This past week, the Turnkey Property Group team went to our annual real estate conference in Las Vegas. This year was especially important for us because of all of the media hype about economic uncertainty. The sessions that resonated the most with us were, How to Grow Your Personal Portfolio with Turnkey Rental Properties (somewhat bias opinion based on what we do), and the 2019 Economic Forecast.
As we approach 2019, it is important for us to keep up to date with our return estimates. Fortunately, at an event that was not Turnkey specific, the trend was that B class rental properties show no signs of being a poor investment in the near future.
Dr. Mark Dotzour, economics guru with ties to Texas A&M and much respect in the economic analytics community, event went as far as to say that, even though he said it isn't for everybody, 70% of his entire investment portfolio is comprised of B class rental property investments. During his presentation, he cited a TIAA study that reported B Class rental property as a distinct asset class, in strong markets with low vacancies, tend to outperform stocks, as long as you have a healthy debt balance. This not only gave us more confidence in our model, but made even more excited to provide people with this class of investment.
We cross-referenced this information with the other session mentioned above to make sure we could apply what we learned to our business. In the turnkey session, the speaker enthusiastically encouraged the turnkey rental approach, and brought up key factors to look for when choosing the company:
1. Property Management:
Are they actively seeking at least 2 year lease commitments?
Do they have policies in place to make more money for renewing a lease instead of re-marketing the lease?
Are they easy to communicate with?
What is their education level?
2. Cash Flow:
Don't focus on hitting home run cash flow numbers in the beginning.
If it is a renovated property in a market with job growth and added value, and net cash flows over $100/month, this is still a good investment. Anything above that is a solid deal.
The most important factor is building the portfolio and being smart with leveraging your debt.
3. Renovation Standard:
-Does the company have a standard approach to renovation? Good companies should have everything standardized down to the paint color.
-Do they replace items that lead to deferred maintenance cost? They should replace items with low life expectancy.
-Do they allow for 3rd party inspections? If they don't, red flag
Turnkey Property Group's Perspective:
We see too many new investors getting bogged down with the minutia and it prevents them from doing the most important thing: Investing
Every investment has risk involved, but if you trust the people you have been speaking with, their numbers are in line with yours, and it is POSITIVELY CASH FLOWING IN YOUR PRICE RANGE AND IN A GOOD MARKET, go for it.