This is not about religion, this is pure and raw Real Estate Investing speak, I do consider myself somewhat of a Pro, not just because of my self-proclaimed designation, but because I have been reading, mentoring, suggesting, participating and just following forums, posts, the marketplace, blogs, the entire plethora of resources offered on this subject space.
I have learned, evolved, and expanded my wealth over the last few months. Considering I am not a novice, I have transacted hundreds of various deals:
- Investment Buy & Hold (Not Turnkey)
- Turnkey Investment Buy & Hold
- Single Family Residential (1-4) Unit
- Multi-Family 10+ Units
- Property Maintenance
- Property Management
- Buy Fix Flip & Buy Fix Flop 🙂 (it happens to the most experienced of us too)
- Property Construction (New Construction & Remodeling)
- Renovation Loan Construction
I still have much to learn and much to do, I am by no means, a know it all or claim to know it all. The aforementioned transactions, however, I am highly skilled in, experienced and very technical, with that disclaimer in place, let’s begin!
This is all about turnkey investment buying success, the true guide to a successful experience:
Definition: Turnkey Investment = Pure Passive Income
- Purchase Direct from Turnkey Provider
- Turnkey Provider has completed the acquisition ahead of investor commitment
- Asset was renovated using a high caliber finish and resilient products
- Turnkey Provider has vetted and placed a tenant prior transfer to investor
- Turnkey Provider Maintains and Manages the asset after the transfer to investor
This little road map serves as a source of accountability and should help secure long-term and consistent cash flow, ultimately resulting in wealth building.
Dissecting and digging deeper:
Purchasing Directly from a Turnkey Investment Provider offers a lot of insight about the hyper-local market, this allows an easy and cost effective entry into a marketplace without having to be an expert yourself. Working with a direct Turnkey provider should offer some additional value.
- knowledge of local Investment market, not just the local real estate market.
- Premium Free Acquisition (No Middlemen – No added Fees)
- Acquire far below ARV (Actual Retail Value)
- Turnkey Provider has completed the acquisition prior to investor commitment
- Hassle free acquisition.
- Lead time to acquire is reduced
- Quality of property is better
- No downtime on your money
You do not have to rely on the provider negotiating or searching out a property and then waiting to close on it, just to begin the next step of the Turnkey investment process. Most true Turnkey investment providers will only acquire properties they feel comfortable with, as they have used their company funds to take this risk on ahead of any investor commitment to the property.
Turnkey Provider has renovated the asset using a high caliber finish and resilient products (Not just “lipstick on a pig”):
Speaking from experience, having our own construction company, we are able to extend our economies of scale to the investors, similarly this should hold true with other true Turnkey Providers. As the investor, your goal is that you are acquiring a home that is jam packed with cognizant and smart construction material decisions. It’s all about resilient products that can withstand multiple tenant turns, reducing the cost of turnover and maintenance, in essence enhancing your ROI.
- Resilient products = No Carpet. Tiled spaces that are exposed to water.
- Uniform paints
- Mechanical condition and update
- Uniformed fixtures: faucets, lights, door hardware, kitchens, appliances,etc.
- Economies of scale are your friends in this case 🙂
Turnkey Provider has vetted and placed a tenant ahead of acquisition:We are not talking about just placing a tenant, anyone can just place a tenant, but a truly sophisticated and well-balanced method of placing and vetting tenants, going beyond the credit and criminal. A True Turnkey Provider is patient when placing a tenant as they own the property, the more they scrutinize the tenant the more profit for everyone, less collection risk, reduced eviction risk, longer lease term, better-maintained unit by the tenant. All of this directly impacts the ROI. Patience is truly a virtue in this case. A turnkey provider who manages the asset in-house for the investor is not really a property manager, they are an investor ROI manager (Big Difference!)
- Screen the potential tenant from a global perspective (DTI*, CBC**, PCEV***)
- Tenant placed in advance of acquisition = No Placement Fee for the initial tenant
- Long-term qualified tenant = reduced turnover = enhanced ROI
* DTI – Debt to income ratio
** CBC – Criminal Background Check
*** PCEV – Past Current Employment Verification
To reiterate once more all of these are just another differentiators between a classic property manager and turnkey investment property manager – it’s not about the fees and placing whomever, it’s about building value and long-term success, this is a mutually beneficial win for all parties.
Turnkey Provider Maintains and Manages the asset after disposition to investor:
This is a very important part, you can say the glue that keeps it all working, a qualified management team can make or break your investment, does not matter where and what, this is the epicenter for your success. When providers offer in-house management this speaks to the assurance they feel about the property and the accountability they are willing to retain with you the investor. Many providers will pass you off to a “partner” or “other” property management company, they leave you with no accountability and then they have no skin in the game, the burden is on the management team they have shoved you off onto, if they do not perform the result is not the responsibility of the “provider.”
- Management team is not centered around fees but its culture is centered around the investor ROI (this is the game changer here, folks)
- They know the intimate details of the property, the tenant and property history
- Offers in-house cost effective maintenance solutions – hourly is always cheaper than a contractor on an as needed basis
So all of that was fun, now, how do you know who you are really working with? You want hassle free and you want to gain experience, you are seeking the (KISS Method = Keep it simple stupid) Any good true Turnkey investment provider, will be able to support the information they provide with tangible success and scientific data. The goal here is, wealth building through passive income, this allows you to concentrate on your core competency that lent you the ability to acquire the property. You want the hassle-free success without having to be on the ground floor of this venture. You are seeking experience and expertise, this is the least costly entry to hurdle for passive income.
To summarize, do not place faith into your decision, be diligent, complete your research, ask tough questions, make sure you are familiar with the team you will be working with, the area you are selecting to work in and do not settle.
Happy Investing! Happy Wealth Building!