Hi there, My name is Austin I’m new to the Bigger Pockets world and I’m looking to buy my first property this year within the next 6 months if possible. I’m 23 years old I’ve been saving money for a property since I was 17. I live in Southern California where the market is extremely saturated, prices are high, and cash flow is extremely difficult. I have enough money to get something out here but the numbers make more sense out of state and there are more cash flow properties in places like Florida,
Missouri, Ohio, and Alabama etc. So I’ve come to the conclusion that It would be the smartest move to buy a property in another state and continue to live here in California. My question is in regards to the service that Bigger Pockets always promotes on every podcast, Rent to Retirement. So I understand they are turnkey properties and I recently just learned what that means, but I started doing my research on new construction homes in Florida and I really like them I found a good price and it says it would cash flow $359/month or $4,308/annually. I found this to be amazing and I have my sights locked on this property, but then I was on YouTube yesterday on the Bigger Pockets channel looking for a video where they went more in depth over this service. I didn’t find that, but I did find a video basically going over the risks and dangers of getting into turn key real estate. Now I am in no way questioning the integrity of Bigger Pockets, but I’m new into real estate and I’m trying to educate and make informed decisions. So my question is Is Rent To Retirement a smart investment? Or Should I buy a piece of property on my own terms and renovate it and all that? Are they a legit service? Are there hidden fees? Should a turnkey be my first buy? What are the PROS & CONS of using this service? Also am ￼I in charge of getting tenants or do they do that as well? In the video Brandon was saying you can’t trust turnkey companies numbers and I sat down and crunch the numbers and it all came together. I guess all I’m asking for is some guidance. I’m really excited to jump head first into real estate and take it head on but I just don’t want to make a move with a lack of understanding of this specific service. Any help or guidance would be greatly appreciated
How much money do you need to retire? I think that's the first thing you should decide.
The second thing I think you should decide is how you want to get there? You CAN cash flow with turnkey properties, otherwise there wouldn't be turnkey companies. However, there are pros and cons to each. I don't really know them, but I'm sure the BP community will come help you out with that pretty soon here.
I would also focus on small multi-family to get to retirement. They scale a lot better, can increase in equity and cash flow pretty easily, and then you can get into another one. SFH are just not very fun IMO, but these are all your personal investments, so they should fit you personally.
Recap of questions you should answer:
How much money do you want to retire?
How do you want to obtain that money? (Stocks, Real Estate, Interest on loans, small business, etc)
How passive do you want your income to be?
How can you get it to be that passive?
EX: If you want 10,000 Dollars per month exclusively from real estate and SFH in Pomona, CA in Passive Income that only requires you to look at your mobile banking and see it deposited, you're going to have to build systems around whatever your passive income is. Property managers, maintenance people etc...
Yes, we are a legit service. I'm not sure what you mean by this, or what videos you are referring to by our team, or by any others. We have hundreds of positive reviews from clients that have worked with us if you do some research on this site, and we've helped hundreds of investors build very successful rental portfolios for many years. I've included some links for you below that show some of this discussion on the forums already that would be good to reach through. @Joseph Schweizer can you provide some insight here.
We do have FL new builds that are available, and probably one of the best TK investments for a newbie by going with a new build. Whether or not going TK for your first property is completely a decision you need to make based on your investments goals, experience level, resources available, time you want to be involved, areas you want to invest in, etc.
The most successful investors invest in the markets where they can get the best returns, and should be diversified across multiple markets. Regardless of where you invest it is essential that you have the right team to assist you in building a successful portfolio. It doesn't really matter if you start locally, or not. The main point is that you get started. If your local market is so expensive that it will take you years to save up for a downpayment then I would highly encourage you to look at a market you can invest in sooner. If it takes you multiple years to save up money to invest those are valuable years lost of cash flow, tax benefits/depreciation, appreciation & debt reduction by the tenant paying the loan down. It's also years lost of education, which is the most valuable resource to help you be successful long term. If you truly want to invest locally, but don't have the capital to then use real estate investing out of state to help you build equity over time & save up your cash flow to invest locally. Just my two cents on the matter. We look forward to connecting with you!
The Midwest and Ohio in particular is a great place to invest to achieve higher returns than out west. If you’re paying high rent in California now it also could be smart to get a low 1-5% down 1-2 unit in California and start eliminating rent you could then use those savings to buy homes in the Midwest. Columbus, OH is a great market to be in!
Thank you Timothy this helped a lot.
Hi Zach, I recognize your name you are the guy in charge of Rent To Retirement, I meant no disrespect by my message I just wanted to get more information on something I had a lack of understanding of. The video in question that made me confused is linked down below in this comment. The reason I was confused was that Brandon Turner talks about your service every podcast and when I saw this I wasn’t sure if he was referring to all turnkey companies or not. All that aside, I really like your website and I think this is an amazing service that can really help me out tremendously, but that’s just it; It seemed so amazing that usually when something is to good to be true it usually is. I just know it’s bad to read about something, get all excited and super attached without stepping back and making an informed an educated decision especially when it’s as big as buying your first property.
Thank you for clarifying. In the video you are referring to Brandon simply talks about when turnkey makes sense for investors, and when it may not, and he also encourages you to run your own numbers instead of simply trusting numbers provided to you by the seller. This would be true of ALL investment opportunities TK or otherwise. I would encourage you to do the same, but also ask about why certain numbers are listed in a pro forma to add some insight. It is important to know why input data is used, and it's a red flag if there is no justification. If you have questions about what our company does, or how investor's experiences have been I encourage you to read through some of the threads I posted to give you a better idea of the value we provide to investors. I think you will find out very quickly we dedicate a lot of time to set our clients up for success, and develop long term partnerships with them. The next step would be scheduling an initial call with us to answer all your questions in great detail as that is the best way to find out specific answers to your questions to see if this is a route of investing that is compatible with your goals. We look forward to connecting with you in the near future!
Investing with turnkey providers can be valuable since it reduces the risks involved with REI. Im my opinion it does take away a lot of the value since you can do that on your own and make your own connections but it all depends on how hands-on the investor wants to be. If you are looking for oos investments in Ohio, I would check out Columbus. @Austin Shade
Hey thanks I set up an investor call for tomorrow at 11:30am. I can’t wait!
Just to put some clarification in here, Austin... the questions you're asking are really a mix of different questions. If I'm understanding right, you're first asking about the turnkey strategy as a whole, and whether you should do that or do a property yourself. For help on that question, check out this article-
Then there's a clarification about different kinds of turnkey companies, because who is who matters for understanding who/what to do your due diligence on. You said "is Rent to Retirement" a smart investment? That again goes to the previous question... you're actually asking if turnkeys are a smart investment... but then if you decide to pursue turnkeys, you need to understand the difference between a direct turnkey provider and a turnkey marketing company. RtoR is a marketing company, as are many good companies, so they aren't the one who is directly selling you the property. They're merely connecting you with the company (direct provider) who does. That simply matters so you know where to direct your due diligence focus. Yes, research RtoR and learn about them and see if you want to work with them, but they aren't the one selling you the property, so don't stop your due diligence there.
Yes, absolutely run your own numbers. You should always verify everything for yourself and don't take anyone's word for anything.
As far as whether turnkeys are a good strategy or not... I've been buying turnkeys since 2011 (not through Rent to Retirement) and I wouldn't choose any other strategy! They aren't perfect, nor is any strategy, but they fit for exactly how I like to do things.
Hope that helps. The biggest thing is--separate out the questions you're asking into their specific categories so you can better and more easily figure it all out.