Thoughts on turnkey investing and the best locations

[Keith Brown]

I am just starting out in REI and would like to know your thoughts on turnkey investing PROs and CONs and what are the best areas to look at? Thanks in advance.

[Erik Hitzelberger]

@Natalie Allen - Thank you for the recommendation

@keith 

@Keith Brown I couldn't agree with @Chris Bodden more. All of your investment activity should support your personal, financial and lifestyle goals. I strongly suggest you figure out these goals prior to purchasing anything if you haven't done so already.  Here's a few sample questions to ask yourself...

• 1) Do I want to be a passive investor or an active investor
• 2) If active, do I have the time, knowledge and resources to do so
• 3) If not, how do I get them
• 4) Real estate offers the potential for wealth accumulation and/or income. Which (wealth, both, income) do I want/need
• 5) What is my exit strategy 

Once you have your goals laid out, your path forward will be relatively obvious. For example, if it is really important to you to get a strong equity position and you are willing to trade your time for this, than active investing may be your path.  Just remember that buying, rehabbing and managing homes is not investing; it is a job. Owning the home is the investing part.  If your time is more valuable because of existing family, lifestyle or work requirements, passive investing is the right choice.

Similarly, if you want to maximize short-term cash flow from a 'disposable' house (one that you will sell to another investor at or below the same price you paid), look for those types of houses, neighborhoods or markets.  Homes in nicer neighborhoods that produce consistent (albeit lower) cashflow, appreciate and are able to be left as a legacy will be in different neighborhoods and/or markets.

I'll finish with a comment on turnkey providers.  While there is a physical asset and a real estate transaction, you are really buying a rate of return that you want to meet or exceed on a consistent basis. Vacancy and turnover will really limit your success in this category. Make sure your provider is excellent at providing service to not only you as the investor, but also to your residents.

Good luck!!