I'm sure other investors will have different rules for investing successfully in a turnkey property or portfolio. These are my five top rules, and five is an arbitrary number. Others may have more or less, but these are the rules I tell investors not to violate. I'll also add a quick note that this has nothing to do with the due diligence that investors need to perform. It has nothing to do with the long list of questions you need to ask service providers, mentors, or any professional services that you use when getting started or growing your portfolio. That is another post for another day, and I've listed the top questions I suggest dozens of times in the forums. This post is 100% about mental mindset and financial positioning.

These are just mistakes I made as an investor early on when I was investing passively in a turnkey manner. I also see investors make these mistakes frequently in conversations, online forums, and through the hundreds of inquiries we receive each month.

For me, these five rules are essential for staying grounded, minimizing stress, and ultimately building lasting success. Please feel free to list your top and non-negotiable rules you follow and suggest for other investors.

Turnkey investing, which is essentially a passive approach to investing through companies that assume the front-end risk of investing, remains one of the most consistent, scalable, and accessible paths to building long-term wealth. But like any strategy, it only works if you follow the correct principles.

1. Your Capital Stack Must Be Strong

If you want to be a passive investor, you have to be capital-ready. That means having enough funds not only to buy the property, but also to hold it through any challenges that may arise without any financial strain. This is not a strategy for maxing out borrowed money or scraping together funding that leaves you anxious the moment something breaks. You are not in control. You don't have the luxury of performing work yourself or forcing value-add. Lastly, passive investing is not the strategy to use OPM.

The right capital stack gives you staying power. It allows you to ride out a slow period, handle a repair without hesitation, and remain focused on the big picture. Investing should enhance your life, not create new financial pressure.

2. Only Invest What You Can Afford to Lose

This isn’t about expecting to lose money. It’s about preparing for anything and protecting your financial health, no matter what happens. Turnkey investing can come with incredible benefits—but that doesn’t mean it’s free of risk. There will be maintenance costs. There will be vacancies. There may even be the occasional surprise expense. Unfortunately, from time to time, a seemingly reputable company will turn out to be a bad actor with unscrupulous intentions, and investors will lose everything.

If your investment is so crucial to your finances that a few bad months would wreck your plans, you're over-leveraged. Always invest in a way where, if something unexpected happens, it won’t derail your daily life or other obligations.

3. Prepare for the Worst—So You Can Focus on the Best

Real estate is predictable, albeit over the long term. But in the short term, anything can happen. A new HVAC system can fail. A resident can break a lease early. You might go months without an issue, then face two at once. That’s just how it works.

Savvy investors know this going in. They don’t get rattled when the unpredictable shows up—they’re ready for it. Over time, the bumps smooth out, especially as your portfolio grows and becomes more diversified. If you're prepared for worst-case scenarios on the front end, those moments won’t throw you off course.

4. Invest for Expected Value, Not Risk Aversion

Some investors make the mistake of choosing properties based on what feels "safer" rather than what will perform better long-term. A lower-priced home may seem like a less risky option, but if it’s in a weak location or requires more oversight, the risk is higher—not lower. We read about this daily in the forums. People will argue against their own best interests based on something they read or were told. That will likely never change. Neither will the fact that risk and reward are correlated, and investors easily move each in opposite and wrong directions.

What matters most is expected value: the combination of reliable performance, long-term appreciation, resident quality, and professional management. That’s what sets successful portfolios apart. The goal isn’t to avoid all risk—it’s to position yourself where the upside is most substantial and the downside is manageable.

5. Long-Term Benefits Always Win

The true magic of real estate investing isn’t found in a single year’s cash flow—it’s in the long-term hold. When you own a property for 7, 10, or even 15 years, the compounding benefits start to stack: rent increases, loan pay down, appreciation, and stable income all working in your favor.

I’ve seen investors spend time and effort building the best paper cash flow portfolio they can—and still get outpaced in returns by homes that stayed rented and appreciated steadily over time. The same can be said for investors who are hyper-focused on small monthly cash flows and obsessed over minor expenses, without realizing that their appreciation and debt paydown were five times greater than their total cash flow earned to date. There is nothing wrong with wanting to win the short-term return game of earning cash flow; we should all be paying attention to that metric. However, if you can stay committed to the long view, even with the ups and downs, you’ll position yourself to win bigger every time.

Final Thoughts

Turnkey investing works—when you follow the right playbook. These five rules have helped thousands of investors build dependable, profitable portfolios because they enter the investment from a strong mental and financial position. A passive investment, utilizing a turnkey model entered with these five rules in place, can help keep your mindset focused, your finances strong, and your goals in perspective. They enable investors to focus on the right questions to ask upfront, a topic for another day. For now, knowing how to develop a winning mindset and focus is paramount for creating the right list of questions and answers to expect. This is a long game, and those who play it with intention and preparation will come out on top.