All Forum Posts by: Hank Keller

@Michael Babin I have 9 in Indy and 1 in Charlotte all funded through my SDIRA

Hi @Joan-Marie Pagan! My experience has been that even if there is a shift in housing, even if it is as bad as the 2008 crash, that while house values may drop (and will eventually come back), people will still need to rent and as long as you are in a good market, and your properties are managed by a good team, you should continue to make cash flow. 

A good market for me includes at least 1Million population with low unemployment, good jobs, cheap houses and business friendly and fiscally responsible city / state (check their credit rating). Using these attributes will minimize risk.

A good property management team will screen tenants for the credit and job history which will minimize the risk of the example you pointed out. A business friendly city will reduce the risk of squatting. A fiscally sound city will have cash reserves which helps with vitalization projects and encouraging jobs into the city.

Taking the first step is the hardest. Let me know how i can help!

Hank

@Account Closed - I've used the turnkey strategy purchasing through self directed IRA's to purchase 10 properties over the past six years and grow my retirement. Similar to you, i was in a full time job and just didn't have the time. Now that i've Been able to quit my job and focus on real estate, those 10 continue to buy more on their own about once a year.

once you find a good team, you’ll be golden..

Even though i live just an hour north of Columbus I haven’t been following how well the city is going. Driving through i see some big pockets of renewal and growth, others, not so much. What’s the city economy like right now? Is it burdened with debt? Are they putting money into any specific neighborhoods or are they struggling economically?

Hi @Craig Williams - lots of good suggestions above! I’ve been investing in out of state turnkeys over the past six years and now use the following as a Guideline...

Four things to look for in a market

1- Population over a million and good growth rate. This ensures that there are plenty of available houses (for example: with an approximate 3% foreclosure rate, there are about 3000 houses at auction each month), renters to choose from and that the city is growing rather than stagnate or losing population. Good markets didn't drop during the 2008 crash...

2- Cheap Houses. Make sure you get at least the 1% rule meaning $1000 of rent for each $100k of purchase. This should also ensure youre getting about 8% return on your money.

3- Business Friendly. Look at how easy it is to set up an LLC, the costs of maintaining the business and the cost and timing of evicting a tenant. Also look for states and cities that have a good credit rating which ensures that they will be pouring money into revitalization which increases jobs, growth, appreciation and rents.

4- Jobs and Credit worthy. Look for cities where there is a good mix of manufacturing, warehousing and overall good job market with low unemployment. See what kind of reserves the city and or State has. It also ensures that taxes won't go up in the event that a city starts going bankrupt. (http://www.zerohedge.com/news/2017-10-05/these-two-charts-depict-which-cities-will-file-bankruptcy-next) 

Hi @Marcus Linehan - I’ve been using a TK in Indianapolis for the past six years and now have 10 properties with them. Here’s some of my lessons learned:

What to look for in a Turnkey Company

1. Vertical Integration. Make sure they have construction, property management and brokerage under the same roof. TK companies that farm out will focus on their profit instead of the investors and cut corners.

2. Systems. Look at their systems. How do they get wholesale deals, how do they manage crews, how do they screen tenants. Make sure they use a CRM system to track all the details and your profits. Good TK companies will send investors a monthly report showing not just the rent, but their YTD returns

3. Company Structure and History. Find out how long they've been in business, their Better Business Bureau rating and how they've segregated work. How many jobs does each person have? If they are short on resources, customer service will suffer. Good companies will implement systems to make their employees more efficient. The best of TK companies will have dedicated customer service so the investor has 1 point of contact.

4. Visit the city and the company. The best TK companies will welcome you to come visit them, meet their team, show you their systems and build quality. Ask if they have one or more local neighborhood experts. Appreciation happens in the neighborhoods, not the whole city. Does the company know where the next big market will be? Good Turnkey companies will be in the know with local government and city officials and understand what, where and how much will be invested next.

5. Begin with the end in mind: How will you sell your property. The best TK companies will make it easy to sell your house when the time comes. They not only have their own brokerage, but they have access to Hedgefunds, other investors, or even the ability to make your property into an AirBnb.

6. Relationship. You've got to like working with the company. If you dont get a good vibe with the owner and employees, dont buy from them. Nothing worse than buying , then having a small issue turn into a big issue because you dont get along with the team.

7. Are there any other perks that come with the owner or company? Do they allow you in on flips? Do they have connections for reduced insurance, asset protection or other investment options? People who have 7 or 8 figure mindsets attract very successful people that you can learn from. Don’t underestimate this as an advantage.

Hope that helps in your search!

@Mack Owens - i think its always better to learn / educate yourself first. I started with local rentals doing the work myself and managing while having a full time job. After a year of experience and starting to expand my local portfolio, i bought a few more but then used a property manager. Last in my strategy was to go to turn keys. 

I’m now trying AirBnB and commercial...

@Rahul Sunkavalli I’ll give you my example from an real estate investor perspective...

I started investing in real estate in 2010 and at the time had a 401k which lost almost 50% two years prior. As i educated myself on the advantages of real estate, i started moving monies into a self directed IRA and purchased rentals from that. The model i used is to start was to purchase 5 $60k houses which generate about $2500 net monthly. Reinvest that $ into another house as soon as it is enough to purchase another. In 15 years, the initial investment will be worth $1.9M, monthly income will be $11k/month and i'll Have 23 houses. If i were to extend that out to 30 years it would Be $44k/month, $15M in value and almost 100 houses (dont think i'll Make it 30 years though 😀) the only thing better would be to move them to Roth's which i plan to do over the next 5 years paying for the tax bill each time with a flip.

What i like about real estate is that even when the market has a significant drop, even if the value of the house drops, the rent will continue to come in still creating cash flow. If you buy with cash, you can also get the additional advantage of tax deductions for depreciation and rehab expenses

The one thing i like best about what i'm Doing is that i'm Not managing the property allowing a third party to find the houses, rehab them and manage the tenants. It's completely hands off (which is required for real estate in IRA's) allowing me to concentrate on additional active income...

Hi @Christopher Africa - there’s at least a couple TK companies in Indy if youre looking to go that route. I’ve been investing in Indy for a while and can provide some references from that standpoint. 

Still a great city to invest in; Good C/B class properties for $60-$90k, cheap to set up an LLC and easy to evict, Lots of people and still lots of jobs.

I’ve been successful with oos TK investing in Indianapolis and Charlotte for the past six years and now have 10 properties with the same company. Complete your due diligence by going to see the operation, view some properties and the neighborhoods their in...