Real estate investing is hotter than ever, and an increasing number of investors are looking into purchasing turnkey properties to make the most out of their money and diversify their portfolios. The benefits of turnkey properties are numerous like attractive pricing on properties that have already been renovated and some turnkey homes even come with a renter already in place, allowing buyers to generate instant passive income from day one.
With the turnkey real estate market on the rise, so are turnkey marketing scams. Here are a few things to keep in mind to help minimize your risk when investing in turnkey properties.
Don’t Forget That the Turnkey Investment Company Is the Seller
Turnkey investment companies are great resources when it comes to this type of real estate purchase, especially for those who are unsure what type of property is best for their budget and long-term goals. However, it’s important to find the right turnkey real estate investment company in order to avoid scams.
You see, when you work with a turnkey investment firm, you’re getting guidance on where and what type of property to purchase. This is invaluable, but it puts you in a unique position where you’re also being guided by the property seller — and therein lies the potential for shady companies to take advantage of buyers. Make sure you get references from past clients to ensure that a firm is reputable and has their clients’ interests in mind. In addition to this, it’s a huge plus if they have an in-house property management wing. That way, you know they’re committed to sticking with their clients for the long-term and not just working to offload undesirable properties at a profit.
Beware of Companies That Are Big on #’s and Short on Details
One of the turnkey property marketing scams seen quite often is when a company shadily attempts to skate over the details when it comes to where your investment return will be coming from. You’re guaranteed to make X amount of dollars a month, they tell you, but can they provide proof that this money will be generated through rental income from your property? Some unsavory turnkey investment companies float payments from one client to another, Madoff-style, until the cash flow dries up and they can no longer pretend. The best way to avoid getting caught in this game is to ensure you will get monthly reports detailing the money your property is generating.
Don’t Buy Sight Unseen Without Trusted Guidance
Many buyers create income through purchasing and renting turnkey properties in multiple cities or in other states. Sometimes, this means buying a property without ever having seen it in person. Predictably, this leads to turnkey property marketing scams in which sellers send pictures that don’t realistically portray a property’s current condition.
A townhouse purchased at a bargain suddenly isn’t such a great deal when the buyer discovers that it needs a new roof, has holes in the walls, or is surrounded by neighborhood blight. The only way to avoid this kind of scam is to visit the property and see it for yourself or work with a reputable and trusted turnkey investment firm.
One of the Most Common Red Flags
A big red flag is an inexperienced turnkey investment company or one that (strangely) has very little history or information to be found online. This could signify one of two things: first, the company may be run by inexperienced operators who are using you as a sort of training guinea pig to learn the field. Second, it could be a sign of a fly-by-night operation that fails under one name and reopens with a new identity after angering past customers with investment flops.
When it comes to turnkey property marketing scams, a majority of them can be avoided by thoroughly researching the company you work with. The best ones will not only be concerned with making a profit themselves; they also want to see satisfied repeat customers!
If you’re looking for the best way to build long-term wealth, real estate investing is a great strategy. It provides a way for you to control your risks while reaping immediate financial rewards.