All Forum Posts by: Duarte Marques

@Duarte Marques 

Investing in turnkey property is a solid way to grow your portfolio by taking advantage of markets that maximize your returns. There are a few initial market research tips I will provide first. I will then move to good return benchmarks and close with the most important piece of choosing a turnkey company.

Important market focus points: 1. Stable and desirable rental market (seasoned turnkey providers know these markets and utilize them with economic fluctuations in mind); 2. Diverse employment drivers; 3. Ability to get as close to 1% rent to value as possible (.85-1%).

Important return benchmarks: 1. Cash on cash return (8-12%); Cap rate (6-10%); and Rent to value ratio (.85-1%).

Choosing a turnkey provider: This is the most important step of the process. In effect, you’re not only investing in real estate, you're investing in that turnkey company. You want to share the same vision with your contact there and seek how transparent they are.

Key Questions:

How responsive are they?

Do they have in-house property management or is it referred to a third party?

How many doors do they manage in comparison to how many employees are on the payroll (should be at least 1 per 100 doors)?

Do they have up to date software with the ability to provide accurate reports for your income?

Do they offer routine maintenance programs?

Are they willing to readily provide references?

I hope this helps a bit!

@Duarte Marques

I own an out of state rental in the state of MI and it works for me. Of course this wouldn't be easy without a great property manager, so do your research. Let me add one more thing to consider. You are about to tie up your valuable capital. It may be a few years before you can make a second purchase. Make sure this first purchase is the best investment you can make. The first purchase will set the pace of everything that comes after.

Not a bad plan depending on your goals and risk tolerance. I bought out of state and got something that was good to go for my first one so I could Airbnb and I learned a ton along the way, however it does take longer to build equity and save up for the next deal. 

If you are happy with the return and know you're in a good area then go for it, especially if it is expected to appreciate. 

Personally, we only buy turn key new construction for our investment properties. It’s my preferred method - no surprises, warranties for everything, etc.

As for our clients, I’d say about 90% of them are out of state and highly prefer turn key as well. 

The small group of clients that opt for BRRR method are typically more experienced and have had at least 1-2 BRRRs under their belt. The most difficult challenge with an out of state BRRR is finding a team you can trust to follow through.

@Duarte Marques

Cleveland is great! I am biased, because I live and work here.

You need people here to help you, agent, PM, etc. Cleveland has lots of areas and neighborhoods that are good and lots that are not so good. Connect with a great agent and learn more about the market.

Cleveland is very competitive and popular from investors all around the world, I think it’s going to continue to grow in popularity, appreciation, etc.

If you already have a team in Cleveland, then Cleveland is fine.  More important will be picking a growing submarket.

If you have no ties at all to Cleveland, then there are markets with better growth prospects, such as nearby Columbus.

Its a bit of a misnomer and misunderstanding of DSCR that its "only" based on the income the property generates and this creates a lot of confusion. I'd recommend reading these articles on BP for answers to all your questions!

DSCR Loans: What Are They And How To Get The Best Terms

https://www.biggerpockets.com/...

DSCR Loans: How To Use Pro Strategies To Save More And Make More

https://www.biggerpockets.com/...

Multifamily DSCR Loans: A New High-Impact Loan Option For Real Estate Investors?

https://www.biggerpockets.com/...

12 Frequently Asked Questions (And Answers) About DSCR Loans

https://www.biggerpockets.com/...

8 More Commonly Asked Questions and Answers to DSCR Loans

https://www.biggerpockets.com/blog/eight-questions-and-answe...

What Documents Do You Need for a DSCR Loan?

https://www.biggerpockets.com/blog/what-documents-do-you-nee...

BRRRR Loans: What Are the Options, and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/brrrr-loans-what-are-the-...

Short-Term Rental Loans: What Are the Options and How Do DSCR Loans Stack Up?

https://www.biggerpockets.com/blog/short-term-rental-loans-a...

DSCR Loans: Terms to Know When Working With These Popular Rental Loan

https://www.biggerpockets.com/blog/dscr-loans-terms-to-know

What’s Next For DSCR Loans? Updates For 2024 and Beyond

https://www.biggerpockets.com/blog/what-is-coming-in-2024-fo...