6 golden rules to follow before investing in turnkey real estate

Real estate investing is not for everyone. It requires patience, consistency, and persistence and comes with its share of challenges that must be considered before taking the plunge.

Many new investors are interested in investing in turnkey real estate because they think they won’t have to do any work. Yes, it is true to a large extent, but this does not mean that you start investing without doing any research.

With my experience and understanding, I came up with these 6 golden rules that you could follow before investing in turnkey real estate:

1. Prepare a concrete Written Strategy – The rule here is that if it is not written, it does not exist. Very few people stick to the plan that is not in writing. Writing a plan on paper not only ensures compliance, but it can also serve as motivation when the going gets tough. Some important questions your plan should address are:

• How much cash flow are you striving for?

• How many turnkey investment properties will you need to buy to achieve this goal?

• How long will it take to buy them at your current savings rate?

2.Investigation – Before investing in turnkey real estate, it is important that you explore different turnkey providers. But before that, you need to figure out where you want to invest. Many investors want to invest in out-of-state properties due to a variety of factors, including low price or high rental demands.

So while you are doing your research, you need to find turnkey providers in that particular state where you want to invest. You must schedule a meeting with the turnkey provider and verify the property in person.

3. Stay active – Investment properties require a large initial capital investment ($10,000 minimum), to cover down payment and closing costs. Even after the initial purchase, repairs, vacancies and lawsuits can result in large and immediate bills. Turnkey providers can help minimize those risks. Some of them, like us, also provide a one-year rental guarantee, but as an investor, you have to stay active. Schedule bi-weekly or monthly calls with your turnkey provider to stay informed.

4. Proper planning – Real estate investment is an illiquid asset. Therefore, if you plan to sell it, it may take longer, i.e. between a month and a year. It is a long-term investment and cannot be thrown away easily.

5. Rental – The type of profit you will earn depends on the location of your property. You should ask yourself all these questions before investing in a particular location:

• How stable is the area?

• Is there an alternative part of town/country more qualified for turnkey investing?

• How old is the property and when was it last renovated?

• What kind of experience does your turnkey provider have?

6.Plan B – Many people believe that having a plan B means that you plan to fail. But when it comes to real estate investment planning, having a plan B simply means diversifying your portfolio. So, if you’ve started with single-family homes, after a few years, you can start investing in multiplexes or even commercial properties, depending on your personal preferences and market conditions.