The fundamentals of turnkey real estate investing are simple: buy low, find a tenant and rent out the house, enjoy the cash flow.
But that’s easier said than done.
How do you buy low? Where do you find the properties? Where do you find the tenant? How do you manage the rental?
So let’s start…
The most important questions you need to answer is: where should I invest?
Most investors, who are just getting started in real estate, look first in their own market. They look in their own neighborhood or in their own city or state. Some even acquire properties there.
But most discover that it’s a life sentence – when you acquire properties within driving distance, you end up doing all the work yourself and getting stuck managing the property and chasing after the tenant.
Not only that but people soon realize that their market might not be ideal – perhaps it’s hard to find affordably priced houses, or maybe it’s hard to find renters. And so those aspiring investors either skip investing altogether or they pay a premium for their investments.
Surprisingly few investors “graduate” to the smarter strategy of investing outside of their local markets – to other markets in their state or in another state – that gives them what they are looking for.
These investors look where it makes financial sense to invest – a growing city, vibrant with jobs and entertainment.
So how can you tell where a good market to invest in is…
There are several ways you can tell what makes a good market. For example…
- You’ll want to invest in a city. Smaller rural markets don’t give you a lot of choice.
- You’ll want to invest in an area where the median house price isn’t excessive compared to the rents. This is a big problem in California right now – house prices are exceedingly high.
- Related to the above, you’ll want to invest in an area that isn’t an ultra-hot destination location. (That’s not to say it has to be unpopular or undesirable, but it just can’t be THE place that EVERYONE wants to go right now.)
- You’ll want to invest in an area where there isn’t a huge amount of investors. If there are a lot of investors then you end up competing with other investors for properties and renters.
- You’ll want to invest in an area where there are a lot of renters. This is usually means an area where there might be a lot of blue collar workers.
- You’ll want to invest in an area where there are a lot of steady, on-going jobs… but jobs that pay minimum wage and can’t be outsourced or easily relocated. Universities and medical centers are a good example. They may not always pay a lot and they aren’t likely going to be moved.
- You’ll want to invest in an area where you can find properties built between 1965 and 1985. You can of course acquire properties outside of this but these are a great “sweet spot” of real estate because they’re still solid houses that aren’t too expensive to make repairs on.
There are other factors too but this is a great start.
Now, a lot of you might be scratching your head and wondering how to find these markets… and maybe you already started searching in Google to compare median house prices with rental prices.
Why am I sharing all of this information with you? To illustrate an important idea: there is A LOT that goes into finding the right markets to invest in… and not only that but you have to sift through tens of thousands of markets in the US to find something great that meets as many of the characteristics as possible.
Not only that, but you also have to watch those markets for a while to make sure that what you’re seeing is actual data versus short-term anomalies.
And once you get all of that information and feel good about the market, then you have to start investing… which requires solid contacts and a familiarity with the area.
Oh, and don’t forget that you need to keep watching the market just in case it changes over time!
Frankly, it’s not always a great idea to invest in your own market… but it’s next to impossible to find the right market to invest in.
I should say: it’s next to impossible for most average investors to find the right market to invest in.
Fortunately, there’s a way to bypass all of that and skip the excessive research-heavy effort to find the right market: you can work with a turnkey investment company like us here at American Wealth Builders.
That’s what a turnkey investment company does: they find the right markets to invest in. They build a set of parameters of an ideal market and then carefully filter through all the available markets to find the right place for their situation. And then they find properties there for investors.
Investors like you who are smart enough to realize the folly of investing in your own backyard – but who doesn’t want to go through the challenge of finding a good market to invest in.
If you want to find out what markets we’re in and why, and how an investment in one of those markets might fit into your portfolio (even if you live in a different state or country) then get in touch with me today.
Give us a buzz at: 561.408.0880