Realistic Rental Aspirations?

Question

I have about 700k to invest in real estate, and I’d love to start with turnkey rental properties (preferably multi-family). I am new to the world of RE, but I know the stock market very well. I live within 2 hours of Memphis, and I’ve heard nothing but good things about the markets in that area. I’d love to be able to see 40-50k through strictly rental income. I’m not interested in the flipping process yet; only interested in the rental aspect of things. Any advice or pointers in the right direction are greatly appreciated. As a side note, I am not one to throw money down the toilet. I want to get a good grasp of where to start before considering something big.

Do you think 700k would be enough to achieve this goal? What is a realistic goal? More, or less?

Much thanks in advance.

Do you think 700k would be enough to achieve this goal? What is a realistic goal? More, or less?

Much thanks in advance.

Steve Donovan · Answer

Hello @Travis Hagan and early welcome to the real estate investing world!  If you do your research, and invest in quality projects, $700k is more than enough to mee the goals you have outlined.  You will find that returns vary greatly from one area to another and also that the definition of turnkey is not the same from one provider to another.  Some turnkey providers will slap some paint on a fall down property and sell it to unwitting investors who now must find a property manager and hope that the rent gives a decent return.  Others do full rehabs to properties, place tenants in the units and ensure that the properties are professionally managed before selling to their clients.  Make sure that you work with a provider who will offer the level of service that you need.  You will also find that no two providers calculate returns the same way - some consider reserve amounts for vacancies and maintenance in their calculations, and others assume the units will be 100% occupied and never need repairs.  Make sure you are comparing apples to apples when doing your research.  Best of luck to you in your investing future and feel free to reach out if you need any advice or want an opinion on a deal.

Nathan Gesner · Answer

Contact @Avery Carl here on BiggerPockets. Use the search function or you can find her in Short-Term and Vacation Rentals forum. She sells turnkey vacation rentals in a variety of hot markets. You buy a few of those, hire someone to manage them, and you should be able to easily earn your $50,000 a year.

Reed Rickenbach · Answer

Hey Travis, I sent you a PM. Memphis investor here.

Seth Young · Answer

I think turnkey might be exactly what you are looking for. Memphis is a great market. It just depends how passive you want to be in the the investment process. It sounds like you need to start establishing the team you want to work with! I don't have much experience in multi family but I think if you leverage the money you would be able to come close to the 30k-40k yearly cashflow investing in Single family homes. SFH's typically appreciate quicker, better tenants, lower interest rates.

Michele Fischer · Answer

Every market is different, you should probably use the Bigger Pockets calculator to run your local assumptions through to see.  In my market $100-200/door of cash flow per month is expected, but I think Memphis would be better.  We make a return similar to your desires, but each market and each property varies.  Are you looking to self manage or use property management?  That is about a 10% difference in return and makes a huge difference in how knowledgeable you need to get.  See if you areas have any beginning landlording courses, that is a good way to start to learn the ropes.  Or some bigger pockets resources on the financial side, how to analyze deals.

Realistic Rental Aspirations?

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