Need guidance on investing strategy

[Zacharee Carmack]

I am active duty and have a decent amount in my TSP. Thinking of taking a loan out to fund a turn-key property. If the numbers held even close to what the company is putting out on the turnkey, I would only be out of pocket $100-$200 a month which ive already removed liabilities to free up cash. I know its not the best way to go as an investment but, would it be better to get a property now with a virtually interest free loan (interest is paid back into account) that will be paid back in 5 years. The larger the loan the less likely a rental is an option vs a flip.

[Chris Clothier]

Originally posted by @Zacharee Carmack:

I am active duty and have a decent amount in my TSP. Thinking of taking a loan out to fund a turn-key property. If the numbers held even close to what the company is putting out on the turnkey, I would only be out of pocket $100-$200 a month which ive already removed liabilities to free up cash. I know its not the best way to go as an investment but, would it be better to get a property now with a virtually interest free loan (interest is paid back into account) that will be paid back in 5 years. The larger the loan the less likely a rental is an option vs a flip.

I love the mindset you mentioned of doing something is better than doing nothing, but I would advise a bit of caution.  Don't be reckless and in a hurry.  There is time to be patient.  A solid investment can be found in any market and at any time, but it does require the discipline of making sure you understand the investment you're making and more importantly, you trust the people you are working with.

Turnkey is just a marketing term.  It doesn't mean a thing anymore when you go to compare and contrast opportunities.  You need to make sure that your expectations of a turnkey property are exactly what is delivered.  Unless I read something incorrectly, you stated that if the company you are speaking with comes close to their numbers, you would only lose $100-$200 monthly.  Did I read that correctly?  

There are a few reasons to lose money on an investment property, but most of them pertain to experienced investors. As a new investor, if your expectation is a minimal monthly loss, but the numbers on a piece of paper have to be spot on, I would again advise caution. I don't go as far as Douglas Spence does with notion that no vacancy, no Capex or maintenance statements are a reason to walk from an investment, but you should be asking questions of how and why. How is a company going to deliver on the numbers they show? Why does a company show certain vacancy, maintenance and Capex assumptions. Lastly, how specifically do they hit your expectations. You have to put a lot of faith into a company and reputations, proof of performance and specific systems or processes for consistently hitting expectations are all requirements in my opinion if a company wants to earn business.

Now, not everyone holds companies accountable and a lot of investors simply assume that everyone operates the same way.  I can assure you every company is not built the same and every property marketed as turnkey cannot be assumed as renovated or even managed the same way.  I would be careful before buying a property right off the bat, especially with a limited use program, that is going to produce a negative performance on day one and only if all of the numbers are spot on.

Be patient and keep asking questions.  And whenever you move forward and however that looks, I wish you all the best -