As an investor, it is your responsibility to select investments best suited to your style of investing. While stocks and bonds may hold some attraction, so many factors are beyond the control of the investor. Most investors recognize the huge growth potential with real estate but find it too hands-on for their preference. This is the reason many investors are using turn-key real estate investments as a strong and reliable alternative to volatile stock and bond markets and direct real estate investing.
A QUICK OVERVIEW OF TURN-KEY REAL ESTATE INVESTING
Those wanting to own real estate likely learned of its growth potential through buying their own home. They benefited from the advantage of buying versus renting and, over time, watching their home value soar. That is the first point of turn-key investing: you are buying homes that you rent to others. Your tenants essentially pay for your home during your years of ownership.
Investing in residential properties is an immediate winner, as turn-key real estate investments only include properties ready for rent. Turn-key properties are residential real estate properties that have been renovated and made ready for immediate rental, assuring the investor an income flow from day one.
Face it, everyone needs a home, whether they are buying or renting. Unlike investments depending upon a healthy economy and consumers with extra money to spend, even during a recession those same consumers will continue paying rent and eliminate extra frills. And paying your mortgage for you during those tough times!
In other words, everyone needs real estate but can do without jewelry, luxury cars, vacations, and even minor splurges such as eating out and going to the movies.
This is why turn-key investing has been so successful for investors, given they understand and employ the five following keys to turn-key success.
1. WORK WITH PROVEN PERFORMERS
Everyone and his brother think they can become successful turn-key operators by buying low, performing a quick structural face lift, and finding a buyer with the promise of delivering a qualified tenant. Great ideas are a dime a dozen, and yes, buying low, fixing up, and renting to cover your investment costs is a great strategy; however, you want a team that has done more than come up with great ideas.
You should expect and demand a proven performer in the turn-key industry. This means a group that understands and manages all aspects of turn-key investing: acquisition, renovation, and rental. If your turn-key group drops the ball on any of those three crucial factors, you weaken your potential for an impressive return on your investment. If they really fumble, it could result in the loss of your entire investment.
2. USE LOCAL TURN-KEY MANAGERS
There are many depressed real estate markets out there offering exciting opportunities for the savvy investor. Truly sharp turn-key investors understand the importance of only working with turn-key groups operating in their own backyard.
The reasoning behind this is that local turn-key managers know the rental market, the local and state laws governing rentals and tenants, and have built a reputation as a quality and reliable property manager. Since uninterrupted rent income is essential for a successful investment, knowing your property is in the hands of a professional property manager should be your top priority.
3. FIND FULL-SERVICE TURN-KEY OPERATORS
Some turn-key operators focus only on finding distressed properties, fixing them up, and turning them around to sell as a turn-key property for a fast profit. They may even tempt their investors with a modest discount on their sales price (which they increased from their purchase thanks to their renovation efforts) to close a deal.
This leaves the investor responsible for either personally renting the property or finding a qualified rental management company to take on your property. In both situations, the investor is not in a strong position, being inexperienced at renting housing or at the mercy of an unknown element, the management company, where it could take months or longer to learn if you are working with a quality property management company.
In comparison, a full-service turn-key group understands the long game and brings the professional rental management services crucial to your turn-key real estate success. They know the property inside out (having performed the renovations) and they know their local rental market. They also have built a reputation as a management company with a large list of houses for rent (as compared to apartments), making them a magnet for tenants seeking new housing.
4. INVEST FOR THE LONG HAUL
The biggest drawback to any real estate investment is lack of liquidity. Being forced to sell a property in a depressed market will not only incur a loss but can take more time than the seller wishes or can afford.
This starts a dreadful cycle of adjusting prices downward to attract buyers. Then word gets out that there is a desperate seller, with realtors advising sellers to wait or make a ridiculously low offer.
Compare this to the investor who has wisely diversified their investments so a fair percentage remains in cash or a liquid equivalent that can be converted to cash without loss. By always maintaining sufficient liquidity in your portfolio, you can play the long game with your turn-key real estate investment; good real estate shows its strongest returns through long-term holding.
Also, this same investor instantly sees their investment earning income, year in and year out, through rental revenues while watching that real estate appreciate in value over the years. If there is a mortgage on the property, debt is also being pared down while that value keeps rising, a doubled investment advantage!
5. TAKE ADVANTAGE OF TAX BENEFITS
There are no stocks and bonds available that let you deduct a portion of your investment each year. Real estate, though, is ideally suited for the investor looking for income while also taking advantages of tax deductions that offsets the rental income they are receiving.
In addition to depreciation (not a real declining value but a tax benefit based upon assumed “wear and tear” of a structure), those investors holding a mortgage on their turn-key property also benefit by deducting their interest payments. In the early years, when the bulk of the mortgage payment represents interest, the investor is delighted to find that almost all of their mortgage payments are deductible.
Now that you know the reasons you should be investing in turn-key real estate properties, it’s time to get to know us. We are XXXXX; we are located in YYYYY and know the ZZZZZZ and ZZZZZZ residential real estate market inside out. For a decade, we have proven our worth and have significantly increased the portfolio value of our investors from America and around the world.
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