Epic Real Estate Investing - How to Evaluate and Invest in Turnkey Rental Properties (so you can retire early) | 1348

Starting point is 00:00:00 This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-a-eas.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Starting point is 00:00:27 Let's go. If you're cautious about real estate investing, you need to hear this. I'm going to guide you step by step through evaluating and investing in turnkey properties. Because you won't believe how easy it is for a busy professional like you to fast track your journey to financial freedom. By the time we're done here, you'll know the secrets of evaluating and investing in turnkey properties, specifically the unknown benefits, how to evaluate providers, and how to calculate

Starting point is 00:00:52 your returns. So let's turn that fear into confidence and action. Point number one, understanding what turnkey properties are and their benefits. It's turnkey properties are fully renovated homes or apartment buildings ready to rent out immediately. The concept is to turn the key and the engine starts. They often come with property management services too. Aspiring real estate investors look at turnkey properties as a hassle-free way to invest in real estate, especially when they lack the time, the expertise, or the desire to manage the renovations and tenant issues.

Starting point is 00:01:22 Minimal effort from the investor is required, allowing them to focus on building their portfolio to generate passive income, minimize tax liability and grow their wealth. The first three things to do here is research. You want to look for properties marketed as turnkey by reputable real estate companies. Focus on markets with strong rental demand. And often those are going to be found in the Midwest and in the South, such as Kansas City, Birmingham, St. Louis, and Indianapolis. A Google search of turnkey real estate providers. That's a good place to start. Then you want to verify. Ensure the properties being offered have been fully renovated and meet all local housing codes. Don't just rely on the company's word. Talk to people who have used their services, join real estate

Starting point is 00:02:03 forms, and attend RIA meetings, and ask for referrals. Then property management, you want to confirm that a reliable property management company is in place to handle tenant relations and maintenance. Good management ensures that your investment remains hassle-free and profitable. And if you happen to find yourself at any time wanting to go faster or get some one-on-one help, go to R-EIACE.com, answer a few questions, and then pick a time for us to hop on the phone and we'll brainstorm some ideas for the next steps. Point number two, evaluating turnkey providers and their offerings. So if you want to avoid the biggest mistake in turnkey real estate investing,

Starting point is 00:02:37 here's how choosing the right turnkey provider can make or break your investment. So let's explore the secrets to finding a reliable provider and ensuring that you get top-notch properties and professional management. Stick around and we'll finish this up with how to protect your investment and maximize returns. Now, turnkey providers are companies that sell turnkey properties. and often provide additional services like property management. Additionally, they'll handle the renovation, the tenant placement,

Starting point is 00:03:04 and the ongoing management of the property. Choosing a reliable turnkey provider ensures that you get high-quality property and professional management, which is crucial for the success of your investment. A reputable provider is key to minimizing the risks and maximizing the returns by taking care of the complexities involved in property management. You don't want to do this stuff, but here are three things to do. One, you want to start with your research. look for turnkey providers with a strong track record.

Starting point is 00:03:30 Read the reviews, read their testimonials from other investors, and focus on companies with extensive experience and a good reputation in the market. And then there are references. And then ask the providers for references and speak directly with other investors who have worked with them. Gain insights into their experiences and the quality of the properties and the efficiency of the management services. And then visit the provider's properties to inspect their quality and management firsthand. and evaluate the condition of the properties, the neighborhood, and how well they are maintained. This step, it helps ensure that the provider delivers what it promises.

Starting point is 00:04:02 And although it's important, in-person visits are not always practical. Realistically, you may not visit every property, and that's okay. For example, I've only seen in person a handful of the 53 properties that I currently own. The key here is to seriously consider this step because it's a big investment, but understand that it's not the most critical. From my experience, there's often more risk in the people you choose to work with. the provider than in the properties themselves. So trust your gut, but verify when your instincts tell you to do so. If you're ready to take the next step in researching turnkey providers, I highly recommend downloading the investor package at cashflow savvy. You can get it at cashflow savvy.com.

Starting point is 00:04:40 Point three, do you want to know if your real estate investment will actually pay off? Let's break it down. Understanding the true cost and potential returns of turnkey investments, it's crucial. So let's now run through how to accurately calculate expenses and project rental income so you can gauge the profitability and viability of your investments. And I even have a free tool that I'm going to give you to do this. But calculating the cost and potential returns involves understanding all expenses related to the property and projecting the rental income. So this analysis that helps you gauge the profitability and viability of the investment. Accurate calculations are crucial to determining whether the investment will be profitable and align with your financial

Starting point is 00:05:18 goals. These calculations, they help you avoid unexpected expenses and ensure that the returns justify the investment. So here's how it's done. Start with all initial costs, including the purchase price, closing costs, inspection fees, and any initial repairs or renovations. Then you want to account for ongoing expenses such as property management fees, maintenance costs, insurance premiums, property taxes, and any homeowner association HOA type fees. And then you want to research the market rental rates and occupancy rates for similar properties in the area. You'll use this data to estimate your potential rental income. Now, quick note here. If your new tool, an area, I'd recommend picking up the phone and dialing a few different property managers to ask

Starting point is 00:05:58 about rental and occupancy rates. Because what you're going to find online will be very general. And that's typically enough when you're evaluating a property's purchase price. However, when evaluating a rental income, being off by just 100 bucks a month, that can throw off your annual return by up to 3%. So you want to take your time here and get the most accurate number you can get. Now, calculate net operating income, your NOI. You want to use this formula. NOI equals rental income minus operating expenses. And a part of those expenses is your debt service. This is going to give you the net income after accounting for all operating costs and mortgage payment, if any. Now determine your return on investment, your ROI. So you'll calculate the

Starting point is 00:06:38 ROI using this formula. RUI equals NOI divided by total investment. You take that number and multiply it by 100. Now, if math isn't your thing, grab a copy of my deal math calculator where all you have to do is just punch the basic numbers and it does. the math for you. Now, I made it really easy and uploaded it for you at deal math.net. But I'll go ahead and I'll run through an actual example of math for you here so you can see how it works. Let's assume this conservative scenario. We'll start with this property, valued at $300,000. We'll purchase it with a 20% down payment of $60,000. We'll borrow the balance of $240,000 at 7%. And assume that a monthly income of $3,000. That's what you're receiving in rent. So from the $3,000 month we receive from our

Starting point is 00:07:21 tenant will have to pay some property expenses. We have to pay the taxes, the insurance, the maintenance, the vacancy, and the property management. Now, the 350 units that I've owned over the years, those expenses average out to about 40% of the rent that we collect. So what we're going to do is we're going to deduct that as our expenses by multiplying our monthly rent by 60%. And that leaves us with $1,800. With that, we have to pay the mortgage payment on the property, $1597. And that leaves us with a monthly cash flow of $203 per month. We'll now multiply that by 12 to give us our annual cash flow. And then also divide that number by the amount of money that we invested in the property,

Starting point is 00:08:01 our down payment of $60,000. Now multiply that one by $100. And that gives us a 4% return on investment. And the return, it gets way better than this. But for now, you understand what turnkey properties are in the benefits that they offer. You learned how to find and evaluate reputable turn. key providers and you know how to calculate the costs and potential returns of investing intern key properties. I'll see you next time. Take care. And that wraps up the epic show. If you found

Starting point is 00:08:30 this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I, health, peace, blessings and success to you. I'm Matt Terrio. Living the dream. Yeah, we got the cash flow. You didn't know home for us, we got the cashmow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.

Epic Real Estate Investing - How to Evaluate and Invest in Turnkey Rental Properties (so you can retire early) | 1348

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