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Real Estate Investing in Turn-Key Investment Properties Part 3

In Real Estate Investing in Turn-Key Investment Properties Part 1 and Part 2 we discussed the steps involved to make a property turn-key and 5 benefits to acquiring rental property from a turn-key property provider.

In this article we will discuss 7 requirements when selecting a turn-key property provider.

1). Buy directly from the seller:
It is common in real estate investing for investors to wholesale other people’s properties. A red flag is when the seller is in California selling a property in Ohio. The problem with this is that the wholesaler doesn’t really know about the property and the property can easily become misrepresented. Always ask if the seller actually owns the property. Inform the seller that you would like to discuss the property with the person or company who originally acquired it and performed the renovations. Even if purchasing from a broker, sign an agency disclosure agreement and still insist on speaking with the owner. When speaking with the owner, interview him/her on the renovations that took place.

2). Pay for a property inspection:
It is always wise to pay for a 3rd party inspection to confirm the property is fully renovated. Don’t be alarmed if the inspection has a few minor items, as all reports do. An inspector must justify his cost. The main thing is that the seller promptly takes care of any/all issues.

3). Make sure the renovation is 100% complete:
Never buy a property at a wholesale price where the rehab isn’t already 100% complete. Some property providers sell the property and then do the repairs. For example, “For sale for $39,900 and only needs $15k in rehab.” The question is does it really needs $15k in rehab. According to who? Performing what repairs? These type of transactions may sound appealing but leave the buyer very exposed to either an under-renovated property or “extras,” exceeding the original estimate. Furthermore, the investor would have to buy the property and then wait for the renovations to be completed, delaying time to begin renting and realizing a return on investment.

4). Know the financials:
The seller should provide a financial analysis showing all the expenses, cash flow, cash on cash return, cap rate and other key financial ratios. One item often misrepresented is the property taxes. Be sure the stated taxes are based on non-homestead rates even if the property currently is assessed with homestead taxes. Sooner or later, the adjustment will come and non-homestead taxes are much higher.

5). Property Manager/Rents:
Be sure to interview the property manager and make sure you are clear on your goals, objectives, and expectations. For example, discuss collection policy and what type of qualifications you would like to see in a tenant.

6). Work with a company that has a proven track record:
When it comes to real estate investing, there are many novice or beginning investors. Be sure to use a company that is established and has a strong track record. Look at previously sold properties and testimonials and ask for referrals. A solid company will work with the best property managers, insurance agents, lenders, appraisers, etc. Find out how long they have been in business. Be sure to do due diligence and learn about the area, rents, property, etc. Select a company that has excellent customer service, superb properties and plans on being around for a long time. Be sure to obtain a full warranty deed and clear title. Above all else, work with only the best in the business!

Be sure to read, “Real Estate Investing in Turn-Key Investment Properties Part 1 and Part 2.”

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about investing in turn-key properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

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Real Estate Investing in Turn-Key Investment Properties Part 2

In Real Estate Investing in Turn-Key Investment Properties Part 1 we discussed the steps involved to make a property turn-key and how utilizing a turn-key property provider may be the right solution for an investor to acquire rental property.

In this article, we will discuss 5 benefits to acquiring rental property from a turn-key property provider

1). Buying Power:
Turn-key property providers buy distressed properties (usually foreclosures) with cash and they have a strong relationship with the REO realtors/banks in their area giving them a head start on good deals as well as better pricing. The really good deals in any market are often pending the very morning they come available for sale.

2). Time Savings:
As it goes, “time is money.” With real estate investing, this has never been more true. Turnkey property providers have teams and systems and the means to locate, purchase, rehab and rent a property quicker than most. There are many overlooked time consuming tasks such as turning on utilities, recording transfer affidavits, ordering final water bills, attending closings and notarizing paperwork, pulling permits, etc. All of these items are taken care of by the property provider.

3). Market Knowledge:
Turn-key property providers know what cities, streets, and even blocks are good and not good areas to invest in as well as what rental rates are. They also know the types of properties that are most desirable. For example, a 2 bedroom will not rent as well as a 3 bedroom. A small kitchen will detract a tenant. A house across from commercial or on a busy street will not be as attractive.

4). Rehabbing Expertise:
Perhaps one of the greatest benefits to using a property provider is their ability to renovate. Managing contractors is no easy task. Successfully rehabbing a property requires constant, almost daily attention. Miscalculating the cost of a rehab is common. A specialists is very knowledgeable about what it will cost to fully renovate a property. They know the right labor and material costs for each item of the rehab. They have a team of contractors at their disposal. They know how to manage schedules so the rehab is completed quickly. They know how to pay draws accordingly and how to hold back money until the final punch lists are completed, which is essential to keeping contractors motivated to finish the work 100%.

5). Financing:
With real estate investing in investment property, financing is often a major component. Unless you are a cash buyer, financing is required. Most lenders are unwilling to finance the purchase of a distressed property as well as the funds to perform the required repairs. However, lenders will borrow on an already fully renovated property. Today’s programs typically require 20% down payment plus closing costs, allowing an investor to acquire property without having all the cash to purchase and renovate.

Be sure to read, “Real Estate Investing in Turn-Key Investment Properties Part 1 and Part 3

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about how to invest in turn-key properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

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Real Estate Investing in Turn-Key Investment Properties Part 1

The phrase “turn-key investment properties” is becoming more popular in the real estate investing arena. It implies that all the work is done from A-Z and an investor literally steps into a cash flowing investment property. To qualify as “turnkey” the property should be fully renovated with a property management professional in place and preferably already rented.

For many investors acquiring such a property is the key to success, especially when considering all the steps involved for a property to become turn-key. Here is a brief list of steps:

• learn a neighborhood or market to invest in
• determine rent comps
• view foreclosures for sale within that market
• determine repairs needed
• make offers
• attend closings (at time of purchase)
• obtain final water bills
• turn on utilities
  file property transfer affidavits with the county
• pull permits
• obtain repair quotes
• hire contractors
• schedule contractors
• determine extras/change orders
• inspect work
• ensure work is meeting high standards
• pay contractor draws
• hire a property manager
• register the property as a rental with the local municipality
• obtain a tenant
• fronting the cash to purchase and renovate
• accounting (keeping track of all the draws, expenses, etc)

Not only must the investor be experienced and knowledgeable at rehabbing, he/she must be willing to commit a tremendous amount of time (even when outsourcing responsibilities).

Therefore, when it comes to real estate investing in investment property, some investors turn to a specialists or a “turn-key property provider,” who provides already renovated and rented properties at wholesale prices. The right specialist has a system and team in place to find and buy the right properties, in the right areas, at the right prices, and then to successfully renovate and rent the properties offering them for sale at wholesale prices.

To learn more, be sure to read “Real Estate Investing in Turn-Key Investment Properties Part 2 and Part 3”

Jerry Norton is co-owner of Equity Services, LLC. His company provides investors with fully renovated, positive cash flowing investment properties for under $50,000.

To learn more about investing in turn-key properties investment properties, visit our site and download our FREE worksheets “Rental Income and Expense Tracking worksheet” and “Financial Analysis Worksheet.”

Bookmark It

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