There is nothing more exhilarating for me when speaking with a new investor than the moment when they get it. The real estate bug has bitten them. They understand the immediate and life-changing power of real estate. Then, they start to peel back the layers of what it means to invest through the buying, renovating, leasing, and holding real estate long-term.
It starts with just one house. But down the road, personal wealth and cash flow will grow over time. This might create an opportunity for their spouse to stay home from work. It might pay for their kid’s college. It could help build a net worth into the millions, reduce their taxes, and pay down the principal of the mortgages—with someone else paying them!
Not to mention, all the while they’ve been helping others have a great place to call home.
All of these are powerful and wonderful reasons to own real estate. But what if you’re not interested in learning how to go through the entire acquisition process, how to renovate a house, and how to manage the properties yourself? In this case, turnkey real estate investing might be an awesome option.
This past week, we’ve spoken with a number of clients who had this exact issue. They wanted to talk through what it looked like to not just own 2-3 properties, but dozens of doors and millions of dollars in assets. This is 100 percent achievable and scalable. Let’s dive into how to make it possible.
The Big Question: What Does it Look Like When You’re Done?
This massively important question is consistently overlooked. It’s so easy to obsess about buying more homes or having a certain net worth. Sometimes it might be analysis paralysis. You might do all the work and research over and over—but never pulling the trigger.
I have been challenging myself lately to really define what my income and net worth goals actually are—and WHY I want them to be there. Otherwise, the natural tendency is to look at the next thing, instead of reaching and completing the goal.
How many homes do you want to own? What are those homes producing for you?
Start with the big picture. Really think about what this portfolio does for you. It must serve to help you solve the problem or desire you have laid out. If it’s for your spouse to be able to quit their job, what is the cash flow needed to replace their income?
Make sure the outcome is clear on what you are looking to solve and by what means you will solve it. For example, “I want to own 30 homes, paid down to under 50% loan-to-value (LTV) and cash flow of $10K consistently every month.
Common Issues Investors Confront When Scaling a Turnkey Portfolio
“It’s hard to finance more than 10 properties.”
This is a common misconception about funding your investment properties. Yes, there is a limit of 10 Fannie Mae mortgages you get with the best…