Private Lending Q&A
In-Depth Answers from Behind the Scenes at Ohio Turnkey
We’ve put together a brief Q&A with Bryan and Nichell, to answer more of your possible questions in greater detail.
Q: Why do you offer investing through Private Lending?
Bryan: For some general background on us and how we use funds, we’re one of the largest property buyers in Ohio. Specifically, in and throughout Cincinnati, Dayton, & Columbus. We aim to buy 20-25 every month, and even though I keep $5MM of my own cash working, of course, that runs out at some point just from our volume alone. So we work with private lenders that loan on our properties while we rehab and resell.
Q: What if a recession hits the U.S., how does that affect returns?
Bryan: We resell six different ways, so it never matters to us whether the market is up, down, sideways…we thrive during the downtimes, unlike many in Real Estate. I’ve done this for 18 years now, and I went through the 2008 crash and made a ton of gains navigating even the lowest points, so yeah…markets don’t matter to us. And for safety, you have the first and only lien on a property, just like a mortgage at a bank.
Q: How long is the waiting list to invest with you?
Nichell: We don’t have a “waiting list” for our clients, as we stay in active contact with all of them, and have a pretty good idea of who is ready to deploy funds, and when they’re ready to do so. Mostly it ends up coming down to matching up the client with the right property/properties at closing.
Q: Why do you offer terms for less than a year to the private lender, and why?
Bryan: We write these loans for 6-9 months, depending on the project size, but most are done well before that period of time has passed. After that, you can take the money and run, or you can turn around and reinvest it with us via another private loan, or by purchasing long-term rental buy-and-hold properties to keep for yourself. Whatever you like. And there are some times when a deal sells as-is because someone is begging us for it, before we even rehab, and in those cases we give you a minimum 3 months’ of interest if that happens. Meaning, we buy, you fund, we plan to rehab, and then a neighbor wants it as-is for their daughter, at a profit we can live with, and they buy the house 29 days after we had you lend on it….you still get 3 months’ minimum in that case. It happens occasionally, 10-15% of the time, so it’s nice for all when it does.
Q: What renovations do you complete on the properties you invest in?
Nichell: We maximize and leverage a dozen variables when making decisions on what renovations will be completed at any particular property.
It’s a balance between meeting the expectations and demands of the modern market, while not overdoing it in unnecessary ways. For example, on a B- class single family home, we may elect to install a base tier of cabinets and countertops, while in an A class single family home, we elect to install the top tier of cabinets and countertops. Folks that are in the market to buy or rent the B- class home aren’t expecting the finishes they would find in an A class home, so those kinds of upgrades don’t provide any real return on investment. Any major mechanicals that are near the end of their useful lives (generally <3 years) are replaced during renovations, with few exceptions.
Q: Is there any other benefit to investing in this way with you, aside from the returns themselves?
Bryan: We fund the rehab ourselves, so not only do you have a huge safety cushion in the property value from how we buy it on day one, but then we add value with our rehab so your first lien is even safer/has more equity.
Q: How much funding does a private lender need to invest with you?
Bryan: Most of the deals we do are $150,000-$400,000, so $150,000++ is usually the minimum. The sweet spot seems to be $200,000-$250,000 most of the time. For example, I have 4-5 properties closing this week at $155K, $130K, $215K, $275K, and $225K, to give you an idea.
Q: Does that mean an investor needs millions in the bank for you to take the time to work with them?
Bryan: We work with over a dozen folks, from all walks of life and all different $$$ amounts, from $150,000 to millions, so truly the main things we look for are: an easy relationship, 100% trust, reliability, and funds wired quickly when a new deal appears and has to close. You get a note/mortgage on every property you fund, securing your interest in the property, again, just like a bank.
Q: How long have you been working with other investors?
Nichell: We were a small team at the start. We established an LLC for our construction/renovation services at the beginning of 2009, after we had already accrued a few years of experience in doing total home renovations. We started opening up investing opportunities to other investors about 15 years ago. The world was much different back then, and we didn’t really do any kind of marketing at the time – we connected to investors through global forums and referrals, mostly. Even Ohio Turnkey as its own separate entity and brand didn’t exist until 2016. We realized by then that we should probably go ahead and establish an easily-recognizable and searchable name to help investors find us.
Q: Can you provide any professional references?
Bryan: For serious investors, we are happy to provide references to two different third party title companies who love us and have closed hundreds of deals with us, plus our attorney Ben, who can confirm who we are, and even a private lender or two whom we’ve worked with. Please understand, to respect the time and privacy of these associates, we only share these with new private lenders who are 100% ready to go and ready to fund a deal. In the same way we’ll respect your time and privacy once you become a lender/client of ours, we’ll never share your information with anyone without asking you first, and we’ll only ever connect you with someone that’s 100% ready to go!
Q: How do you ensure that the transaction and transfer of funds is secure?
Bryan: Simple! All funds go directly through the licensed third party Title Company, so we never touch them and you certainly never wire anything to us.
Q: What cities do you invest in within the state of Ohio, and do you invest in any other states?
Nichell: We primarily invest in what we like to call our “backyard,” which consists of the entire Greater Cincinnati and Greater Dayton areas. We also have a branch in Columbus. Right now, we occasionally buy properties across our immediate Southern border in Kentucky, but won’t be going much further out than that until we establish branches in other cities as well. Spoiler: We do have plans in the works to accomplish that within the next several years!