Newbie, living and working overseas. Is turnkey my best option?

Question

Hey everyone,

I'm brand new to this forum and to discussions on real estate in general. I'm in my early thirties and have done ok saving and investing in the markets. I have used much of my money to travel the world thus far. I'm interested in allocating a bit more of my income toward investing. For diversification, I'd like to dedicate some energy, time, training, money into real estate. However, given how busy my life is, I think it's only likely that I will be a passive investor. I am only in the states for about 6 weeks each year (and even that is often shortened) and I have so many other projects going, that it would be difficult for me to be as hands-on as so many of you are.

So, is turnkey really the best option for me? I don't have too much to work with yet, but could definitely begin investing on a first estate within a couple months.

And if it is my best option while overseas, do you have any recommendations for reputable turnkey companies in markets in Idaho/Montana? (Or maybe you can show me the flaw in targeting these regions as they might prove too difficult to general a cash flow).

Thanks in advance. And hello from Belarus! I am a Washingtonian at heart and I return to northern Washington (just north of Seattle) every summer if I can help it.

Henry J. · Answer

@Josh Smalley

Welcome to BP!  Although I've been on BP couple of years but I don't have enough RE experience to contribute much on for forums.  I'm just sharing my learning and experience here.

I bought a few out of state properties (and some of which are turnkey) in the last 5 years.  I can't say that they are truly passive like buying stocks or mutual funds because you will have repairs, tenant turnover/placement, and other issues which a great property manager should take care for you.  You will also need to track your rental related expenses / income for tax reporting purpose.  Depending on where you purchase the property, you may also need to deal with unreasonable property tax assessment and find ways to get reassessment done in time to lower your property tax.

That said, like @James Wachob said, the key is to have a great team that you vet and trust to handle your properties while you're thousand of miles away.

Other than buying rentals, there are other options to invest in RE like what @Larry Fried wrote in his blog, or invest in REIT (Vanguard mutual fund or other ETF's), private money (loan people and receive interest like a bank), notes or note funds, crowdfunding sites, JV apartment deals and other alternatives that I don't know about.  Know what you are looking for, what you can't handle, why you want to invest, and compare some of these options to understand the pros / cons (liquidity, control, fees, to name a few) before you decide.

Good luck figuring it out.

Henry

Chris Clothier · Answer

@Josh Smalley, If you are wanting to invest close to what you know in the Northwest and Idaho is a market you would consider, then @Jonna Weber is an excellent resource to connect with.  She was very upfront in that she does not have the TK format set up, but you would be hard pressed to find someone who will work as hard for you and knows the market any better.  That is as much a part of the best definition of TK as anything else!

Good luck to you -

Jonna Weber · Answer

@Josh Smalley - Idaho has not quite embraced the turn key concept here like a company like Memphis Invest has...but we have great strategic partners in place here in Boise that can take care of you from lenders to property managers.  Investing from afar can present challenges, but it is doable!   No matter where you choose....always still take the time to be thorough in your vetting of your potential partners and of course in your research of the numbers.   Good real estate can be fairly passive after it is in place if done right, but nothing takes some initial research upfront.  All the best to you!

Josh Smalley · Answer

Tom,

Thanks. The BP postcasts are so many and the threads are so voluminous that it can be difficult, even with specific searches, to find the material of interest. Thanks for the links!

Tom Ott · Answer

Investing overseas can be difficult and confusing. Mainly due to time difference and how accessible you are! A Turnkey (ideally) would have everything done and be managed by the company that did the renovations. This way it is all taken care of under one roof and it is 100% passive for you.

I would look at:

How to Find the Right Turnkey Real Estate Investment Company for You

and

The Best Types of Markets for Profitable Turnkey Properties

Good luck!

Ibn Abney · Answer

@Josh Smalley I agree with @Henry J. Real Estate ownership is not "passive" as much as others will lead you to believe.

I would consider: B2B lending, REITs, and/or seeking financing opportunities for syndicated deals.

Also, why not buy property overseas? What country do you travel to mostly? My family has some land in Belize which is doing well (Coffee farm, Small residential homes, vacation rentals).

Good Luck!

Josh Smalley · Answer

Thank you. Every tip counts for someone as new as me. It makes all the sense in the world given how passive I will need to be just by necessity.

James Wachob · Answer

@Josh Smalley welcome to the forum! The key is to find a great team! Ideally you would find a company that has everything under one roof. Acquisitions team, renovation crews (fully licensed and insured), Property Management, and a Real Estate Investment Brokerage in case you ever decide to sell.

By teaming up with a solid firm you can mitigate your risk and have some "boots on the ground" that have your best interest in mind.

Larry Fried · Answer

@Josh Smalley Hi and welcome to BP!  I lived in the Seattle area for about 21 years, so understand your wanting to return.  Whether turnkey is your best option is ultimately up to any number of factors.  It can be one of the easiest and most passive ways into buy and hold investing from a distance, but it is not the only way.  I dont' know that you will be able to find anything cash flowing in Montana or Idaho, nor that there are even existing turnkey companies in those states.

As someone who has done turnkey investing at a distance in the past, and have helped other investors do the same, I am now focused on something that is even more passive, and more easily diversified for risk for my buy and hold investments.  I invest in portfolios of 10 SFR (and one apt. complex so far) that are co-owned by the managers.  I have written about my investments quite extensively in a series of blogs starting with

Have I Found the Holy Grail of Passive Real Estate Investing?

Tom Ott · Answer

Happy to help! best of luck to you!

Newbie, living and working overseas. Is turnkey my best option?

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