What were the two deals?
Both are single family turnkey rentals in Kansas City, Missouri, bought cheap by a renovating contractor, brought back to rentable condition, and sold to a client of mine buying from another country.
I've written up the first one in full, document by document, in what a turnkey rental costs to produce. The buyer there asked to stay anonymous and I'm keeping it that way. The second is Karl, who lives in Taipei and gave me his consent to publish his numbers.
Two turnkey purchases in the same market, fifteen weeks apart | Deal A | Deal B |
|---|
| Year built | 1953 | 1912 |
| Age at appraisal | 72 years | 114 years |
| Quality and condition on the appraisal | Q4, C3 | Q4, C3 |
| What the contractor paid | $30,000 | $50,000 |
| What my client paid | $163,000 | $185,000 |
| Days between the two sales | 266 | 185 |
| Sale price as a multiple of purchase | 5.43x | 3.70x |
| Down payment | 30% | 30% |
| Mortgage rate | 7.125% | 6.75% |
Note the first three rows. A 1912 house and a 1953 house, and both came back from the appraiser with the same quality rating and the same condition rating. That's the whole argument of why the year built tells you almost nothing, sitting in two appraisals on two different houses, from two different appraisers.
Note the seventh row too. The purchase multiple looks wildly different, 5.43 against 3.70. It's also the least useful number on the table, because it says more about the deal the contractor got when he purchased than about what my clients paid.
How much did each seller make on the house?
This is what most people want to know. Is turnkey a rip off, or a scam? And how much money do these sellers really make? In this case, this is where these two deals stop matching.
On Deal A I could bound it. The seller had a bridge loan, and the payoff on the settlement statement was $139,472.47 on a house he'd bought for $30,000. That tells you $109,472 was funded by his purchase loan, most likely hard money, above the purchase price.
Work that through and you can see the renovation budget lands around $90,000, the seller's total cost around $138,430, and the profit around $24,570. That's a 15.1% margin on the sale price. In my experience, that's pretty average for these kinds of deals.
But it doesn't always pan out like that. In this case, the seller walked away from that closing table with $6,050.21 in cash. Now, maybe he had cash left over from the renovation budget to add to the $6,000 he walked away with. But I was very much on top of that renovation throughout. It was a full gut back to the studs with brand new wiring, plumbing, systems, and everything else you can imagine. Even at cost price in-house contractor prices, that was a $90,000 job in any market.
That should offer some comfort to my buyer. This house wasn't new, but pretty much all the components were. In my experience, that translates to lower maintenance costs, lower capex, and better long-term tenant retention. That's exactly what I'm looking for with a turnkey house. If I'm going to pay a premium, I need a return, and that return comes in the form of stability and consistency of income, and lower holding costs.
On Deal B I can't do that, and I'm not going to pretend otherwise.
What the seller's proceeds had to cover on Deal B| Deal B, the seller's side | Amount |
|---|
| Sale price | $185,000 |
| Less his own closing costs, my fee and a buyer credit | ($12,815.86) |
| Due to seller | $172,184.14 |
| Less what he paid for the house | ($50,000) |
| Less a pre-closing plumbing invoice he paid | ($4,000) |
| Left over | $118,184.14 |
That $118,184 is 63.9% of the sale price. It has to cover the renovation, his buying costs, his finance, his holding costs and his profit. There's no bridge loan document in this file, so I can't split it. Anyone telling you that figure is profit is guessing, me included.
What I can tell you is that the renovation was real. Kitchen and both bathrooms were recorded as redone inside the previous year. There was a new furnace, water heater, electrical panel, A/C unit, roof, windows, doors, flooring, drywall, and paint throughout. The supply lines are PEX, the drains are PVC and the panel is 200 amp. That's a repipe and a rewire on a house built in 1912. It's why the effective age was only 22 years on the appraisal. I know the scope because I was on the ground for it, though only the kitchen, the bathrooms, the panel, the air conditioning and the pipework are recorded in the paperwork.
The point? Understanding the difference between what your seller paid and the price you pay gives you some insight not only into their profit margin, but the renovation budget. If it's too thin, I might question what work was actually done, and what problems were just painted over that you'll inherit.
When does the tax bill catch up with what you paid?
Not this year, and not next year either. The answer has a date on it, which is why it belongs in your underwriting rather than in the small print.
Start with what the county thought each house was worth.
The county's valuation against both prices on the same house | Deal A | Deal B |
|---|
| County's own valuation | $50,210 | $57,700 |
| What the contractor had just paid for it | $30,000 | $50,000 |
| What my client paid, renovated | $163,000 | $185,000 |
Read the middle row before the bottom one. On both houses the county's figure was higher than what the contractor actually paid. By 67% on the first and 15% on the second.
That surprised me, because the easy story is that the county is miles behind the market. It isn't. It was valuing the house that existed on its records, and on Deal B it landed within 15% of a real arm's length sale. The whole gap to what my client paid, $127,300 on Deal B, is the renovation and the margin on top of it.
So the question isn't whether the county is behind. It's when the renovation shows up, and what holds it back when it does.
The date, and how to find yours
Missouri sets new values as of January first of each odd-numbered year. Both houses were renovated during 2025, after that January. Neither is new construction, which is the only thing that gets picked up mid-cycle, because the pro-rata rule reaches a newly constructed and occupied building and not work done to a house that already exists.
So neither could be revalued in 2025 or in 2026. Both land on the roll as of January 1, 2027, and the bill arrives that December. Karl gets about twenty two months of a pre-renovation tax bill, then a step up.
The eight words that decide whether anything protects you
Missouri homeowners have real protection here. An assessor can't raise a residential value by more than 15% without physically inspecting the house, and the same statute says a drive-by doesn't count.
Jackson County broke that rule in 2023. The state found the failures were "widespread and systemic, affecting at least seventy five percent of the parcels" where the rule applied, and ordered it undone. Three rolls running have now been held to 15% or less by the Missouri State Tax Commission: 2023 and 2024 in August 2024, then 2025 in May 2025.
Every one of those protections, and every one of those orders, carries the same eight words.
excluding increases due to new construction or improvements
Your house is those eight words. The cap holds back ordinary market movement. It leaves the lane your house is standing in wide open.
I'm not saying that to alarm you, and none of it makes turnkey a bad buy. A renovated house genuinely is worth more than the wreck the county valued, and the increase is arithmetic you can do months before you commit. But budget the tax on the recorded bill and you've budgeted two good years.
Outside Missouri, ask it in three parts
Every state does this differently and some cap increases much harder. So don't learn Missouri's rules. Learn the questions.
- How often does this county set new values, and as of what date?
- Is there a cap on how far a value can rise, and does it exclude improvements?
- Does work on an existing house get picked up mid-cycle, or does it wait for the cycle?
That's three questions to one assessor's office, and the answers change your first two years of cash flow rather than your opinion of the deal. How US property tax actually works has the general version, and tax is the number that's wrong on more listings than any other.
Which number was wrong on both lender term sheets?
Property tax. Both times, in the same direction, and it's the reason I now recompute it myself on every deal.
The property tax line across both deals | Deal A | Deal B |
|---|
| Tax bill recorded on the appraisal | $467 for 2024 | $527 for 2025 |
| Annual tax on the lender's term sheet | $480 | $650 |
| What the county's own ratio implies at the sale price | about $1,516 | about $1,690 |
| What the lender is now collecting | not quoted | $2,124 a year |
The ratio is the county's bill divided by the county's valuation.
On Deal A that's 0.930%.
On Deal B, $527 against a $57,700 valuation is 0.9133%.
Apply each to the price that client paid and you get $1,516 and $1,690.
Now cross them over.
Put Deal A's 0.930% on Deal B's $185,000 house and the bill comes to $1,720.
Deal B's own record produces $1,690.
Two separate county files, thirty dollars apart on the same house. That's about as close to a second opinion as this math gets.
One caveat I have to put on the Deal B figure. The bill is a 2025 bill and the valuation is a 2026 valuation, so 0.9133% is an estimate of the ratio rather than the ratio.
Then look at the last row. On Deal B the lender's escrow is set to collect $2,124 a year, on a term sheet that quoted $650. The escrow is 26% above what a full reassessment to the sale price would produce, which is defensible for a lender who wants a cushion. The $650 quote is the number that was wrong, not the escrow.
Put that next to the January 2027 date and the lender looks less odd. It's collecting now for a bill that can't arrive for another two years. Early rather than wrong, and the buyer is quietly funding the step up in the meantime.
Insurance behaved differently, and I'll report it as it happened rather than as it would suit me.
Annual insurance, quoted against bound, on both deals | Quoted | At closing |
|---|
| Deal A insurance | $1,104 | $1,589.76 |
| Deal B insurance | $1,450 | $1,218 |
Wrong on both, in opposite directions. So I don't have a pattern on insurance and I'm not going to invent one. Read what landlord insurance actually costs and get a real quote before you rely on a quoted figure.
The monthly payment came out higher than quoted on both, though.
Quoted monthly payment against the payment at closing | Term sheet | Actual | Understated by |
|---|
| Deal A monthly payment | $891.12 | about $1,034.52 | 16.1% |
| Deal B monthly payment | $1,014.93 | $1,118.43 | 10.2% |
Neither lender did anything wrong. A term sheet is an estimate built on the figures available at the time. Both times, the tax figure available was a pre-renovation bill. But if you underwrite your deal on the term sheet, you're underwriting on a payment that's 10% to 16% light. Run it yourself with the rental property cash flow calculator and use the recomputed tax, not the quoted one.
What did both appraisals fail to report?
The house's own recent sale. Both times.
Fannie Mae's appraisal forms require the appraiser to report the subject property's transfer history going back three years. The Selling Guide is blunt about it: the forms require a three year subject property and twelve month comparable sales history.
Deal A's appraisal says the house "has not sold during the past 36 months." It had sold seven months earlier, for $30,000, on a warranty deed.
Deal B's appraisal reports the prior transfer at $0 and calls the price an "unknonwn amount." The county publishes $50,000 for that same instrument. It was on the public record months before the appraisal was written.
Two appraisals, two different appraisers, same field, same failure.
What I'm not going to tell you is why. The documents don't say, and I'd be guessing between a data feed that missed it, a deed that recorded no consideration, and simple inattention. Neither report explains it, so I'll report the gap and stop there.
What it means for you is practical. The one box that would tell you what the seller paid is the box most likely to be empty or wrong. So don't rely on it. Pull the county record yourself, which is the same instruction I opened with, and it's why I opened with it.
The rest of the appraisal is worth your time, and reading it properly catches things the marketing pack won't mention. On Deal B the appraiser made his value conditional on a basement plumbing inspection because there'd been a sewage backup. A collapsed cast iron house trap came out, schedule 40 PVC went in, a camera went down the line, and the seller paid the $4,000. That whole chain started with one sentence in an appraisal, which is the best argument I know for never buying sight unseen without a scope.
What did my own fee cost the buyer on each deal?
Mine was 5% of the sale price on both, and I'll put the numbers on the page.
Fees on both deals, and where each was charged | Deal A | Deal B |
|---|
| My advisory fee | $8,150 | $9,250 |
| As a percentage of the sale price | 5.00% | 5.00% |
| Charged to | the seller | the seller |
| Entity formation, charged to the buyer | $995 | $995 |
| A second fee of the same size, to a party I can't identify | $8,150 | none |
The fee comes out of the seller's proceeds rather than being added to my client's price. That's true, and it isn't the whole truth. It's still 5% inside a retail price with several margins in it, and a buyer paying that price is paying for it somewhere. That's a fundamental thing to weigh, and I'd rather write it than have you work it out.
The last row is the one I like least. Deal A's settlement statement carries a second fee of exactly $8,150, invoiced to the title company by the seller. I don't know who received it. Together the two came to 10% of the sale price. Deal B has no equivalent line. I'm reporting a visibility problem, not accusing anyone of anything. The fix is the same either way. Ask for the seller's side of the settlement statement and read the fee lines.
Most buyers never see that page. You're entitled to ask, and the ten checks I'd run on any turnkey seller's numbers has the rest of the list.
What do two deals actually prove?
Not much on their own, and I'd rather say so than dress two houses up as market research.
Two transactions, one metro, two contractors, both introduced by me, both bought by clients of mine buying remotely. The sample is small and it isn't random. My whole book of business is a rounding error against the 67,100 US homes foreign buyers bought this year.
So here's what I'd separate out.
Which of these findings I'd act on, and which I wouldn't| Finding | Would I bet on it |
|---|
| Improvements sitting outside every cap on assessment increases | Yes, and it's the one thing here I'd call certain rather than likely. It's written into the statute and into both state orders, so it doesn't depend on my two houses at all |
| The step up landing in the January 2027 assessment | Cautiously, on timing. The mechanism is clear, but this is a county that has been rolled back once, capped twice, and was still setting aside 2023 appeal decisions in June 2026 |
| The tax line understated on the term sheet | Yes. Both deals, same direction, and there's a mechanism behind it: the bill available at quoting time is pre-renovation |
| Appraisals missing the subject's prior sale | Cautiously. Two of two, different appraisers, and there's a stated Fannie Mae requirement being missed |
| A specific markup or margin percentage | No. One deal had a bridge loan I could measure and one didn't |
| Insurance quoted wrong in either direction | No. Two data points, opposite directions, no pattern |
| Anything about a market outside Kansas City | No. I'd expect the way the tax rule works to travel, because it's statute rather than observation, and nothing else |
The honest counter-argument, and it's a real one: both of these houses came through me, so the sample is selected by my own buying criteria. I only look at renovated single family houses in two Midwest markets. So a repeating pattern in that set might tell you about my buy box rather than about turnkey. The tax findings survive that objection, because a statute doesn't care whose buy box the house came from. Almost nothing else here does, and I'll know more at four deals than I do at two.
What would I check before the next one?
Five things, in this order, and all of them before you commit rather than after.
- Pull the county record. Sale history, the county's own valuation, and the last recorded bill. It's the cheapest document in the process and it was missing from both appraisals.
- Recompute the tax at your purchase price, then ask when it can legally arrive. Divide the county's bill by the county's valuation and apply that percentage to what you're paying. That's how you get from $527 to about $1,690. The three questions above tell you which year it shows up in.
- Send the recomputed figure back to your lender. A term sheet built on the old bill produces a payment that's 10% or more light. It's your DSCR that moves, as these two real quotes on one property show.
- Read the appraisal, including the boxes that are blank. The prior sale box, the remaining economic life box, and anything the value is made conditional on.
- Ask for the seller's side of the settlement statement. You're looking at fee lines, credits and payoffs, not at the price. What closing costs actually are on a US rental sets out the buyer's side for comparison.
None of that requires you to be in the country, which is the point. I've done it for clients in Taipei, Toronto and London without any of them getting on a plane. The property sourcing service is me running this list on your behalf. If you'd rather run it yourself, the checklists are free in the foreign investor starter kit.
Two more things are worth reading before you buy anything renovated. First, what turnkey ownership is actually like once the tenant is in. Second, what maintenance and capital really cost, because a renovated house delays those costs rather than removing them.
The bottom line
Both of these deals were fine. That's the part that surprises people who expect an expose.
Two remote buyers got renovated houses in decent Kansas City streets, at prices their appraisals supported, on loans that closed, with tenants and managers in place. One of them has had no maintenance cost at all since he bought it. Can turnkey work for somebody who can't fly in and manage a rehab? On this evidence, yes, at a visible cost.
But two documents were wrong the same way on both deals, and neither was wrong in the buyer's favor. The tax line was light, and the appraisal didn't say what the house last sold for. Both are knowable before you commit, and one of them has a date on it. Ten minutes on a county website fixes both. Neither gets fixed by trusting the pack you were sent.
That's the actual lesson from thirteen documents. Not that somebody's hiding something, but that the two numbers most worth knowing are the two nobody hands you.
Investing isn't about certainties. It's about shifting the probabilities, and the cheapest way to shift them here costs ten minutes and no money at all.
This article is general information, not legal, tax or financial advice. David Garner is a property investor and is not a lawyer, tax adviser, accountant or investment adviser. Cashflow Rentals is a real estate consultancy, not a real estate broker, and is not a lender or investment adviser. Cashflow Rentals is paid an advisory fee, charged to the renovating contractor as seller, on the turnkey properties it introduces to clients. That fee appears in both deals described here and should be weighed against everything in this article. Both buyers consented to publication of their figures, one anonymously. Every figure comes from the settlement statements, appraisals, term sheets, invoices, inspection reports and county records for these two transactions, held on file. The renovation cost on Deal A is an estimate. It is bounded by the bridge loan payoff and by mid-construction walkthrough videos, and is labeled as an estimate wherever it appears. The renovation cost on Deal B is unknown. Two transactions are not a market average. Property tax, insurance and loan terms change, and your own tax position depends on your country of residence. Always take advice from a qualified professional before buying.
