How To Do Stress Free Investing In Real Estate
When people think of stress free investing they often choose turnkey real estate investing. There are a lot of different perceptions as to what turnkey real estate really is. While there may be a variety of descriptions, for our purpose we consider a turnkey investment to contain the following...
What is True Turnkey Real Estate
- A property that is already a performing asset with revenue coming in
- Annual or perhaps multi-year lease in place
- Monthly income and expenses identified with a true pro-forma in place
- Property management in place
- Online accounting of your rent activity and income and expense accounting in place
What are true returns from TRUE Turnkey Real Estate Investing?
You may notice I like to use the term TRUE investing; the reason for this is I believe a TRUE investment encompasses all 5 wealth building principles. When an investment will give you the ability to gain:
- Income: from the Positive Cash Flow
- Deductions: from interest payments, repairs as well as depreciation saves you money at tax time
- Equity: when tenants essentially makes your house payment for you and reduces your principal balance you create equity buildup
- Appreciation: the 50 year national average is 6% per year
- Leverage: you can borrow up to 80% of the value of the property to gain 100% of the entire 5 wealth building principals
You will notice if you were to take the first letter of each of these 5 wealth building principles you would get IDEAL. Real estate is an ideal investment and when you gain all 5 wealth building principles within one turnkey investment, you have what I consider a TRUE Turnkey investment.
How to find Sustainable TRUE Turnkey investments
As great as TRUE Turnkey investing is, we indeed live in the real world. With an economic bubble in our rear view mirror, how do you prevent losing some or worse yet, all of it to another bubble or other economic factors?
While any investing does incur an element of risk, real estate is the preferred investment vehicle because unlike stocks or commodity investing, you do have your own personal controls over the investment. Let’s face it, no one cares more about your money that you do and you want as much control as possible.
You have all heard the expression “You make your money going in.” This of course refers to doing your initial diligence on evaluating the property before purchasing it and to know what your exit strategy will be. Buying sustainable investments goes far beyond this, however most people miss this most important part of identifying if a property is sustainable.
Sustainable investment diligence includes identifying markets poised for sustainable growth like:
- Population growth
- Job growth
- Job diversity
- Cities that have a 5, 10 or even 20 year vision plan to attract businesses
- Undervalued markets where you can purchase a median priced home for less than 1/3 of the median incomes
- Strong Rental demand
- Purchasing property within the path of progress (which direction is the city growing)
I trust you see a picture emerging here. Before you can expect to find sustainable property you first want to make sure you are investing in a market that is poised for growth. Within this growth you want to focus on the corner of the city where this growth is taking place as that part of the city will typically perform better.
Once you have identified this best investment market, you can then resume where most people start. Finding a great property that will provide you with your pre-identified criteria.
TRUE Turnkey investment property within this best market which provides the passive investor with a safe and sustainable True Turnkey investment. Your initial diligence is done. You can now let your property management run your little business while you sit on the beach sipping on your favorite beverage.
With the safe and sustained returns coming in you will want to repeat the process over and over so you can build the residual income to your desired level.
All done for you
We here at EBG understand that you may not have the time or desire to do all this diligence. Not to worry, we do this diligence every day and frankly we have become very good at it. Join our Buyers Club and you can see all these markets unfold before your very eyes. We will even share some great properties for you. With today’s modern technology you can even do this from the beach while sipping on those favorite beverages.