New Member

[Debbie Thomas]

Hi, I'm Debbie from San Diego County, CA.  

I stumbled upon Bigger Pockets about a year ago and have since been listening to podcasts.  

Other than buying 3 homes for our own family I don't have experience in Real Estate, but I have had an interest in investing since noticing that retirement aged people who are doing well financially often own a substantial amount of real estate. 

As for a goal, I hope to discover that as I dig deeper in to Bigger Pockets.

[Clayton Mobley]

Hi @Debbie Thomas and Welcome to BP! Sounds like you're doing the best thing already, which is to just learn as much as possible. I know there's a ridiculous amount of info here, but it really is the best resource available. That being said, once you narrow down the type of investment that suits you, your finances, and your risk tolerance, the amount of information that applies to you will be greatly diminished, which makes this place a teensy bit less overwhelming.

I see that you are looking at MI (great outfit) so you must be interested in exploring turnkey. Full disclosure, I am the CEO of another turnkey outfit, Spartan Invest, similar to MI but in Birmingham, AL. We have worked with the folks over there many times - often our clients overlap as they build fully diversified portfolios. Chris and his team are all fantastic and highly knowledgeable, so you're off to a good start. 

If you're just dipping your toe into turnkey, however, I would encourage you to consider some questions that might help you decide if it's right for you and, if so, what type of turnkey investment will work best for your needs: 

What are your long-term financial goals? You say that you were interested investing because retirees that are well set up seem to own a lot of real estate. If you are looking to build your retirement nest-egg, I assume you are looking for long-term buy and hold opportunities. Is your end goal capital appreciation or passive rental income? Since you are busy, I'm guessing the passive aspect of turnkey appeals to you in particular, so are you comfortable giving control of property management to someone else? Do you want or need to be involved in decisions about repairs, tenant selection etc? 

If you like the idea of purely passive investment in turnkey and want to generate long term income to bulk up your retirement fund, what kind of properties will you look at? Just like any other type of RE investment, you can invest in many different property types with turnkey and your risk tolerance is a huge factor in determining which way you should go. If you are going purely for a high ROI, you're going to be drawn to lower-tier properties in less than great neighborhoods because turnkey outfits can buy them cheaply, meaning your upfront investment is lower and cash flow higher. However, these properties often carry their own set of difficulties, including deferred maintenance, tenancy issues, vacancy, lack of appreciation due to neighborhood, or Section 8 troubles with the local housing authority, so you should be ok with a higher risk investment if you look in these areas. If you like the idea of investing in very high end areas, you may find something that carries almost no risk and that has the possibility of appreciation, but will not generate a lot of cash flow. It's all about your priorities.

At Spartan, we settle right in the middle - focusing on capital preservation and reliable cash flow. We invest solely in solid B areas (if you have not yet researched the difference between A B C and D areas, here is a link to an older thread with some useful descriptions and photos, but note that the third photo looks more B, while second is C). Our clients are looking to invest in properties that they know will be occupied most of the year (our current 52-week rolling occupancy rate is 96.1%) and will not end up costing an arm and a leg in maintenance costs (our current maintenance rate is only 2.6% due to our comprehensive refurb process). They want consistent reliable cash flow month to month and any appreciation in the property 30 years down the line is just icing on the cake.

In the end, you can generate returns any number of ways, to varying degrees, it all depends on what you are comfortable with, what you can afford, and who you invest with. You'll see a lot of posts about markets and where the best real estate is this week, but the most important thing, once you've determined the type of investment that suits you best, is to find a provider that you trust. Any time you see a 'deal' or offer, ask for appraisals on comparable props, ask for hard numbers regarding occupancy and expenses, ask to see the ROI calc and have them explain what it includes (many outfits omit certain expenses to show inflated numbers).

Any time something is being sold, you have to be responsible for your own due diligence. If you break down the numbers and it all adds up, then you can be confident in the provider and the investment.  Of course, at Spartan, we make it a little easier by backing up everything we do with a 100% money back guarantee, but we still encourage our clients to do their own research, ask all the questions, and review spreadsheets with us to understand our calculations. Once trust is established and your first investment goes well, you'll be more confident in building a well rounded portfolio armed with the knowledge and experience you've gained.

I know that was just a wall of text, but I know as well as anyone else that this place can be a little daunting and sometimes it just helps for someone to lay out a little check list of things to consider, if only to give your research frenzy some focus for a day to two ;) 

If you have any questions about turnkey in general or what we do at Spartan, just give me a shout!

All the best,

Clayton