I have been working with turnkey buyers for the past 6 years and I have come to find that there are some common mistakes that many investors make when they start looking at turnkey properties. Some of the mistakes cost investors money. Some of the mistakes cost investors time. All of the mistakes carry little lessons with them that can easily help an investor avoid making the same mistakes twice! Now, if we would all only listen…
History Repeating Itself
Looking back over the last few years, there is one thing we all can agree on. This has been one heck of a ride for the real estate market. What I find really interesting though is that even with such a wild ride, there are still lists out there of things you need to avoid. Oddly enough, there are still many investors who are choosing to not learn from history. They are still making some poor decisions and many are finding it easier to fool themselves than to exercise a little more patience. Although any list is going to be subjective and without a doubt, incomplete, this list at least gives a starting point for investors looking at turnkey investments.
Money Burning A Hole In Your Pocket?
I guess I am at a point where I should not be surprised anymore by how quickly some investors want to get moving. It is the exact opposite of a phrase that has been around for a number of years describing investors who love research - Paralysis by Analysis! I wish I were more witty and could come up with a quick alliteration to describe the opposite problem.
Too many investors continue to jump into the real estate market with no understanding of why they are investing in the first place and to make matters worse, they have no clear plan for how to manage their future investing. Not manage their portfolio, but to manage themselves and their plan for investing going forward. I speak to investors on a weekly basis who are in need of assistance with a "problem" house they have bought. Usually, they bought the house because the marketing looked slick, the picture of the house was great and the person on the other end of the line promised to handle everything. Eight hours later they were under contract and after a couple of short weeks they were in the game! Of course, they soon find out that the property is not rehabbed to a high standard, the property has a hard time keeping tenants and that company who told you there would handle everything is having a hard time finding their phone to answer or call you back.
The warning signs about bogus companies have been out there for years, but it is still up to the investor to do their own due diligence. Proper due diligence has more to do with effort and time than it does with where you look or what you find. A real estate investor purchasing a turnkey investment property today needs to understand that the market is changing in many cities around the country, but that does not mean you have to invest Today to get a good deal. Beginning your research and gathering the needed information to feel comfortable is an essential step, but that step leads to the next step and to the next step and eventually to purchasing a property. If someone tries to tell you that all the good deals will be gone before you get around to buying, you need to keep looking. In order for an investor to have a good and healthy turnkey investing experience, they need to have a solid understanding of who they are doing business with.
- How long have they been in business?
- What makes them a strong choice as a company?
- What are the factors that make them stand out among so many choices for investors?
These are all very important questions for an investor to ask and feel comfortable with the answers long before every buying a property.