BiggerPockets Real Estate Podcast - Is This the Most Beginner-Friendly Way to Start Investing?

Starting point is 00:00:00 Do you want all the benefits of owning rental properties without having to do a lot of the work yourself? If so, turnkey investing could be right for you. Hey, everyone, it's Dave. And if you've been around the Bigger Pockets community for a while, you may have heard of a guy named Chris Clothier. He's been on this podcast a couple of times, or you might have seen him in the Bigger Pockets forums where he's posted more than 10,000 times. Chris has done a lot of stuff in real estate. Right now, he operates a business called REI nation where they buy properties, fix them up, find tenants, and then sell them to investors as sort of a nice, complete package for people who want to operate on the more passive side

Starting point is 00:00:46 of the real estate investing spectrum. In addition to this business, Chris just happens to be one of the most savvy investors that I know and has really seen everything and done most strategies having been in real estate investing for over two decades. So today I'm going to pick his brain about some topics that sure apply to turnkey investing, but also apply to anyone who wants to operate an efficient real estate investing business or portfolio. So let's bring on Chris. Chris, welcome back to the Bigger Pockets podcast. It's good to see you. Yeah, you too. Thank you for having me. Oh, it's a pleasure. How many times have you been on the podcast? Do you know? Yeah, this will be number five. You might be one of the top returning guests then. Five. I don't know anyone else who's been on five

Starting point is 00:01:29 times. You know, but, but the crazy thing is, is it's been a while. It's so, uh, I was on four times, but I've been, you know, I've been on Bigger Pockets since 2009. So I was on four times from the very early stages and then as we kept evolving in business topics, but it's been since COVID. COVID was the last time. Okay. That I was on here. So glad to be back. Yeah. Well, I'm really excited to have you back because I, I really like these types of shows where we talk to someone who's been in real estate and been a part of the Bigger Pockets community for such a long time and has figured out a way to evolve and adapt to the many, many different real estate climates that we've seen since 2009. So let's, maybe before we jump into that, can you just tell us a little bit about how you got started back in 2009 and just

Starting point is 00:02:17 like an overview of what you've been up to up until the last couple of years because that's where we're going to really dig in today. Yeah. So, you know, we got started well before that. I've been doing in real estate specific on the business side since 2003. And I got started by watching Carlton Sheets. I bought the Carlton Sheets, How to Be a Real Estate Investor program from late night TV. Some people may not even know what that is at this point. Was it? Oh, wait. I'm just curious, what format was it? Is it books or VHS tapes? Or what were we talking about? It was nine DVDs and probably a dozen little workbooks printed out, you know, like softback workbooks printed out. plus another 12 CDs.

Starting point is 00:02:59 You know, back when it probably cost three cents to produce it, it's just a box pull of junk. It was, you know, like overwhelming. It was the pre days when, you know, you would pay $100 to get all of this education. It would take you months to actually get through. And a week later, it's a call of, you know, would you like to join our exclusive program and we'll hold your hand kind of thing.

Starting point is 00:03:22 But hey, it got me started and I still give it credit because I learned something. It sounds like you've come a long way in the last 20 years. And if you do want to hear about the rest of Chris's journey, make sure to go check out some of the other episodes he's been on. And we'll put those in the show below. But today, Chris, I really want to focus on turnkey investing. This is an area you have a lot of expertise in. And I think it's really one of the good options for investors who want to get started or build their portfolio today. So maybe you can just explain to us what turnkey investing is in the first place. Sure. So to me, at the first place, describes the process of someone else, an individual or a company, has taken the risk of identifying

Starting point is 00:04:03 and using their money to purchase a property. Then they've taken the risk of creating a scope of work and completing that scope of work on that property. They've taken the next step of residenting the property, putting a resident into that property. And now they offer you as an investor, a stabilized asset, that at this point is, performing, and this is the key for me, they offer you an option for in-place property management within their company. And the reason why for me that's so important is going forward. Real estate is real estate. There will be issues. There will be moveouts. There will be maintenance. There

Starting point is 00:04:46 will be items that come up. Nothing changes with that. But the reason why that, to me, is the actual definition of turnkey is that there's one point of contact. Oh, I see. There is no. There is know, kind of, it's, it was the, it was the renovations fault. No, it was the management's fault. No, it's the renovation's fault. And you as the investor, you're trying to make three different phone calls. The management company says, hey, it wasn't renovated very good, so it's not our fault. You have maintenance. And the renovation team says, well, the management company did a bad job with their resident selection. So it's not our fault that there's a maintenance item already. And you as the investor are left. This doesn't feel very turnkey. This just feels like I bought a

Starting point is 00:05:26 stabilized property and it's not performing very well and nobody wants to take, you know, responsibility. Turnkey is meant in my world. It's meant to lessen the stress for the investor because there's one point of contact. There's one source of truth. So in the end, it's nothing more than just passive real estate, but all the heavy lifting is done for you on the front end. I think that the value of what Turnkey, in the way that you describe it, offers is that when we talk about quote-unquote real estate investing, you're not just investing like it, you know, buying a stock, obviously, or buying cryptocurrency where it's passive. You're actually starting a business. And what it's always intrigued me about turnkey investing is that it takes a lot of

Starting point is 00:06:12 the harder business operations outside of your hands and lets you be more of actually just an investor. You're kind of just purchasing an asset like you would with a stock. There's still more you have to do that if you're just buying a stock. I don't want to oversimplify it. But like Chris said, rather than having to find your own property, identify the right neighborhood, find a property manager, find tenants, all those different things. You just work with a turnkey company that does that part for you and you get to sort of sit back and be more just of an asset owner rather than an active business person inside that business. Yeah, you're building a balance sheet. you're building your rent roll.

Starting point is 00:06:54 And in doing that, you're not having to make all the big decisions on which assets to put in that you do, but you should get a very neatly, finely packaged final product to decide on. So rather than making 100 decisions along the way, you make one decision on the back end. And does this, does turnkey, well, I know you have a company, you do this kind of stuff. So like, are your clients mostly new investors or people trying to scale? what is the profile of an investor who benefits most from this approach to real estate? For us, it's a mix of two types of investors. But they do share one thing in common, and I'll get to that at the backside. The two kinds of investors.

Starting point is 00:07:34 One, new investor. I do not have an investment portfolio, but I know this is the route I want to take. Most in that scenario, they're in hustle mode. They're trying to actively build their careers. They are building their families. they are, I would say, dreaming their life as they go, and they understand that real estate's important. They've got to have a piece of their future growth in real estate. So that's the first one. A new investor that doesn't have a lot of time built in the market, they don't have a lot of

Starting point is 00:08:05 time built in how to, but they know they need it. The second investor, believe it or not, and this is, I would say this is about 50-50, very experienced at real estate, very experienced at investing in general, and they are looking for a return on their time. That's why they are turning to turnkey. I'll give you a very particular scenario that happened two weeks ago. A group of investors, there was two of them that were selling a portfolio of properties in California that were commercial light industrial. And it wasn't time intensive for them. They had management companies in place, but they had hand-selected these properties well over 10 years ago for a particular use and purpose. Now, in the past decade, they have since built other companies that they're

Starting point is 00:08:52 actively operating and running, and they turn to turnkey because I want to take these properties and I want to 1031 exchange them into a large portfolio of single families that have a lot of upside, have management in place. I don't have to do any legwork on the front end. They understood that their legwork was us. They needed to do their due diligence on us and how we were going to perform for them. Outside of that, they were strictly looking for, I'm taking these assets and selling them. I'm putting my money into these assets here and I need the best management company. It's just balance sheet. They're creating a new balance sheet. That's all it was. That makes a lot of sense to me. One, it's a great way to get started if you're busy and you haven't yet learned the ins and outs of

Starting point is 00:09:34 operating the business and you could just like, it's not as easy as just clicking a button, but compared to doing everything yourself, it's a lot more on the passive end of the spectrum. and we'll get into this more, but I would assume lower risk, too, because you have experienced people doing a lot of the work for you. But then I also imagine, like myself, I try and diversify my own portfolio like that. Like, I do some properties where I'm actively involved, and then I invest in funds or syndications because they're more passive, because I can't put a lot of time into every deal I do, but I want to scale faster than my time allows. And so I've always been sort of intrigued by turnkey because it would allow me to sort of scale my rental portfolio

Starting point is 00:10:21 faster than I currently do to be perfectly candid. Sure. And it can. But even as you and I are sitting here talking, like a really big point of emphasis I want to make today is that the word turnkey, it's neither a noun or a verb. And unfortunately, it's been used as both. It's become both. A noun, a turnkey property as if that is descriptive. It's no longer descriptive. It's a word that everyone uses. And then also, I invest turnkey, meaning I invest with, you know, little work, little anything as a verb. To me, they both have done a lot of harm to the industry itself. When I use the word like as a noun or a verb, most turnkey investors are going to lose. Now, they may lose money or they may miss their objectives, but they're going to lose because they're, they are investing

Starting point is 00:11:12 buying the word. So there's a lot of misnomer. There's a lot of, hey, I'm just going to buy turnkey, totally passive. Everything's done for me. It's super easy. And it just really lowers the alert level of an investor. It lowers the attention they need to pay to what they're doing. And it allows a lot of, I don't want to use the word unscrupulous, because it makes it sound like it's intentional, but just allows a lot of error to enter into the equation. I guess that makes sense about the risk because, like, obviously, my assumption when I said it was low risk is that you were doing your diligence of working with a qualified, you know, high integrity operator.

Starting point is 00:11:52 But obvious, to your good point, it should be called out that not all turnkey operators are the same. Okay, time for a break, but more with Chris Clothier when we come back on the Bigger Pockets podcast. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes, 10% below market value, and the best

Starting point is 00:12:19 markets across the country without making real estate your second job? That's exactly what rent to retirement does. They're a full service, turnkey investment company handling everything for you. In some cases, investors get 50 to 75% of their down payment back at closing. plus interest rates as low as 3.75%. They've partnered with Bigger Pockets for over a decade, helping thousands invest smarter. If you want to do the same,

Starting point is 00:12:43 visit BiggerPockets.com slash retirement to learn more. You've upgraded how to buy properties, but did your insurance get the memo? When investors start scaling, insurance can't be an afterthought. Most policies were designed for a single property, not multiple rentals, LLC ownership, short-term stays, or properties mid-rehab.

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Starting point is 00:14:24 without making real estate your second job? That's exactly what rent to retirement does. They're a full service, turnkey investment company handling everything, for you. In some cases, investors get 50 to 75% of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with Bigger Pockets for over a decade, helping thousands invest smarter. If you want to do the same, visit Biggerpockets.com slash retirement to learn more. Let's get back to my conversation with Chris Clothier. This is resonating with me today, because I spent the early part of this morning dealing with a contractor who is threatening to put a lien on one of my properties because my property manager didn't pay a bill. And I was like, of course,

Starting point is 00:15:11 I would have paid it, but you sent it to the property manager who somehow lost it. And like, this is just how real estate goes. Like, there's so much of the business is just coordinating between disparate parties who have no incentive to coordinate with each other. And you're sort of just quarterbacking the whole situation. And you get a hang of it. But it can be annoying for sure. And I can imagine that having basically just, it's sort of like customer service, right? Like you have a point of contact that you can call and they sort of deal with whatever situation arises, whether it's on a maintenance side, tenant side, asset management side. There's misconception and misdirection when it comes to Turnkey.

Starting point is 00:15:49 And the way that a lot of turnkey companies try and say they're incentivized to have, you know, their interest aligned is if you're happy, you'll buy more properties from me. And if you're not, you won't. But when it comes down to it, if they're not responsible. for end-to-end, like a circular transaction. For instance, my company, we buy back a lot of properties from investors. Now, it could be year three, it could be year seven, it could be year 15, but we're there. We are able to purchase properties back when an investor's ready to exit out of an investment. But we can because we bought it, we renovated it, we sold it, we managed

Starting point is 00:16:31 it. We know every detail about the property. And it's an ease of transaction. for the investor. So it's the ability to get in, make your investment, earn your return, exit easily, and either move into a new investment of us or into something else. But that circular transaction doesn't exist with most companies that use the word turnkey to describe what they do. Yeah. So they take pieces of it and they say that for them, what turnkey means is, I'm going to find it, you're going to buy it, I'll manage an innovation for you and introduce you to a management company. You might as well at that point hire an agent and make sure that you have a professional with a fiduciary responsibility rather than just buying from an individual. There's no risk.

Starting point is 00:17:14 Yeah, because when you're saying done well, right, you said that the turnkey company should be purchasing the property and doing the renovation while they're the owner of the property and then only selling it to an investor or passing it off to an investor once it's derrised by having the renovation completed. Right. And the reason why I bring that up is that if somebody advertises turnkey, but all the risk is on you, what value are you truly getting? You're just, perhaps you trust them.

Starting point is 00:17:46 Perhaps they're fantastic. And they're going to be able to help you. But what value did you get other than you met somebody? You came to them because the word turnkey told you that it was less risk, less work, easier to do. But in the end, nothing's changed. It's just a real estate transaction. the reality is that turnkey done well, it won't be instant equity that you get in the property.

Starting point is 00:18:07 It'll be bought equity, especially if you're using financing, whatever you put down. You're probably going to pay closer to retail pricing on a property because the advantage, the purpose of it is I'm buying a properly renovated property that is going to be, should be, less headache for me, should be managed well and should be a relatively simple, straightforward investment over the next few years where the company I hired is able to perform at a high level. You know, I'm saying a lot of jargon there, but that's the, that's what it's supposed to mean. Turnkey means that I'm not having to do a lot of work going into this. I make sure invent the professional.

Starting point is 00:18:48 And they're going to deliver to me a smooth, relatively stress-free and consistent investment. Otherwise, why am I paying retail value? Yeah, you're hitting on two of my my favorite themes here, Chris, what is incentive alignment, which I want to come back to. Sure. But the second thing is about the risk, reward relationship in real estate and all investing, right? I try and stress this a lot to people, but the more risk you want to take, the higher the potential reward. But when you work with a turnkey company, you are basically paying them to lower your risk, right?

Starting point is 00:19:24 And so that means that there is going to be, in some ways, less opportunity for reward. And I'm not saying you won't make money, but as Chris just said, you're not going to be buying it at a super steep discount because Chris and his team, I'm going to ask you about this in a minute, but I assume need to make money somehow, right? They're not doing this out of the kindness of their hearts. But they're basically, or Chris and other reputable turnkey companies are taking on that risk for you. And so they're going to enjoy some of the benefit. That's what a good partnership is, right? Is both sides have mutual benefit? But, I think I've heard people with turnkey say, oh, you're buying retail. It's not a good deal. Well, it depends the kind of investor you are, right? Correct. If you want to go and do all the work yourself, you're probably not going to be attracted to a turnkey investment. If you're saying, hey, I'm trying to buy a property for the next five, 10, 10, 15 years, I don't want to do a lot of work and I'm willing to pay retail and they're going to de-risk it for me. Then that can be a great deal for you. It just depends

Starting point is 00:20:25 in your personal preferences. If your investment strategy, your high-risk, high reward already is in oil and gas futures or you have cryptocurrencies that you're heavy into and you're diversifying into real estate because you can leverage your purchase. You can use a fraction of your money to own the whole investment. Yep. And then you gain, for each of us that'll be different, but some form of tax advantage from that somewhere along the way, you know, more for others and less for, you know, some, but you know what I'm saying? There's some there. And ultimately, in the end, what you're doing at this point is, I want less risk. I want a stable and high likelihood that when this investment's done, my up will be that, you know, let's say you put 25% down.

Starting point is 00:21:12 My 25% has appreciated, but so has the banks 75%. And along the way, a resident gave me every dollar I needed for the operation of that asset. That's it. I didn't make any cash flow in the end. I made a little bit here, a little bit there, but after seven years, they gave me all the money I needed for my costs. The value went up. They paid my note down. And I got all my money plus a standard 8 to 10 to 15% return or whatever it is. But guess what? I got that return on the bank's money too. And I can't do that with my oil and gas futures where I took big risk, but maybe I rewarded maybe I didn't. I can't do that on my other investments. And the crazy thing for me is that each of us as investors, we get to decide why we're buying a piece of real estate. And we get to decide what our expectation of performance or return is. And so if my expectation is, number one rule, I'm not going to lose money.

Starting point is 00:22:12 And number two, I'm going to be able to leverage myself intelligently into a better return. Cash flow, you know, be damned. It doesn't matter. You raise up a really important point here, Chris, which is that even within Turnkey, there's just a huge spectrums of type of deals and prospective returns. Right now, in 2024, can you tell me a little bit about what a good deal looks like to you? And I know this is individualized to anyone. But if you were just advising, let's start with a new investor who was buying their first deal. Like, what should they look for in terms of price point, buy box, and type of return?

Starting point is 00:22:50 For me, I would not invest anywhere that I was in the bottom quartile of the market. I would invest as close to median value as possible. Why is that? Because every piece of data you can look at will point to the majority of renters in any market are going to be in that middle section. There's fewer that can afford the lower end and almost none that are. are looking for the upper end. So a majority of the renters in a market are going to be renting homes that are at median value and just below. So median value minus about 10% in that area right

Starting point is 00:23:32 there. So one, you're buying a property with the highest probability of finding a qualified renter. That's such a good tip. It's the most demand, right? Yes. But the demand also exists in the resale. So you're also buying in the most affordable part of a market where your exit strategy, will be the probably the widest that they're going to be because not only would it be owner occupants that that's also the median price is where they're going to be the majority, but also investors. So investors that want to stabilize proven product that you've owned for three to five years and you're exiting for whatever reason, they're going to exist there. And they're going to be looking for, hey, this is just the right spot for me to be.

Starting point is 00:24:16 That's a great tip. I just want to reiterate that for everyone before you move on, Chris. Just so everyone understands, if you're talking about a market, let's say that the median home price is 400,000. Chris is saying that if you buy something in the, you use 10%, 360 to 440,000 range. That's from, you know, around the median, you're going to always have a high chance of renters because they get most people, just statistically, most people are going to want and be able to afford that type of apartment as a renter. And the same thing is also true when you go to sell the property either to a prospective home buyer is going to use it as their primary residence or to another investor. And that is such a good tip because I think a lot of people say like, hey, I can, I found this great market. It's growing. But then they try and buy at the bottom of that market because it's what they can afford, which can work.

Starting point is 00:25:12 But you're taking on that risk, like you said, of not having a product that is going to be very attractive. to your perspective tenants and then in the future to someone that you're going to want to offload this property to. All right, time for one last break. And then we'll be back with the Bigger Pockets podcast. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors by turnkey, new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details, so you don't have to.

Starting point is 00:25:58 In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade, and if you want to learn more, visit BiggerPockets.com slash retirement. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims.

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Starting point is 00:26:46 People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade,

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Starting point is 00:28:24 Don't overpay the IRS. Head to costsegregation.com before April 15th. All right, we're back with Chris Clothea. Well, I tell people, there's two questions that you have to ask in turnkey real estate. The first one is how and the second one is why. And what I mean by that is, okay, I'm going to buy this property from you. And I'm talking true turnkey, meaning it's everything's in-house. can hire their management company to manage this asset for you. So there's, again, one point of

Starting point is 00:28:55 contact, one source of truth. How are you going to make this property perform? And why do you think it'll perform the way you're telling me? And those are the two most important things. And I'd say that because of this. A management company makes their money, no matter how they want to say it, they make their money on turnovers. Your property has to go vacant in order for them to make money. Because a majority of the income comes from the lease-up fees. Everything else, the 8, percent, 10 percent, 12 percent, whatever our company keeps of the monthly rent, it's a pittance compared to the lease up. Again, I'm in the, I'm in the middle of it. We manage 8,000 homes. So I know exactly how the math works. When you buy from a fully integrated turnkey company,

Starting point is 00:29:35 and you said you were going to ask me this question, and I'm going to tell you, if they, if they know how to make money, meaning they are successful, that you want your turnkey company to be profitable. The last thing you want is for them not to be profitable because then they're gone. So if they know how to be profitable, profitable, they subsidize income through home sales. So they're able to buy the discount, get work done, and leave enough of a spread where they can sell the property without gouging the investor. Right. And so they can make money, but still deliver a serviceable product that the investor will not lose on. It's sort of like flipping, right? You're buying at a discount,

Starting point is 00:30:13 you're renovating, and then you're selling it to an investor at a fair price. And that's how the turnkey company makes money and is still able to provide the investor with a good enough deal that they too can earn a fair profit. You nailed it. It has to be like I don't like the verbiage of win-win for everybody, but the reality is that if the investor wins, you win. Like if you priced it properly where you're not, you can cover your overhead, you can make a living, you can hire your team and innovate and grow and they win as well. They're coming back to buy more. That part of the equation is true. But here's the deal. If they own the management company, then they no longer have to rely on turnovers.

Starting point is 00:30:53 So how can really high quality, and it's not just that there are multiple high quality turnkey companies, how can they provide the best services? Well, it's all going to be in the management and renovation. Those are the only two places in real estate that they can make a difference and make a property perform better. If you renovate a property properly on the front end, you save costs,

Starting point is 00:31:17 especially in the first seven to 10 years of ownership. And then if you are really good at the management, you can increase occupancy and length of occupancy and hold down maintenance costs, especially in those first, like I said, seven to 10 years. Those are the only two differentiators you can really force into real estate to try and make it perform better for that first period of time. And I use the term seven to 10 years.

Starting point is 00:31:46 that poorly renovated properties, expenses are going to come earlier, doesn't really matter, it's coming. And poorly managed properties will suffer more turnover and higher costs. And that happens in all real estate. That doesn't matter if it's turnkey or you do it yourself,

Starting point is 00:32:02 doesn't matter. Those two things drive up costs. And so if you get a good turnkey company that's fully integrated that has all those services in-house, how are you going to make this property for like, what do you do different

Starting point is 00:32:15 that will make this have a longer occupancy or fewer expenses. If they just say, well, we're just really good at it. I mean, ask more questions. But if they can point to this is precisely how we do this and they have a track record to back it up, that's going to be the difference maker in turnkey. Because otherwise, as we said earlier, turnkey is meant as a protection of your money. You should never lose in real estate period. But when you're buying turnkey and you're so passive, you buy from a company that there's a

Starting point is 00:32:45 high, high probability, you're not going to lose. Now, how can I force a return? They're really good at what they do. That's it. Thank you. Well, you beat me to it. I was going to ask you about how to create mutual incentive between investor and company, because I think a lot about that. I deal with this with my property managers all the time. Their incentive is to turn properties over. I've figured out how to give them retention bonuses instead to incentivize them to keep people. And a lot more operators are doing this now. But this is just, it's such a good point, regardless of you turn here or not, just figuring out the way that you and a company both win together, I know it's such a cliche thing, but it really is true that, you know, if whether it's you're working with a contractor

Starting point is 00:33:34 or a property manager, like find a way that you both benefit from the same thing is going to help you go so far in in this industry i agree chris we do have to wrap up soon but i wanted to ask you to finish your thought because you started telling us about what a good deal looks like especially we're ending 2024 we're heading into 2025 you told us a little bit about what the buy box should look like but what is like that what is a return look what does a good return look like in 2025 someone wants to get into turnkey so given the state of the market the state of barring costs and where we are uh if you can get a consistent and reliable cash on cash of six and a half to eight, eight, I mean, you're hitting home runs. There's nothing wrong with five and a half today on a highly

Starting point is 00:34:23 reliable property. That is pretty good, man. That's higher than I thought you were going to say. Well, those are no-brainers. And every bit lower that you go, you know, it has to come with success. It has to become some level of advantage for you. And so, you know, you go. You know, you go up. up in price point, those returns come down. But going up in price point, your advantage is for every percent of appreciation, it's more dollars. And so it's going to come down as you go up in price point. The other thing that I think success looks like today is if you're with a company that is successful at length of occupancy, at being able to extend and hold down your moveouts, so they're just really good at what they do. Doesn't mean you're getting rent increases, but you're not suffering moveouts.

Starting point is 00:35:07 That's what you're looking for. It's the worst. Once you're in this business so long enough, you stop caring about rent increases. You care about vacancy. 100%. It's reliable, consistent revenue. And it's better for the tenant. That's another win-win situation. That's just a better situation for everyone. Yeah. So as an investor, what does a successful turnkey look like? One, it's medium priced homes. You're investing there and you're investing with somebody that can demonstrate to you that they can keep your property occupied. Those are the two big things. Properties don't say occupied. if they're not well renovated and they're not well managed. Those are the two things passive turnkey investors need to focus on. I need to be buying in the right price points. And if I don't have enough capital, wait. You're not going to miss out. Believe me, anybody that says you have to buy this today or you'll make, no, wrong, wrong. Move away from that person. Like, you do not

Starting point is 00:35:58 have to be in a hurry. What's great advice. Yeah, I think that, especially now, like the market is, you know, weird right now. But you could take your time. Things aren't moving as quickly as they were a couple of years ago. You know, and you should, whether it's turnkey or not, be comfortable and with whatever deal that you want to do, you know, as Chris said, the main goal is not to lose money. And real estate's pretty forgiving, but one of the few ways you can lose money is if you, you rush into a deal before you really understand what you're buying. Yeah. Work with companies directly. There are no shortcuts to this. There's nobody out there that has the magic crystal ball. The reality is that if you're going to buy far from where you are, you need either.

Starting point is 00:36:38 a really, really good agent and somebody that has a fiduciary responsibility to perform for you, or you need a high-quality turnkey company. What you don't need is a consultant to tell you those two answers. Yep. And I say that because, again, it just goes back to the whole thing of turnkey, it's spun off into all these cottage industries today, and there's turnkey for everything, but what you don't need is a turnkey coach to hold your hand and tell you how to buy turnkey. Yeah, it's kind of like the opposite of what it's meant to be, right? That's, if you need a coach to tell you to buy turnkey, it's not turnkey. Yeah, if you look up and you say, how is this person making money and they're making money off of me instead of making money with me, then you don't need that.

Starting point is 00:37:22 You don't need that person. Well, Chris, this is great. Thank you so much for joining us for your fifth time on the Bigger Pockets podcast. Congrats. And thank you so much for being such a great member of the Bigger Pockets community for so long. If you want to learn more from Chris, just go to BiggerPockets.com and you can see, Literally tens of thousands of things that he's contributed to our community for free. Chris, thanks again, man.

Starting point is 00:37:44 Hey, thank you for having me. See you soon. And thank you all so much for listening to this episode of the Bigger Pockets Podcast. We'll see you next time. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes, 10% below market value in the best markets

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BiggerPockets Real Estate Podcast - Is This the Most Beginner-Friendly Way to Start Investing?

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