Do you know that finding the right turnkey investment company can enhance your chances of success significantly? We came up with the following steps that could assist you in finding the right turnkey investment company to make your real estate investment dreams come true.
The first thing that you have to do is to figure out which cities you are interested in. Spend a little time on the front end to determine which cities have the best opportunities, not just the best pro-forma yield.
Do you really want to end up buying a property in a city that has nothing going for it and its largest employer on the verge of bankruptcy? While the 12% return looks great, who knows what that return will be in 5 years?
After choosing some cities, check out different turnkey providers there and the returns that they offer. Make sure you compare numbers apples to apples. A turnkey investment company may only show rental yield and not include expenses. Some only include property management, taxes, insurance. However, when you are evaluating your numbers, make sure that you are doing it consistently across providers. Better yet, come up with your own criteria and run your numbers based on your assumptions, not theirs. That way, you can be sure you are catching everything.
Once you’ve narrowed down the cities in which you are interested and you’ve checked your numbers, you should make a trip to visit each city and interview the potential turnkey investment company in person. Their operation will never be better than it is the day you meet them. So, if you decide to buy a Chicago Turnkey Investment property, make sure you visit some of the turnkey companies there before doing business with them.
If they are disorganized or unresponsive, this is how they will always be and odds are it will be even worse. See the properties they are rehabbing, ask questions and ask for references. Now is the time to figure out if they are a right fit for you or not.
Questions for a Turnkey Investment Company:
- How do they choose their locations?
- Why did they choose to do the rehab that they did?
- How do they choose tenants?
- Why did they not include cap-ex in their numbers?
Ask as many questions as you can think of and then ask some more. If they become annoyed by your questions, then it is not a good fit for you. You need to feel like they care about your business and do whatever it takes to gain your trust and business. If they are getting annoyed before they make the sale when they are courting you, how do you think they will be 6 months in?
After you made a site visit and had a conversation with them, follow up with the referrals they provide. You can also find their referrals online. You might be amazed at what some of their referrals say. Most of the time people don’t follow up, so sometimes they provide bad referrals. Find out how the company has dealt with problems in the past. If their clients are not happy with their work, it is a big red flag.
If after doing your due diligence, you are not comfortable with any of the turnkey investment company, keep looking. Never just settle because they are making a hard sell. You are better off missing an opportunity than being stuck with a bad investment.
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