8 Tips For New Turnkey Rental Owners

Have you recently bought your first turnkey rental? Turnkey rentals are one of the best real estate investment decisions you could ever make. As a new turnkey rental owner, you may have a lot of questions about what’s next. While there isn’t exactly a manual for new turnkey rental owners, we can let you in on what to expect in the years to come, and how to make the most out of your new passive income source.

 

1. You’ll Start Getting Income Right Away

 

If you’ve purchased a turnkey rental from us with a tenant in place—as all of them have—you can expect to receive your first rent check as soon as the next first of the month rolls around. Make sure that before closing you get all the documents that the property management company has requested from you. This will include setting up your bank account for the funds to be sent to the correct account. Be mindful that you can have the funds sent to any account of your choosing. Some investors make separate banks accounts for their investments and others do not; the choice is yours.

 

2. Set Up Contact Information For Your Property Management Company

 

If you haven’t already done so, gather all the contact info for your property management company, and in particular your representative. You’ll also want to organize your online portal username and password so you can log in and view or download reports pertaining to your property. Your property management company rep can help you register for the first time.

 

3. Don’t Expect to be Busy

 

Turnkey rental ownership is a very passive income source. There really is very little for you to do, so don’t expect to be kept busy with it. Beyond organizing your home files and letting your CPA know you’ve purchased a turnkey rental, there’s not much else you’ll need to do except collect those rent checks!

 

4. Meet With Your CPA

 

Speaking of your CPA, you’ll want to either meet in person or talk on the phone to learn more about all the new tax deductions you’ll be entitled to as a turnkey rental owner. This is so that you’re sure to retain the records relating to the ownership. Your property management company will automatically provide you with receipts and records. You’ll just need to access them via your online portal and hand them over to your CPA when tax time comes.

 

5. Put Some Money in Savings

 

It’s prudent to save a percentage of the rental income for future expenses. As with regular home ownership, there will be things that need to be repaired or replaced at some point in the future. These expenses will be tax deductible but you do still have to pay for them. To ensure you can readily do that, save some of the rental income.

 

6. Save Money For Your Next Rental

 

Another reason to save rental income rather than spend it on luxuries is to buy another turnkey rental in the future. Just think of how your passive income can grow when you build up a portfolio of turnkey rentals over time. You could conceivably live quite comfortably solely on your turnkey rentals once you have a large enough portfolio.

 

7. Leverage Your First Turnkey Rental to Buy Another

 

Once you have sufficient equity built up, you can leverage your first turnkey rental to buy another. One such method is refinancing. For more information on how to refinance your turnkey rental and make another turnkey rental purchase, just contact us. We can put you in touch with willing lenders who are familiar with turnkey rental investment strategies.

 

8. Don’t Overthink the Tenants

 

When you have a property management company in place, you really don’t have to worry about the tenants. The property management company takes care of vetting tenants, renewing leases and filling vacancies. Even if an eviction becomes necessary, the property management company will handle that on your behalf. And remember, your MartelTurnkey rental property already has a trusted property management company in place.

Now that you’re a new turnkey rental owner, you can look forward to years of passive income. Thank you for choosing MartelTurnkey. If you have any other questions about your property or what to expect, please feel free to contact us.

 

How to Improve Credit

Poor credit can prevent you from acquiring the funding you need to purchase real estate investment property. Even if you have the cash for a down payment, it’s unlikely you’ll be able to get approved for a mortgage through conventional financing. The good news is, you can improve your credit by taking thoughtful action. In order to do that, it helps to understand exactly how lenders look at your credit and which factors most impact their decision, as well as which factors have less influence. Once you see a little bit behind the scenes, you’ll be better equipped to tackle your own credit issues in an intelligent and purposeful manner.

 

There are myriad residential property loan programs out there, and each loan program has its own unique criteria, so for details you’ll need to speak to a mortgage lender about the particular program you’re interested in. We spoke with veteran loan officer Ransom Kelly of Assurance Financial in Birmingham, Alabama, who gave us tremendous insight into how lenders evaluate your credit report.

 

What Do Lenders Look At?

 

Lenders look at several things on your credit report. Following are the main indicators of your risk factor:

 

Credit Score

 

Your credit score is the result of a complex algorithm that comprises factors like how well you pay your bills, how you handle debt and more. What’s confusing for many people is that there are now more credit scores than ever. There’s the FICO score and the Vantage score and each of those have sub categories of scores that can vary from the “main” score. Then you have the three credit reporting agencies; Transunion, Equifax and Experian, and your score can vary among those as well.

 

So how do lenders look at these scores when you apply for a mortgage? Ransom Kelly says that most lenders rely at the middle score. In other words, they don’t take the highest or the lowest; they use the middle number for the borrower’s credit score indicator.

 

But what’s most interesting is that the free online credit scores you get with many credit card companies these days aren’t precise. “Those free score numbers you can access through your credit card company’s dashboard are based on soft pulls,” says Ransom. “Lenders do hard pulls, which dive deep into your credit history. Unfortunately, the credit score you see online could be significantly higher (or lower) than your actual score used from a mortgage credit report.”

 

When you’re ready to look into a loan, you can call a lender in your area to find out the minimum score you’ll need to qualify.

 

Debt-to-Income Ratio

 

Your debt-to-income ratio is a calculation of how much you owe out versus how much you bring in. You can calculate this by yourself. The formula looks like this:

 

recurring monthly bills (rent/mortgage, car payment, credit cards, etc.)

/ gross monthly income = debt-to-income ratio

 

If you want to impress lenders as well as improve your credit score, start paying off your debts while simultaneously either maintaining or growing your income.

 

Collections

 

If you have collections listed on your credit report, you may assume there’s no way you’d qualify for a mortgage. However, there are caveats you should be aware of. “Collections aren’t necessarily approval killers,” says Kelly. “Every situation is considered on a case by case basis. For example, medical collections aren’t typically weighted the same during underwriting review as other collection accounts from vendors. Medical collections get a pass because they’re often exorbitant charges that the person incurred unintentionally. Charge-offs don’t count against you if they’ve been charged off and the balance owed is zero; although they may still have a detrimental impact on your credit score.”

 

Other factors affect how lenders look at collections, too, according to Kelly, whose loan officer career has spanned nearly a decade. “You can have a total of up to $2,000 in collections and it could have minimal influence on the lending decision.”

 

However, don’t forget that collection accounts do bring down your credit score. So if you have collection accounts under $2,000 that you can afford to pay off, it might be worth doing so in order to raise your overall score.

 

Late Payments

 

Late payments listed on your credit report can be problematic, says Kelly. “You can’t have any late mortgage payments in the last 12 months.” If you do, you’ll need to wait for time to pass before you’ll get approved for another mortgage. Late payments on credit card balances count against you, but to a lesser degree. They do negatively impact your credit score, though. Before applying for a mortgage, it’s best to establish a long track record of on-time or early credit card payments.

 

Credit Card Usage

 

“Credit card usage is a huge determinant for mortgage approvals,” says Kelly. “If your credit cards are maxed out, it will lead to a lower credit score and make it more challenging to get approved. Lenders look more favorably upon borrowers that have a conservative history of revolving credit usage. The number one thing I tell clients is to pay off or pay down those credit cards before applying for a loan – but don’t close the accounts. Low balance to credit limit is one of the best things to do to improve your credit score.”

 

One trick to paying off credit cards that some finance experts recommend is making smaller incremental payments during the month. This is often easier to manage than one large payment on the due date.

 

Tips to Improve Your Credit

 

So what can you do to sway the odds in your favor? Lots of things. Here’s what you should be doing to improve your credit both now and in the future.

 

Monitor Your Credit

 

You’re entitled to one free credit report per year from each of the three reporting agencies. Be sure to take advantage of them by visiting their respective websites. You’re also entitled to another free credit report if you’ve been denied credit within 60 days. The letter from the creditor will tell you which agency they based their decision upon. Just go to the reporting agency website and navigate to the section where you’re requesting a report based on denial of credit. Finally, consider signing up with a credit monitoring service. Just remember that the credit score they give you may vary considerably from the score a lender will see, so don’t use it for that purpose; use it to keep an eye on your credit report.

 

Review Your Credit Report For Errors

 

Go through each entry on your credit report with a fine-toothed comb. Report any errors that you find to the credit reporting agency through their website. Any error you find should be reported, no matter how small. Look for errors in:

 

– addresses

– dates

– name spellings

– account balances

– payment histories

– account ownership

– account status (open, closed)

– credit limits

 

If you find an error and submit an investigation request, the creditor has 30 days in which to prove the accuracy of the entry. If they can’t, you might be able to have the negative entry removed or at least amended. Each reporting agency website has its own system for submitting disputes, so you’ll need to navigate each website independently to complete this step.

 

Consult With a Mortgage Lender

 

You don’t have to go through the whole process of applying for funding and then hope and pray for approval. Be proactive and consult with a lender ahead of time. A professional mortgage lender can review your credit with you, including other loan factors like assets and income so you can be better informed and take action before applying for funding for your real estate investment.

 

Ways to Grow Your Credit Score

 

If your credit score is low, there are strategies you can implement to raise it. Bear in mind that it can take several months for changes to reflect in your score. For that reason, the sooner you take control of your credit, the better.

 

Consider Getting a Secured Credit Card

 

A secured credit card is tied to a line of credit that is secured to your own money. Essentially, you deposit a certain amount and that is your total credit line. You make charges as you normally would, making monthly payments on the card. This is a way to establish a history of paying on time.

 

Obtain a Collateral Loan

 

If you own a vehicle free and clear or another valuable asset, you might be able to get a collateral loan from your bank. Collateral loans are secured with your asset. You give the bank the physical title on the asset, and they lend you money. Once you pay it off, you get your title back. In the meantime, your payments are reported to the credit bureaus, which can improve your credit. Confirm that the bank will report the payments, and make sure all your payments are on time.

 

Become a User on Someone Else’s Credit Card

 

If your spouse has a better credit score, you might improve your own credit by becoming an authorized user on one of their credit cards. Their credit limit will be reported as your credit limit, and this can potentially raise your credit score a few points.

 

Get a Standard Car Loan

 

It’s easier to get a car loan than it is to obtain a mortgage. You could qualify even with poor to bad credit. A car loan gives you a chance to demonstrate your creditworthiness, assuming you make payments on time. Just realize that with poor credit you’re likely to get a high interest rate. When your credit improves, consider refinancing the car loan for a better rate.

 

Make Early Payments

 

Making on-time payments is the hallmark of a good credit risk. But making early payments is the hallmark of smart financial planning. By doing this, you pay down your principal faster, which ultimately reduces your debt-to-income ratio.

 

Your credit plays an important role in whether you’ll be able to take advantage of the many opportunities in real estate investing. If poor credit is holding you back from being able to qualify for a mortgage, it’s time to do something about it. Take these steps to correct past mistakes. And, from this day forward, practice smart credit habits to ensure your credit is the best it can possibly be.

 

At MartelTurnkey, we work with a variety of lenders on our turnkey rental properties. Feel free to contact us if you would like an introduction or assistance with obtaining financing.

 

It’s Better to Invest in a Rental Property Than to Buy a Home of Your Own

One of the biggest shams that’s been pulled over the public is the American Dream of owning a home. Home ownership has been lauded as the ultimate symbol of financial freedom. It’s been brainwashed into the American psyche that buying your own home should be your primary goal, to be undertaken soon after marriage. Dwelling in your own home symbolizes freedom of your domain; the liberty to do what you want where you want on your own property. In reality, the idea of the American Dream is a fabrication of the banking system for the sole intent of making money selling mortgage products.

 

Why the American Dream is a Nightmare For Many

 

As we so candidly witnessed a decade ago, the American Dream turned into a nightmare for hundreds of thousands of homeowners. Families were turned out of their homes, had their credit ruined and their personal lives turned upside down. The subprime mortgage crisis was more than a collection of bad judgments; it was a window into the indifferent machinations that drive the mortgage industry. And those same machinations are still turning the wheels today.

 

For a large majority, buying a home at any cost is still the primary goal. Single professionals, young families and even older folks scrimp and save every penny for the privilege of handing it over as a down payment for a primary residence. They go into debt for hundreds of thousands of dollars—often for much more than they can afford—so they can say they’re living the American Dream. And lending institutions are more than happy to encourage and facilitate this belief. After all, mortgages keep the banking industry wheels turning.

 

Your Home is Not an Asset

 

The smartest financial advisors will tell you – your home is not an asset. Real estate is an asset, yes. But not your primary residence. Robert Kiyosaki of Rich Dad, Poor Dad said it, “Repeat after me: Your house is not an asset.” Why isn’t your home an asset? Because it’s a liability. It costs you money to own; it doesn’t pay you money. Think about all the money and work that goes into home ownership; the sweat equity, the repairs, the maintenance. It all detracts from your bottom line.

 

Rental Properties Are Assets

 

Now, some kinds of real estate are an asset. When you can make real estate work for you, it becomes an asset. Rental properties are an asset because they pay you money through rent. If you look at your balance sheet, you’ll be ahead when you own a cash flowing turnkey rental property.

 

Your Home as a Benefit

 

By now, you may be thinking, “but owning a home offers other benefits besides money. Home ownership equals stability and security, right?” Again, that’s part of the sham. That stability and security is only so good as your last on-time mortgage payment. Miss a few too many mortgage payments and the bank will foreclose on you just like they did during the subprime mortgage crisis. When that happens, you lose your home, your dignity, your peace of mind and worse. A foreclosure is ruinous for your credit. Good luck trying to get a loan for anything as long as that foreclosure is on your record. It’s basically a death knell for your future financial situation. Does this scenario sound like stability and security to you?

 

The Difference Between Borrowing For Homeownership Vs. Borrowing for Investment

 

When people borrow for a primary residence, they tend to borrow as much as they can get approved for so they can get into as nice a home as possible. After all, this is the home where their kids will grow up. And, nice homes today in good neighborhoods with good schools usually cost in the hundreds of thousands of dollars. Better homes equal higher prices. So right away, people are borrowing as much as they can qualify for, which depletes their cash savings, maxes out their debt tolerance and condemns them to 15, 20 or 30 years of mortgage payments—for a liability. For many people, they’ll never be able to save money after that to make a real estate investment because they have little to no money left over after paying the hefty mortgage.

 

On the flip side, when people borrow for a turnkey rental property, the price of the property itself is much more reasonable – hopefully less than one hundred thousand. The payments are so reasonable that even with all the costs associated with the rental property – the property manager, repairs, maintenance, insurance – the property still cash flows. It’s an asset that pays them money every month. Doesn’t that sound more like stability and security – to own an asset that brings income every month?

 

Now, we’re not suggesting that you never buy yourself your own home to live in. What we’re saying is that it’s smart to set yourself up for real financial freedom first – before you buy a home to live in. Take that first lump sum that you’ve been saving for a down payment and buy yourself a real asset – a turnkey rental. Once you have one or two rental properties in your portfolio, you’ll be in a better position financially to buy a primary residence some day; one that won’t max out your finances and destabilize your future.

 

The true American Dream shouldn’t be about owning a home. It should be about owning your finances; creating financial freedom that will last for generations. Take a look at some of our affordable, cash flowing turnkey rentals right now. If you have any questions or would like to make a purchase, please contact MartelTurnkey.

 

 

Glossary of Common Real Estate Terms

If it sometimes seems like real estate professionals have their own private lexicon, you’re correct. There is a whole bank of terminology in the real estate industry that professionals use to communicate value, property details and processes. These terms help real estate professionals do their jobs more efficiently, but they can be confusing for the beginning investor who’s trying to understand the world of real estate. If you’ve wondered what the heck words like cap rate, ROI and SFH mean, then you’ve come to the right place. Here is your glossary of commonly used real estate terms.

Appraisal

An appraisal is an assessment of the fair market value of a property. Appraisals are conducted by professional third parties at the behest of the lender. Neither sellers nor buyers can request certain appraisers to be used, or control their findings.

Assessed Value

The assessed value is the value placed on a property by the city or town. Property and the land it sits on are usually assessed separately. The local government uses the assessed value to calculate the property taxes for the owner. The assessed value can change over time, which is why assessments are repeated every few years.

Cap Rate

Cap rate is short for capitalization rate. It’s used by real estate investors to determine the potential rate of return on a property if it were bought with all cash.

Net Cash Flow

Cash flow is the monthly net profit generated by an investment property after all the monthly expenses have been paid.

Cash-on-Cash Return

The cash-on-cash return is the annualized return that an investment will generate when taking into account financing. For example Net Cash Flow Per Year / (Down payment + Renovations Costs) = Cash-on-Cash Return %.

Comps

Comps is short for comparables. To gauge a fair market price for your property, you will “pull comps.” This means you will do research to see what similar homes in your area have recently sold for. If you have an agent do this for you, they will give you what is called a CMA, which stands for Comparative Market Analysis, which is simply a written report on the comps in the area. Comps are going to be very important whether you’re doing a rental property or a flip, so learn how to find good comps.

HOA

HOA stands for Home Owners Association. An HOA is a private governing body in a community that upholds neighborhood covenants; ostensibly to ensure an attractive, safe community where everyone abides by the same uniform standards. HOAs typically charge a monthly fee that community owners are obliged to pay in addition to top of rent or mortgage payments. The HOA fee is non-negotiable and perpetual.

Inspection Report

The inspection report is done by a third party to determine if there are any safety issues with the property. Inspection reports can be ordered by the lender, by the buyer, the seller or their assigns, at any time. These reports can be as short as one page, but most often they run several pages long. They cover everything from minute details like the presence of non-GFCI outlets near the kitchen sink to plantings located too near the perimeter of the property’s foundation wall. Inspection report findings are often used by buyers as leverage to negotiate a lower selling price.

MLS

MLS is an acronym for Multiple Listing Service. The MLS is a paid subscription-based service that’s exclusive to real estate agents and other real estate professionals. When you contract with a real estate agent, they list your home on the MLS so the property details can be seen by other agents and brokers.

PMI

PMI is an acronym for private mortgage insurance. But it’s not insurance for you; it’s insurance for your lender in the event that you default on the loan. You have to pay PMI in certain cases, including if you put less than 20 percent down on your home purchase. Usually–but not always–you can drop the PMI insurance when your equity stake reaches 20%.

Realtor®

Realtor® is a professional designation of membership in the National Association of Realtors®. Every Realtor®is a real estate agent, but not every real estate agent is a Realtor®.

ROI

ROI stands for Return on Investment. It is calculated very similarly to cash on cash return. The formula would be  Profit / Cash Invested = ROI. ROI does not take into account time, so normally ROI percentages are very high. For example, if you invest $50,000 into a property and you flip that house and make $25,000 profit then your ROI would be $25,000/50,000 which is 50%. But this doesn’t take into account that it may have taken you 2 years to make that return!

SFH and MFH

SFH stands for single-family home and MFH stands for multi-family home.

 

There are hundreds of terms used in real estate dealings that you may not be familiar with. This list represents only a small percentage, but these are the most common ones that you’ll hear as you move along your real estate investment journey. If you have any questions about what terms mean, or you want to better understand how a turnkey rental property investment works, please feel free to contact us or to leave a comment below. We’re always happy to help.

3 Ways That Turnkey Rentals Save You Time

Of all the resources you have, time is the most valuable. It’s the one resource that is absolutely finite. And, it’s the one resource that everyone has equal amounts of on a day-to-day basis. While you can edge ahead of the competition by acquiring more money or more knowledge, you can never gain more time than anyone else. However, what you cando is to gain more free time. You can then use that extra free time to do what you want, including making more money, learning, spending cherished time with family or anything else. As an investment asset, there’s nothing better than turnkey rentals for saving you time. Turnkey rentals save you time in many ways.

 

Turnkey Rentals Are a Form of Passive Income

 

You’ve probably heard a lot about the benefits of passive income. Passive income streams generate money without requiring your constant involvement. Passive income affords you the freedom to spend your time the way you want to instead of the way you have to. Turnkey rentals are a form of passive income as long as you retain the services of a property manager. You purchase the turnkey rental and your property manager takes care of the property and helps ensure you receive monthly rental income. This is one way that turnkey rentals save you time.

 

Turnkey Rentals Pay You Indefinitely

 

When you invest in turnkey rentals, you don’t need to keep searching for more ways to make money over and over again. By contrast, when you invest in the stock market you have to keep looking for the next big stock pick. The research needed to choose stocks is labor—and time—intensive. However, with turnkey rentals, you do your research once and then the property cash flows for you over and over throughout the years when or if you ever decide to sell.

 

Turnkey Rentals Are Easy To Shop For

 

When you work with a trusted turnkey rental company like MartelTurnkey, you have access to turnkey rental inventory in some of the best markets in the country. When you’re ready to make your next turnkey rental purchase, all you have to do is go online, check for turnkey rentals for sale, and choose your property. This is in stark contrast to the job of picking stocks, searching for your own rental properties or investing in most other asset types. Turnkey rentals save you more time when you go to invest in your future properties by being easily accessible.

 

No matter where you are in your real estate investing journey, turnkey rentals save you time so you can spend that extra free time doing something else. When you’re ready to invest in turnkey rentals, we hope you’ll choose to work with us, MartelTurnkey. Contact MartelTurnkey today to schedule a call or browse available turnkey rentals online right now.

 

 

How to Find the Best Property Management Company

Whether you’re investing in a turnkey rental property with a property management company already in place or you’re searching for your own property management company, you only want to work with the best. The property management company will essentially be your investment partner. As with all things investment related, you want to ensure that your partners are trustworthy, competent, loyal and responsible. Those are attributes not easy to find with just a casual search. In a recent podcast episode of A Millennial’s Guide to Real Estate Investing, we sat down with one of our favorite property managers, Salvatore Friscia, founder of two very successful property management companies in San Diego. We wanted to find out from a property management company’s perspective how to find the best property management company. Here’s what we discovered:

 

Realize That Your Property Manager is a Key Part of Your Team

 

Newer investors often don’t foresee how much value a good property management company can add.  The very first step in finding the best property management company is to realize that they’re going to play an important role in your investment strategy. Says Salvatore Friscia, “You don’t see a lot of real estate investors acknowledge that a strong property manager’s an integral part of their team.”

 

Don’t Focus on the Cost

 

While it’s natural to ask about the cost of hiring a property management company, it’s not one of the first questions you should ask, advises Salvatore. “You know, the number one question that most people ask, sometimes even before we can say, thank you for calling, is how much do you charge? But the true question, the more valuablequestion would be to ask, what type of valuedo you provide for your services. Forget the cost for a moment because you may not be comparing apples with apples.” It’s true. In San Diego, for example, where Salvatore works, the industry standard for property management companies ranges between 6% and 10%. That’s a wide range. As Salvatore puts it, “If you’re comparing somebody and you want to know if they’re at 6% or 8%, you may not be getting full property management as opposed to just a la carte service. A better question is to ask what value they’re providing for their management fee.”

 

The Number of Managed Properties is a Little Irrelevant

 

One of the most frequently asked questions of property management companies is, how many properties do you manage? While that sounds like a valid question that unearths their level of experience, it’s not a great question, says Salvatore. “The truth is, it’s just not realistic,“ he says. “From my experience, I’ve seen companies that manage 50 properties suck and I’ve seen companies that managed 5,000 properties that suck. It’s not a matter of how many properties you manage that’s gonna make a difference.” According to Salvatore, “A better question is to ask what properties in the immediate area do you have under management? That gives you a better feel for their understanding of your property type and the surroundings.”

 

Older Isn’t Necessarily Better

 

“It used to be a badge of honor to say we’ve been in business 30 or 40 years,” says Salvatore. “So, you know, you hear a lot of people say, well we’ve been doing this for 30 years or 40 years, you know, that may not be the best thing for you. In the last five years we have really changed the industry in terms of automation, technology and social media. These things have really changed the way property management companies are handling assets.” What Salvatore is saying is simply, older isn’t necessarily better when it comes to finding the best property management company. Experience is still critical. But the right kindof experience is more crucial than the amountof experience, since the advent of technology. You want to hire a property management company that is savvy about social media, automation and the entire digital world. Why? Because that’s the world your tenants live in. Also because these are the times when you need automated reporting, online tenant portals and landlord portals. “So you want, in a way, companies that have been around for maybe four or five years that might have the upper hand nowadays on what’s necessary, what they can offer you in terms of their workflow and their systems; that they can offer you to help out property management and communication,” says Salvatore.

 

Choose Someone You’re Comfortable With

 

It’s helpful to spend a certain amount of time with the property manager to see what kind of vibe you get; who you can talk easily with and feel like you could have a good relationship with. Whether it’s a long Skype or a lunch, it’s important to spend some time so you can kind of evaluate the energy. As Salvatore says, “You want to definitely have somebody who you can relate to and understands your goals and what you’re trying to aspire to do.”

 

You Have to Look at Online Reviews

 

Online reviews are a strong indicator of the track record of a property management company. “You’ve got to look at reviews,” says Salvatore. You’ve got to look online. One of the questions I would recommend to ask a property manager is, what’s your online rating? If they don’t know immediately with their online rating is, they’re not paying attention. It’s important for me to put the measures in place as a business owner to make sure that we’re providing the right service that brings in those five star reviews. So if you ask the property manager, what’s your online rating? And they stumble, they don’t have a clue, that’s a red flag. That’s somebody who’s not aware that Google, Yelp, and Facebook have the power over people in their decision making factor.”

 

Ensure They Understand the Importance of Marketing

 

The best property management companies know that marketing is important to your success and their success. For example, it’s the difference between online photos on Zillow taken from a car with the outline of the window in the property photos and professional photos that entice tenants to send in applications without even seeing the place in person. “So going out there and paying, you know, $50 or whatever for a professional photographer to go out there and take eight to ten pictures of that property now puts you above your competition,” says Salvatore. “And that’s the kind of stuff that definitely you’d want to look for.”

 

A good property management company can make a huge difference in the success of your rental property. As you can see, there are a lot of questions you should be asking of any property management company you’re considering. For more tips on how to find the best property management company, and to listen to this entire podcast episode on A Millennial’s Guide to Real Estate Investing, please click here.

 

 

 

 

How to Choose a Turnkey Rental Company

Not all turnkey companies are alike. Although many companies call themselves “turnkey,” they vary widely in terms of services offered, the quality of the properties for sale, how clients are treated and much more.

You need to conduct due diligence and use discretion when shopping for the turnkey rental company where you’ll buy rental properties. If you choose well, you’ll be able to rely on that company repeatedly throughout the years to supply you with quality, fresh inventory for your real estate portfolio. You can think of choosing a turnkey real estate company as entering into a long-term relationship that will serve you well over and over again.

 

How Turnkey Rental Companies Work

 

Generally speaking, turnkey rental companies find properties, rehab them and then offer them as rental properties for investors looking for positive cash flow. The turnkey rental company profits on the sale, and the investor profits from the positive cash flow.

 

The Differences Among Turnkey Real Estate Companies

 

Between the lines, a lot more goes on that distinguishes turnkey rental companies from one another. There are important differences in how turnkey rentals operate that matter to you as an investor.

 

The differences start to show up from where the properties are located. Some turnkey rental companies might not care where their properties are located, as long as they can turn a profit when they sell to an unwitting investor. Cheap properties can be found all over the place if you know where to look. A turnkey rental company may not be picky about where the property is located; they may not care if there are jobs in the area or if there are local amenities. In short, they may not care if the property will be a desirable rental for a prospective tenant.

 

Turnkey rental companies have no third-party standards they must adhere to regarding the rehab. There’s no oversight or governing board; except for the town regulations and building inspector, who determines if the property meets the building code and qualifies for an occupancy permit. The quality of the rehab itself is self-regulated, which is why investors need to do their own due diligence when choosing a turnkey rental company. Too often, turnkey rental companies cut corners on rehab costs to pad their profit margin at the expense of quality work. This can leave the investor with substantial repair or replacement costs just a short while after they take ownership.

 

Another big way in which turnkey rental companies differ is how they present real estate investment opportunities to investors. Some turnkey rental companies publish a list of available turnkey rental properties online so that any interested party can view them, in a similar way to trusted real estate sites like Trulia and Zillow. However, some turnkey rental companies choose to keep their available properties a closely guarded secret; only available once an investor privately requests a list or prequalifies in some way. This practice makes it impossible for an investor to know whether they’re getting access to the same real estate investment opportunities as other investors. Who can tell if the investor is even seeing the same prices as everyone else when each prospective investor is kept in the dark?

 

Yet a third way that turnkey rental companies differ is in the way they turn over their properties to the investor. For example, some turnkey rental companies have contingencies written into their contracts that require the investor to use a certain property management company – for which the turnkey rental company gets a kickback that may or may not be disclosed. Others don’t fully rehab the properties at all – they may omit larger needed repairs in favor of offloading the property quickly. Even if the investor is aware of needed work, having the work done on the investor’s time often results in a vacant rental while the work is completed, thereby reducing the investor’s cash flow.

 

These are all important differences that sometimes indicate nefarious or less than honorable practices among turnkey rental companies.

 

What to Look For in a Turnkey Rental Company

 

Now that you know some of the ways in which turnkey rental companies can differ, here are some helpful guidelines as to what you should look for in any turnkey rental property that you choose.

 

Substantiated Property Listings

 

The turnkey rental properties offered for sale by the turnkey rental company should be substantiated by facts showing they are good investment opportunities. This may include ROI and cash flow, but it should also include information about why a particular city or neighborhood was chosen. Also, look for a turnkey rental company that itself invests in the same areas as their turnkey properties for sale. This proves that the turnkey rental property truly believes in the economic viability of the area.

 

Operational Transparency

 

The investor should be assured they are seeing the exact same turnkey rental properties as everyone else. The list of available properties should be readily available for perusal for anyone who’s interested. In addition, the operations of the company should be transparent. Investors should have access to frequently asked questions that explain—at least in general—the process of working with that company.

 

Easily Accessible

 

Investors should be able to easily connect with owners or representatives of the turnkey rental company. Contact information, either in the form of an email address or phone number, should be easy to find. Response times for inquiries should be immediate or at least within 24-hours.

 

No Contingencies After Purchase

 

Once an investor purchases a turnkey rental property, there should be no restrictions placed on them about how to manage their property. An investor shouldn’t be forced into using a certain property management property or using a property manager at all. The investor should be fully autonomous regarding decisions about the rental property.

 

Experienced Operators

 

The turnkey rental company should be operated by people with experience investing in real estate and finance. The investor should be dealing with professionals who understand the real estate investment space and who will be able to help guide the investor in making smart choices. Working with experienced turnkey rental companies operators also ensures that the properties are sound investments.

 

Access to Funding

 

Quality turnkey rental companies have established relationships with lenders. In turn, investors should choose a turnkey rental company that’s able to connect the investor with potential, trustworthy lenders in the event of non-standard financing needs, such as 1099 income qualification. In other words, the turnkey rental company should be of assistance in helping the investor to acquire the property, not just provide access to property listings.

 

The turnkey rental company you choose will hopefully be your investment partner for many years to come. Take your time so you can pick the one that will best serve your investment needs. At MartelTurnkey, we take great pride in the fact that we hit all the marks for the best turnkey rental companies. If you’d like more information about our company, our properties or anything else about turnkey rental investments, please feel free to contact us. We look forward to answering your questions and hopefully working with you.

 

All Your Fears About Being a Landlord Addressed

Have you thought about owning rental property, but you’re nervous about being a landlord?  Sometimes lack of money and opportunity aren’t what keeps people from investing in buy and hold real estate. Sometimes people are just downright afraid to be a landlord. But fear shouldn’t stand in your way of doing anything in life, let alone being a landlord. Following are the most commonly cited fears about owning rental property, with solutions that will hopefully make you rethink your beliefs about what the landlord experience is really like.

 

Not Having the Right Personality

 

You may feel apprehensive about being a landlord if you think you don’t have the right personality for it. If you’re a natural worrier or tend to assume the worst in every situation, you may envision a future of sleepless nights and chronic stress.

 

You shouldn’t need to make massive changes to your personality in order to make money from real estate rental investing. But it does help to reflect on the underlying causes of your worrying. Studies have shown that people who worry about things that haven’t yet happened often do so because of fear of the unknown. Learning more about how real estate investing actually works—and specifically about the unique benefits of turnkey rentals—may help to alleviate your fears.

 

Being Sued

 

Perhaps the biggest fear that people have about being a landlord is being sued. You may be imagining all kinds of horrible scenarios ranging from paying out of pocket for someone else’s misfortune, or ending up penniless due to a huge lawsuit claim.

 

If you’re already a homeowner, you know that you could be held liable for injuries and accidents that occur on your property. That’s why you carry homeowner’s insurance. If you get a third party claim from someone who’s injured on your property, the liability coverage of your homeowner’s policy will usually kick in – if the injury was caused by negligence on your part. The same holds true for your rental property. You’ll be carrying property insurance as well as some other insurance specific to rental property ownership. This insurance coverage is designed to protect you and your assets in the event of a claim.

 

Lacking the Proper Skillset

 

When many people think of what it would be like to be a landlord, they picture themselves wearing a tool belt, hunched over a broken something or other, trying to look like they know what they’re doing.

 

While some landlords do try to “play handyman,” it’s safe to say that most landlords are very willing to let the experts be the fix-it men. This is especially the case when you buy and out-of-state rental property. When you buy a turnkey rental from MartelTurnkey, your out-of-state rental repairs and maintenance are taken care of by your property manager. So you can leave the tool belt at home and rest easy knowing that no handyman skills are necessary to be a landlord.

 

Losing Money

 

Another big fear that people have about owning rental property is losing money. What if the tenant stops paying rent or simply vacates the property in the middle of the night? What if you can’t pay your mortgage on the rental, or the whole real estate market comes crashing down?

 

As far as investments go, real estate is a very safe bet. Rental property in particular is considered a very low risk investment. Unlike stock, the value of real estate never goes to zero. Technically, even if your rental property burned down to the ground, you’d be reimbursed by your insurance company, plus you’d still own the land to rebuild. Now, things do happen with real estate just like anything else, but there are always ways to handle any situation that arises. If your tenant stops paying rent, your property manager can begin eviction proceedings. This ensures that you can get a new, paying tenant in as soon as possible. The same thing happens if the tenant vacates in the middle of a lease term. As far as not being able to cover the mortgage, you could buy what’s called “rent loss insurance” that’s designed to cover just such scenarios for landlords. You could also just make a practice of keeping the equivalent of at least one mortgage payment in reserve, to cover yourself in this event.

 

Messing Things Up Out of Ignorance

 

Personal ignorance also plays into people’s fear about owning a rental property. What if you buy a bad piece of property or you pay too much for it? What if you mismanage it and you lose your investment due to not knowing what you’re doing?

 

If you’re fairly uneducated about real estate, then by all means you should learn more before buying a rental property if you plan to do it all by yourself. Not understanding where to buy, how to choose a rental property or how to manage it can indeed lead to massive loss. However that’s why buying turnkey rentals from MartelTurnkey is a smart strategy; particularly for investors who don’t know or don’t have the time to learn all the nitty gritty about investing in real estate. When you buy from MartelTurnkey, you know that the property was bought in the right place at the right time, for the right price. Your rental property cash flows from day one, giving you the peace of mind of knowing you made a wise investment.

 

Lacking the Funds to Maintain It

 

Another common fear is lacking sufficient funds. Suppose you can’t maintain the rental property? You’re probably already aware that homeownership requires regular maintenance and upkeep. What if your rental needs something major and you can’t afford to repair or replace it?

 

There are definitely repairs and maintenance costs associated with owning any kind of real estate, including rental property. But again, buying turnkey rentals through MartelTurnkey offers advantages in this area, too. First of all, when we seek properties to buy, we give preference to homes with solid roofs and HVAC systems. This helps to ensure that we get good value when we do purchase, so we can ultimately pass on savings to our investors. Second, we do a full rehab on all the properties we buy. This includes taking care of the major repairs and replacements as well as the smaller details like trim and painting. So when you take possession of a MartelTurnkey rental property, it will be in the best possible condition. Over time, repairs and maintenance costs will come up. We recommend that you keep a few months of rental income on reserve, in an account that is easily liquidated, to take care of these expenses.

 

Has fear been keeping you from being a landlord? If so, you’ve been missing out on one of the most effective wealth-building strategies that exists today. Hopefully this article has addressed your biggest concerns about being a landlord and you feel more comfortable with the idea. If you have any other questions, or would like further information about the benefits of MartelTurnkey rental properties, please contact us today.

Good Credit is Essential For Real Estate Investment Success

For recent college graduates, it can be more of a challenge to get the funding to invest in your first real estate property. You may not have two years of W-2 income to show financial stability, or you may not have a sufficiently robust credit history to demonstrate fiscal responsibility. Whether you’re a recent college grad or a seasoned working professional, your credit report always plays an integral role in the success of your real estate investment future. Conventional lenders will always want to see a strong credit score and history, and you can’t take advantage of any of it without building and maintaining good credit.

 

How to Build Good Credit

 

If you’re a recent college graduate, you’re lucky. You haven’t had much time to irreparably mess up your credit. For most grads, it’s a matter of building credit history and then maintaining good status. To build credit, consider taking out a credit card in your own name instead of just being an authorized user on your parents’ credit card. Being an authorized user can help restore bad credit, but it doesn’t do much to build your own credit history.

 

Another way to build credit is to get a car loan. Although the optimal situation is not to have a car payment at all, if you have zero credit history, a car loan can help get you on the map. Avoid the temptation to get the most expensive car that you’re approved for. You’re probably looking at five years of payments. That $400 monthly payment (or whatever it is) will really cut into your available investment money over time. A modest car loan, with monthly payments made on time, will help your credit just as much as a hefty car loan.

 

If you’ve been paying monthly rent while at college, you can use that history to help build your credit. There are third party companies you can pay for that will report your timely rent payments to the three credit reporting agencies. Assuming all your rent payments have been on time, this can boost your credit rating and enhance your credit report.

 

Make credit card payments on time or early if possible. Beware of bill pay services offered by your bank. These are convenient, but the payments take longer to arrive and they could inadvertently make your payment late even though you authorized the payment several days in advance. If you enroll in paperless billing, make sure to designate your credit card company as a safe sender, and don’t ignore emails from them.

 

How to Protect Your Good Credit

 

If you already have decent credit, take steps to protect it. Continue making all payments on time. Once a year, obtain a free copy of your credit report from the three major credit agencies. Go through and make sure all the information is accurate. If you find something that’s not right, follow the credit agency’s guidelines for reporting errors. They’ll correct any errors, but you should still follow up to make sure it’s been taken care of.

 

Consider enrolling in a credit protection plan that helps prevent identity theft. The better your credit is, the more likely that a hacker could try to take out loans with your information. You should consider either paying for a monitoring service or make sure you monitor your credit activity yourself.

 

Learn How to Budget and Manage Finances

 

It’s reasonable to assume that unless you were a finance major, your knowledge about handling money is pretty sparse. If you’re really going to be investing in real estate you’ll need to learn how to budget money, how to manage finances and more. Don’t leave anything to chance when it comes to your money. Take the time to really educate yourself about budgeting and financing especially when it comes to real estate investing. There are a lot of moving parts, and you have to get a handle on everything in order to be successful.

 

Some ways to learn what you need to know are to read books, take online courses, attend networking events and think about getting a mentor. Even though you’ve recently graduated, your education concerning real estate investing is just beginning. There’s a lot to know, and it’s up to you to get the answers you need.

 

If you take your credit seriously and do all these things, you should have no problem getting funding when you’re eventually ready to invest in your first real estate property. As you become more experienced, continue to use credit wisely and make payments as agreed. This will ensure a solid credit history for a lifetime, which will support your future real estate investment ventures. At MartelTurnkey, we’re always happy to help qualified buyers obtain financing. Please give us a call when you’re ready to invest!

Stock Market vs. Real Estate

Which is the better investment – the stock market or real estate? There are arguments for both sides. But when you have a limited amount of money to invest, as most people do, your decision carries more weight. Your stock broker (the one who gets the commissions) will undoubtedly advise you to invest in the stock market. But before you sign over all your money, consider real estate investing and all the ways it benefits you compared to the stock market. When you need to choose between the two, we believe that the wise choice is to invest in real estate first. Real estate investing pays out in so many more ways than the stock market.

 

Leverage Financing


Real estate is the only investment vehicle that enables you to buy an asset worth five times the initial cash investment. With certain financing, you can buy a property with as little as $16,000 or just 20% down. You can’t do that with stocks. In the stock market, you pay exactly what the stock is worth at that instant you buy it. Then you have to hope that the stock goes up in order to make any money. In real estate, it’s even possible to make money the day you buy, if you get it for less than its appraised value.

 

Always Valuable


Real estate is always valuable on some level; even when the real estate market drops, your real estate investment is always going to be worth something. However, with stocks it’s a different story. Stock prices can drop to zero, and they do so. In the stock market, it’s possible to lose every penny you’ve invested. With real estate, your investment property is always valuable. It can never ever go to zero.

 

Cash Flow


Buy and hold real estate like turnkey rental properties offer continual cash flow. Every month your rental tenant pays rent that’s money in the bank. With stocks, there’s no continual cash flow unless you happen to find a stock that pays dividends. Even so, it’s highly unlikely you’ll find a stock that pays you up to 15% returns like real estate investments can.

 

Tangible Asset


Investment real estate is a tangible asset. It’s something you can touch and feel and see. Stocks are just an asset on paper. You don’t actually own anything except a share of a nameless, faceless company that you have nothing to do with; no connection with.

 

More Control Over Your Investment


Real estate is a tangible asset. You can control and improve your real estate holdings. You can make improvements to the property on a structural level or a cosmetic level. You can make it physically more valuable by adding to it or improving upon it. You have complete control over your investment. With stocks, you have no control over your investment. The value of the stock is based on public opinion. If public opinion sways in one direction or another, the value of your portfolio goes up or down accordingly. With stocks, your financial net worth is essentially in the hands of whim and fate.

 

More Ways to Make Money

 

Real estate provides you with multiple ways to make and save money. You can make money from rental income, save money on taxes with deductions, make money on appreciation, make money with earned equity and more. Stocks don’t offer you any way to make money unless you get rid of them by selling them. Sure, you might have a stock or two that pays dividends, but that’s a pittance compared to the money that you can earn from real estate investments.

 

One Investment For a Lifetime


With real estate, you invest in buy and hold property and it pays you about a 15% return over a lifetime. That’s passive income that doesn’t require more work after you’ve done your original due diligence. With the stock market, you expend time and energy again and again to find stocks that you think will increase over time. Even if you’re “successful,” you don’t make anything unless you sell, at which point you have to pay capital gains tax plus spend more time and energy to find yet another good investment.

 

Tax Advantages


With real estate you get to write off related expenses like repairs, maintenance, marketing, property management and interest, among other things. You can use those write-offs to offset your taxes from your real estate rental income and your W-2 earnings. There are no write offs with stocks. All you get is more taxes to pay both when you earn dividends from your stocks and when you sell your stocks.

You can certainly invest in both the stock market and in real estate. But you can expect to get far greater returns from your real estate investments, as you can see