Buying turnkey for my first deal
So you read rich dad poor dad, then you hit the internet searching for ways to invest in real estate and you eventually come across Bigger Pockets. You start reading and asking questions. You sign up for a webinar and watch this corny guy with a bread talk about investing in real estate. You become really excited. This is it! This is what how I'm gonna break free of my job. This is the pretty standard path most of us take. I wish I could say I had a more interesting start but this is exactly how I got interested in real estate investing.
- OK, so how do I get started?
I didn't have much experience in real estate. I live in an extremely expensive market. House hacking doesn't make a lot of sense here. How the heck am gonna buy real estate? Then i came across the term turnkey. The term turnkey can be overused, but a true turnkey is a property that you hand over the money and do little to no work. I decided this was a prefect way for me to get in the game. I refused to be one of the people that never took action, so turnkey was a great way to get my first deal. Its like buying a property with training wheels on. You get your hand held through the process and at the end you have a producing assets. After researching some companies I decided to buy with Memphis Invest. The main reason I chose to go with them is because they had a great reputation and they were active on BP, so I knew they would be accountable if anything went wrong. Last thing they want is a bad review.
- The first deal.
I purchased a 5 bd 3 bath in memphis for about 153k it rents for 1500. When you buy turnkey many time you can expect to pay about what the property is worth and sometimes more. I wouldn't recommend purchasing for more than its currently appraised value though. My appraisal came in 2k over what i paid. Its been 2.5 years now and it has by far been my easiest property. When you buy turnkey from a good company you have a much better chance of things going well the first few years.
- What I learned.
Buying turnkey gave me the opportunity to learn the basics with a real world example. I got my first inspection report and as you will eventually realize, it usually seems alot worse than it really is. The reason is the inspector will list every little thing. I learned the process of working with a lender and how much personal information they needed. I got familiar with property manager software and how my owners portal worked. This was a real world experience. Stuff I couldn't learn from a book with out taking action.
- From my first deal to 3 more in 8 months.
From there I moved fast. I knew I wanted to get my own deals so i could get better returns and better deals. I found a mentor @David Greene. (Who actually just wrote the new BP book Long-Distance Real Estate Investing). I highly recommend picking that up. Having a mentor gave me the confidence and validation I needed to pull the trigger on buying more property without the training wheels. I then went on to buy a single family property in Jacksonville and two properties in Cleveland (one single and duplex). All of which take way more work than my first turnkey property but produce more cashflow. There is a trade off.
If it weren't for that first turnkey deal I wouldn't have been able to buy properties on my own. It allowed me to get the training I needed to build enough confidence to go after my own deals. Its a great way to get started and learn the basics.
If you are starting out and want to hear more please reach out anytime. Im an open book and happy to share my experiences.