Can you truly get ahead by buying turn-key homes

[Christina Tkacs]

I want to write the title in quotes because it's not like I had much of a strategy to start with. I bought a duplex and a turn-key SFH at a normal price for houses in the area. Both were conventional loans with 25% down because they're investment properties. All three doors are rented at the high end of rents in the area.

I can't keep paying 25% down on homes - it's cost me nearly $160,000 cash so far and of course that money is all tied up until it makes sense to refinance. 

Am I missing something, or is buying a home at appraised value an effective strategy?  It's killing my savings account.  25% down is a lot of cash.  I want to buy another house as a short-term rental, but I don't want to tie up another $80,000 in cash - I'm not that rich.

(I'm looking to BRRR at some point as soon as I can catch the deal fast enough)

[Steve Vaughan]

Originally posted by @Christina Tkacs:

Am I missing something, or is buying a home at appraised value an effective strategy? 

 Turkey is a great place to start says the TK provider and the property manager.  LOL   Barbers also recommend hair cuts.

Paying retail / appraised value makes you a buyer.  Investor's capture equity at the buy.

Paying retail for a turnkey product is fine for those that realize the trade-off.  You are eating at a restaurant. It's all prepared for you.  No planning. No effort. 

Equity capture requires more work.Now eating means you have to grow it or go to the store, plan it, prepare it and clean up.   

Which strategy is more effective depends on the person.  I don't have a job and haven't for a long time because I spent the time growing my food early on while others went to the restaurant. It wasn't an accident.  

Someone with a demanding job and or busy family life maybe can't do it any other way. Just know that paying retail will keep you needing that job, like it or not. It's the equity capture that moves the needle enough to matter.

Down payments won't change much, but having equity sooner will accelerate the velocity of your dry powder.