Thinking about investing in turnkey properties? Make sure you read this article which reveals the 5 secret keys to building a passive cash flow with turnkey property – which works here in the 64114 zip code, and elsewhere.
Most people work their whole lives and then retire at 65 with little to show for it. But turnkey property investors know that building a passive cash flow portfolio will allow them to retire early and very comfortably. If you’re thinking about creating your own real estate portfolio, here are 5 keys to building a passive cash flow with turnkey property.
#1. Find the capital
Turnkey properties are often much more affordable than what you might pay for a house that you want to live in. But you’ll still need the capital, of course. There are many sources you can use:
- Many investors save up cash on the side from their day job and set it aside until they build up enough for a down payment and reserves and then go to a local bank or mortgage company to buy their first property. Others save up the cash to buy the entire house outright. This is a great strategy as you start as you are doing it with your available cash and credit to generate income now. The cash flow from these properties can be built up over time to build a cash flow that can replace your day job income and allow you to leave that day job.
- Others will use the cash above strategy, but work to buy a fixer upper so they build their cash flow faster. If you subscribe to the BRRRR Strategy talked about on BiggerPockets.com you will see that you first want to locate a fixer upper that comes in at a discount and Buy It. Next you want to Renovate It. Next Rent It Out. After about 6 months or so you can Refinance It and get your initial capital back. The Repeat the Process and go buy your next property.
- Other – really smart investors will take a look at their IRA or 401(k) that they have built up from their day job then convert it to a Self Directed Account and use that to buy turn key properties or to work the BRRRR Strategy (make sure you are using 3rd party contractors and property managers) to acquire cash flowing rentals in their retirement account.
- Private Partners are another way to go. You might locate an acquaintance that would be willing to fund you short term for the Buy – Renovate – Rent parts and then you could then refinance those folks out of the strategy. You might also find private partners who would be willing to partner with you long term. Alternatively you might find a experienced landlord with properties he would rather seller finance to you.
- Then you also have the Creative Strategies where the seller of the property participates with you in the deal in some way by seller financing or letting you take over his loan subject to, or we have even seen people trade houses.
#2. Acquire one property
For some investors, it’s a big leap to buy a large portfolio of turnkey real estate. It might be a good step for some but if you find it intimidating then we suggest starting with one property. Put it into your portfolio and see the benefits, then get another one and another one. Many of our clients acquire several – some get them all at once and some invest in them over time. If you are just getting started, we highly recommend starting with just one property. Possibly a duplex or a 4 plex that would allow you to live in one unit and rent out the rest and grow strategically from therer.
#3. Get comfortable and see the process
Once you see the process of how it works, you’ll see how simple it is. Plus, once the cash flow starts coming in, you’ll be really excited and want to invest more. Some people spend some of their cash flow (if it’s not in an IRA) and then save the rest to invest in another property.
#4. Find more capital
Once you feel good about the process and how easy it is to own your first turnkey property and to have all that cash flow coming in, we think you’ll want to do more! So then you can go out and start finding other ways to get capital – if you didn’t before, maybe now get a Self-Directed IRA and put some turnkey properties in there, for example. Or perhaps take out a loan to fund more.
#5. Partner with others
A more advanced strategy would be to even partner with others. This can work in a few different ways but you might think of it like this: the other person puts up some of the money and you put up some of the money and/or your own connections to a turnkey real estate company like us, and then you split the cash flow.
Turnkey cash flowing real estate can be a great addition to your portfolio, and these 5 keys to building a passive cash flow with turnkey property will help you build a cash flowing portfolio.