How to invest in a turn-key property

Your first turn-key investment will probably be the biggest investment you will ever make. Saying this, relatively new investors may be hesitant to move forward with a purchase they maybe scared, or lack the knowledge to proceed. Done correctly, investing in real estate can lead to a very lucrative career.

Here are some easy steps to help you with this investment

1st Line up Financing

Pre-Approval is a huge step & one that all buyers need to do. Get your financing lined up. If you are financing the property through a bank or mortgage broker, get pre-approved. The bank or mortgage broker will look at a couple of things, your credit score, income & down payment. Investment properties have stricter guidelines and require an additional down payment amount. Many investors also seek financing through private or hard money lenders. These lenders do not follow traditional lender guidelines, instead they look at the physical property and potential returns it can generate. Going this route eliminates most of the red tape associated with lender financing, but comes with increased fees and higher rates. In return, you have the ability to close quicker and can often close more deals throughout the course of a year. If you are buying cash, provide a POF from your bank. Either way you go, you need to have financing in place before you do anything else.

2nd Find the Right Turn-Key Provider

There are many turn-key providers out there, determine what market city you wish to invest in. The key for an investor is to find one that knows what an investor wants. A property that may be great for you to live in, however it may not be the best fit for an investment. A good turn-key provider is responsive and knows that working with you may require additional work. Ask them questions until you are confident that they are a good fit for what you are trying to do.

3rd Run the Numbers

With a primary residence, you need to look at the PITI (principal, interest, taxes and insurance) to see if you can afford the property. PITI is still relevant with investment properties, but there are a slew of additional numbers you need to know. Depending on if you are looking to use the property for a rental or rehab, you need to know all monthly expenses, carrying costs, materials, labor, and much more. The numbers are the backbone of every deal. The numbers are more important than the physical property. You need to know that the numbers you are using are reliable, accurate and up to date. Buying a property with different numbers than you project will completely impact your bottom line. Numbers hold the key to every investment purchase.

4th Make an Offer

Not every deal you pursue will be perfect. There will be times when things look good, but you still remain on the fence. The only properties you will purchase are the ones you make an offer on. If the numbers make sense and the rest of the due diligence checks out, you need to take a leap of faith. Many new investors think that their lowball offer will get accepted. Don’t just make an offer, make the right offer. Most turn-key providers will sell direct to the investors so they mark the prices lower than market value. There may be some negotiating space, if you are buying multiple properties. Your goal is to get the property under contract, and not just submit an offer. The real estate business is a numbers game. The more offers you make the more properties you will own.

5th Insurance/Appraisal

Once your offer is accepted, you have a small window to get the house inspected. The inspection is done for your benefit. The inspector will inform you of any flaws and potential problems with the property. If you are comfortable enough with them, you can move forward. The appraisal, on the other hand, is a given if you use bank financing. This is done for them to verify the value of the property. You can still proceed if the value is less than the purchase price, however your lender may require you to bring a little more money as down payment the purchase price or bring the difference to closing.

**According to Banking My Way new Home Appraisals Rules Stir Industry Backlash see article

http://www.bankingmyway.com/real-estate/new-home-appraisal-rules-stir-industry-backlash

6. Close

Closing a real estate transaction is much more about the attorneys or title company than you. Once things get to closing, all you need to do is show up with a check and be ready to sign. You will know a few days in advance how much you need to bring, where and when you need to show up. You will sign dozens of papers, but when you get through it you are done and can walk away with the keys. Then the real fun starts.

The purchase process may seem overwhelming, but it doesn’t need to be. Follow these steps and you will be well on your way to getting your first property in no time.

For properties in Kansas City, please contact [email protected], www.usreeb.com.

US Real Estate Equity Builder your direct source for turn-key properties, avoid the extra fees & save money by buying direct.