I thought about posting in the title “Turnkey Residential Real Estate Investment Simplified” Then I remembered all the time I have personally spent studying and working in this niche and concluded – wait a minute: this may be clear to me but it is likely that many people do not understand this model. It is my mission for you to understand this model as understand how valuable and exciting this program is for you.
Turnkey Residential Real Estate Program Defined
The key word is “Turnkey”. This means a property is purchased, renovated and rented to a qualified tenant. When rented with at least a one year lease to a qualified tenant that property is sold to buyer who then owns the property and collects the net rent.
The net rent is the basis for the important cash on cash return (see next section). The buyer does not have to worry about getting the tenant or replacing a tenant. The buyer does not have to worry about collecting the rent. The buyer does not have to worry about calls for repairs or maintenance. All of those details are handled by a professional property management company that follows very strict operational guidelines that we establish.
The Information On This Program Is Valuable for Investors and Funding Partners
Our Buy and Hold Turnkey Residential Real Estate Model For Investors
Our buy and hold model is for one person or fund who has $30,000 or more of cash in the bank or in an IRA that wants to earn a double digit cash on cash return secured by the property. This means you own the property. You are not sharing the ownership. You own it.
As an owner you will receive with our program on a $40,000 property (example – actual numbers can be higher or lower depending on the property) a return on your money of at least $4,800 net per year and likely more depending on the deal. That is a 12% return and to be clear we are currently offering 15%.
The best value for investors is to fund the purchase of the home when we find it plus the renovation costs. This is because our costs are lower and we pass the savings on to you. This means you have more equity and a higher cash rate of return as soon as the renovation is complete and the property rented.
The returns are not guaranteed. You will know our projection before you close on the deal and decide if the property is right for you.
Buy and Flip Turnkey Residential Real Estate Model for Funding Partners
This model is for funding partners. What that means is we partner with people and funds interested in funding the purchase, renovation, administration and holding costs – All In Costs) of a property that meets our buying, renovating and renting criteria.
When the property is done it is marketed and sold to an individual or fund that wants the double digit annualized cash on cash returns described above. Funding partners want their money moving and our program is perfect for them because of the high turnover rate.
Normally it is 60 days or less from the time we buy a property until the time we sell it. That is six turns a year. We currently are paying 10% for up to 60 days use of the money, secured by the property. That is a 60% annualized return on investment secured. The money is secured by a legal first lien on the property.
If you want more information on our funding partner program please see the contact information below.
Risks (Visit competing sites and see how many are open about the risks. You will fine none.)
Everything involving money has risk. If you leave your money in a bank, it loses value at today’s rates. If you invest in the stock market, precious metals and other market driven investments, the markets control the value – you don’t. Real estate can also go up and down and value. Your control is the timing of when you buy.
Right now we have many opportunities to buy properties at low prices so the downside risk is nominal and the upside potential is very positive. With that, buying the right property in the right location for the right price takes skill. Even with that we never make the decision for you. You always have the final vote on whether to proceed or not.
Risks For A Turnkey Real Estate Buyer
For the buyer of a completed turnkey property the primary risk is that something major goes wrong in the first three years of ownership requiring an outlay of cash which reduces the annualized return on investment. We reduce the likelihood of this risk by the criteria we use in buying and renovating the property. We use an independent licensed inspector not part of the contractor team before we renovate and after we renovate. We know and the buyer knows the condition of all main structural areas of the property including : roof, heating, air conditioning, plumbing, electrical. Our goal is to only sell a property that will not require any major repairs for at least 3-5 years. Note the risk remains because of unforeseen circumstances.
The buyer also has the risk of changing market values. Most remember the real estate bubble burst beginning about 2008. We buy at distressed prices which reduce the risk of further declines. In fact many of our properties have 5-10% equity at the date they are bought because we are selling a below market value prices whenever possible.
The final most common area of risk is tenant care of the property and turnover. We have a very specific policy on qualifying tenants. This is has helped us find quality qualified people for your property. It is true some people will need to move but because our properties are very well liked by our tenants, they prefer to stay and they take care of the property.
Risks For The Funding Partner
All properties are inspected and we receive an inspection report from a licensed experienced property inspector. That supports our renovation cost estimate. The risk remains that other required repairs are found after the property is purchased. Normally these are minor items.
Our funding partner formula include a contingency provision. However it is possible something unusual is discovered requiring additional funds to complete the renovation. The funding partner is protected because we pay interest on the amount funded.
The timeline from date of purchase to date of sale to the end buyer with a tenant in the property is estimated to be no longer than 60 days. Our experience demonstrates closer to 40 days. However, that could be longer. We pay 10% of the total amount funded even if we are completed with the process in less than 60 days. In the unlikely event a project goes beyond 60 days we pay an additional 2% per month.
There Are Risks! However With Our Turnkey Residential Real Estate Program Your Money Is Always Secured (First Security Interest ) by The Property. This Is Done With Legal Documents That Must Be Filed With the State and Through a Licensed Title Company
A concluding comment
My firm has extensive experience with residential buy fix and flips. commercial multi-family buy and hold, new development and more. I have not seen the equity gain and cash on cash rate of returns like the ones currently available in the Turnkey Residential Real Estate Model. Act fast if you like this as the opportunities will fade.
For more information or to reserve your spot for our next great Turnkey Residential Real Estate Property Contact Me Now
Steve Pohlit, Managing Partner
US Real Estate Partners, LP