. The margins are super slim and the only way to really…

have a great property management. You have to be over staff. You just have to have the bodies to do the work. And we’re able to do that because of the model. And so we went out very early on and I hired a very high level executive from.

Mike Hambright (25:55.864)
Mm-hmm.

Preston Letts (26:10.123)
one of the real estate funds and she runs an overseas property management side of the business. Her and I really do it together and we hire and pay our folks in that side really, really well because we want them to stay. We don’t want them to go anywhere. And so we get really good people and then.

We make sure that we have plenty of them so that we can lease in the right time frame. Our work orders can turn in the right time frame. We have the people to make the collection calls. All this stuff, it’s a very manual business. We try to make it as technology friendly as possible. Sometimes still at the end of the day, you gotta pick up the phone. You gotta go by and see if somebody’s there and figure out a solution. We wanna have the people to do that.

Mike Hambright (26:56.096)
I think most property managers in a lot of businesses, run so lean that when something happens, they’re not staffed for it. And you know, that’s a problem when, you know, because obviously your average client is like anybody, like they don’t need anything most of the time. But when they need something, the experience that they have…

during what’s a stressful time for probably you is a stressful time for them. Like that’s what they’re gonna remember year round. So they might not need anything 364 days a year, but the one day they need something, you better provide a good experience,

Andrew Letts (27:30.24)
Yep.

Preston Letts (27:31.5)
Well, you got to have, mean, like, you you have a property manager that wants to go on vacation. So there has to be a plan for, well, who’s handling their email and all of the issues and things that go on. And if that person’s out sick and so.

Mike Hambright (27:38.467)
Right?

Preston Letts (27:47.57)
I have been through all of that and so we have communication processes in place and platforms that we use so that, you know, a massive issue isn’t sitting in somebody’s email and they’re, you know, out sick or in another country.

Andrew Letts (27:58.133)
Mm-hmm.

Mike Hambright (28:01.804)
Right, yep, yep, awesome, good stuff. would you mind, you guys have been in the group for a long time now inside of Investor Fuel, would you mind just sharing your experience of being a part of the Investor Fuel mastermind?

Preston Letts (28:11.499)
Yeah, no, I I think that it was, think, 2019. We were kind of looking around. I’m a big believer. I mean, I built my last company on being a part of masterminds and being a part of groups that get together and meet. And I’m a big believer in the power of the mastermind. I got that from reading.

a lot of books early on and the benefits associated with that and really what…

know, investor fuel did for us is it gives you a lot of confidence. there’s your around other folks and, and you know, you get a chance to hear what’s working in markets, what’s not working in markets. And, I’m a big believer, you know, it basically helps you buy speed. It helps you to look around and go, Hey, what’s everybody doing? What do I want to try to do? What do I not want to try to do? I talked to this person and they tried something this way. And so at end of the day, it really comes down to buying speed.

And not only that, just the connections we’ve made, we’re still very, very, still have lot of lifelong great friends that have come from being a part of Investor Fuel and the connections that come from that that have helped us.

to kind of really move our business forward. I’ve traded days, consulting days with, I’ve gone to visit some members offices and vice versa, and we’ve done kind of reverse consulting and all that just helps us to just allow us to move our business forward at a much faster rate than we’d be able to on our own.

Andrew Letts (29:51.913)
Awesome.

Mike Hambright (29:51.918)
That’s awesome, yeah, thank you. Thanks for being a part for, I guess, about six years now, so that’s amazing. Hey, Andrew, folks wanna connect with you guys, obviously you’re a turnkey provider. If they wanna learn more about how to work with you guys in any way, like, where can they go?

Andrew Letts (30:05.174)
Our website is Turnkey Property Investments. That is the best place to go to. I can easily share my contact information and get that over to you.

Preston Letts (30:19.275)
Yep, Yep, Trinkey Property Investments.com.

Mike Hambright (30:23.566)
Cool, we’ll add a link down below in the show notes too. Well, I appreciate you guys and looking forward to all your continued success and helping if I can and watching you guys along the way. So appreciate you joining us on the show today.

Preston Letts (30:34.643)
Absolutely appreciate you having us. Thanks, Mike.

Andrew Letts (30:34.742)
Absolutely. Thanks so much.

Mike Hambright (30:36.322)
Yeah, good to see you guys. Have a great day. Everybody, thanks for joining us today. Turnkey might be a good thing. you’re an active investor, it might be something you should consider adding to your model. The property management really is key. So if you’re not good at it, find someone that you can partner with maybe. And if you’re looking for a pass of investments, you should definitely check out Preston and Andrew. They’re doing some amazing things in Southeast. So appreciate everybody for joining us on the show today. We’ll see you next time.

Andrew Letts (30:59.284)
day.

Andrew Letts (31:03.894)
Thank you, Mike.