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Updated over 6 years ago on . Most recent reply

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Srini Ramkumar
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Out of state turnkeys

Srini Ramkumar
Posted

I am starting to read up on real estate investment and quickly realized that investing close to where I stay(California) is not possible as 1% rule does not really apply here. So I have been reading up on out of state investments and turnkey comes up as a good way to achieve this. But the convenience of turnkeys sounds too good to be true - they buy rehab, find tenant and maintain the property. I wanted to get some information on turnkey investment and what are the things to watch out for. Are there any bad experiences out there and ways to overcome it? 

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James Wise#4 All Forums Contributor
  • Real Estate Broker
  • Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
19,537
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28,441
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James Wise#4 All Forums Contributor
  • Real Estate Broker
  • Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH
Replied
Originally posted by @Srini Ramkumar:

I am starting to read up on real estate investment and quickly realized that investing close to where I stay(California) is not possible as 1% rule does not really apply here. So I have been reading up on out of state investments and turnkey comes up as a good way to achieve this. But the convenience of turnkeys sounds too good to be true - they buy rehab, find tenant and maintain the property. I wanted to get some information on turnkey investment and what are the things to watch out for. Are there any bad experiences out there and ways to overcome it? 

 Below are some more best practices for out of state investors.

  • Don't buy in the roughest neighborhood in the urban core. Pick a solid B-Class suburban area. Perhaps a nice 1950's built bungalow.
  • Always hire a 3rd party property inspector to give you an unbiased feel for the home. The reports are 40-90 pages long and go through the entire house in great detail.
  • Get an appraisal. If your using financing the bank requires this. This is good. The bank isn't going to let you blow their money. They have more skin in the game then you do.
  • Make sure you get clear title. If using a lender this is a non issue. They will make you do this. It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.
  • Make sure your property manager is a licensed real estate brokerage.
  • Understand you can not eliminate all risk, only mitigate it. If you are risk adverse real estate, (especially out of state) is not for you.

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