When considering buying a turnkey rental, investors should carefully consider the kind and quality of the renovations. As we’ve discussed in previous blog posts, a turnkey property isn’t truly turnkey unless it’s already renovated when you purchase it. A new investor shouldn’t need to put money into renovations immediately after taking ownership. Whenever you’re looking at a turnkey rental property to buy, here’s what you should look for as far as renovations.

 

Quality of the Renovations

 

Unfortunately, it’s all too common for contractors to take shortcuts when it comes to construction. According to people like that, shortcuts help them to make more profit. But there’s a difference between being efficient and taking shortcuts. Efficiency is great. If a contractor can get work done faster or better by using a different method or new tools, that’s great. They make money and the investor saves money. But if a contractor is taking shortcuts that impact the quality of the work, that’s not good for anyone; the investor, the future tenants, or the contractor.

 

The quality of the renovation is as important as what renovations are done in an investment property. If the bathroom fixtures were replaced, that’s good. But if they were replaced with used parts or installed incorrectly, that spells trouble for the new owner – you. Seeing pictures of a newly-repaired front porch railing makes an investor feel good. But if the new railing hasn’t been properly installed, it poses a danger to future tenants and ultimately, the owner-investor. The point is that, as well as reviewing the list of renovations, it’s important to consider the turnkey company that’s handling the renovations. As always in business, know who you’re dealing with. At MartelTurnkey, we fully renovate our turnkey properties before selling them to investors. But that’s not all. We have boots on the ground overseeing renovations on all of our properties. We make regular visits to our properties in the development phase, in other states. We even have one of our own family members, Etienne, on-site in Memphis, overseeing renovations. And if you know Etienne, you know he won’t stand for anything less than perfection! 

 

What Renovations You Should Look For

 

The renovations that you should look for in a turnkey property are ones that add value, safety and aesthetic appeal. For example: 

 

 – Refinished floors

 – Replaced tile/vinyl

 – New carpeting

 – Basement waterproofing

 – Siding repair/replacement

 – Roofing repair/replacement

 – Fencing repair

 – Deck/porch railing repair/replacement

 – Fresh hardware

 – Fresh paint

 – Repaired/installed gutters

 – Replaced plumbing fixtures

 – Replaced lighting fixtures

 – Etc. 

 

As you can see, some of these renovations are for aesthetic purposes; i.e., paint, hardware. Others are important for the safety of your tenants and their families; i.e. railing repairs, etc. Finally, others are essential for the durability and integrity of the property itself; i.e., waterproofing, gutter repairs, etc. 

 

When looking for a turnkey rental property to buy, review the list of renovations. You should see a mix of all three categories of renovations. If you don’t, it’s possible you should look at a different turnkey property company. Because any turnkey rental property company should have all these things in mind; the safety of the tenants, the attractiveness of the property, and the value and integrity of the property.

 

Improvements That Are Less Important

 

Just as much as it makes sense to consider the type and quality of renovations on a turnkey property, you should also be aware of the types of improvements that are less important. The reason is that some turnkey companies do their best to sell properties that are in less than ideal condition by distracting potential buyers with “bling.” For instance, brightly painted shutters and potted geraniums on the front stoop will certainly add curb appeal. But surface embellishments don’t add value to the property. If the front lawn is lush and green but the hardwood floors in the living room are splintering, that’s a good sign that the seller is unwilling to do a quality renovation. When a turnkey property for sale has quality renovations, safety-minded renovations and aesthetic improvements, that’s a good sign that the seller actually cares about providing value to the investor. 

 

MartelTurnkey sells turnkey rental properties that we own ourselves. We analyze the value of the properties ourselves. We oversee the renovations ourselves. Any time you want to review the list of renovations on a property, you can click on that information on the property listing page on our website. We are personally vested in your success. We want to be your partner as you grow your real estate investment portfolio. Contact us today to get started!

 

 

Customer Testimonial:

 

“I highly recommend working with Antoine and Martel Turnkey. As a first time real-estate investor, Antoine gave me a great understanding of an industry I was unfamiliar with. Their properties are in great markets, fairly priced, and are truly turnkey. There were zero improvements I had to make on the property I bought from them in Memphis. If you are looking for a good investment opportunity, work with the MartelTurnkey team.”

 

~ Simon, Long Beach, CA

 

 

When we wrote about the BRRRR strategy back in 2018, we covered the five top risks of this method. The post was surprisingly popular, and it still gets a tremendous number of hits on our website, even after all this time. For those of you who may not have heard of BRRRR, it stands for Buy, Rehab, Rent, Refinance, Repeat. It can be a very solid way to build wealth, given the right economic conditions. But with things the way they are in the world currently, it’s probably not a strategy you should be testing out right now.

 

Reviewing the Risks of BRRRR

 

We covered the five main risks of the BRRRR method three years ago, but they warrant repeating. Every risk is associated with mandatory steps in the BRRRR process, so there’s no getting around them. They are:

 

 – Renovation Time

 – Renovation Cost

 – Appraisal

 – Time to Fill Vacancies

 – Rent Amount

 

Now, some of these risks would be mitigated due to existing circumstances in the U.S. economy. Others are so prohibitive—and, frankly, scary–that we can’t recommend that inexperienced investors get into a BRRRR project right now. 

 

Renovation Time

 

Renovation time refers to the amount of time from when you take ownership, to when the place is ready to rent out. Unfortunately, unless you’re a Jack or Jill of all trades, you’re not going to be in control of the renovation time. (And even if you can wear every trade hat necessary to do a rehab, you still won’t be in charge of the time because of the next point. But we’ll get to that in a minute.) Basically, you’re going to be at the mercy of your contractor and their workers, meaning the construction crew, tradespeople, etc. Ordinarily, in the best of times, you virtually need a whip and some kind of leverage to get rehab work done on time. That’s just the way it is in the construction business. Contractors juggle a lot of jobs at one time and it’s rare that projects are completed on time.

 

Now, you throw in the fact that the government right now is essentially subsidizing unemployment with free money, and you’ve got a shortage of workers to deal with. You’ve seen it in your neighborhood, we’re sure. “For Help” signs are in every storefront window. If McDonalds is having trouble finding enough staff to fry patties, how are you going to find qualified and licensed workers for your BRRRR project? 

 

It all adds up to lengthy—and we do mean lengthy—periods of time waiting for your renovation to get done. Meanwhile, your money is tied up, your property is sitting empty (not bringing in rental income), and you’re making payments to your insurance company and your lender. 

 

Frankly, we at MartelTurnkey have been working with contractors and construction crew for years now, and even we’re experiencing challenges with renovation timetables, getting workers on site and sourcing construction materials. And we even have our own Etienne Martel on site in Memphis overseeing everything. Despite this, it’s been harder than ever to get our projects rehabbed and ready to rent, all because of the way the economy is currently operating.

 

No matter how industrious, energetic or determined you are, there’s no getting around the fact that turnkey rentals are your best real estate investment option at this time. Please think twice and then think again before attempting anything like a BRRRR right now. It could be years before you reap any gains from it. Meanwhile, you could be getting passive income for you and your family as soon as next month, when you buy a turnkey rental from MartelTurnkey. 

 

Renovation Cost

 

Renovation cost is the sum of all the costs associated with finishing your rehab. This includes labor, materials and permits. Costs of construction materials are very much tied to everything from natural disasters, political climates, levies, taxes and even building trends. But in all the years we’ve been doing turnkey rentals, we’ve never found it so hard to lay our hands on simple renovation supplies. We’re talking about a 4-6  week wait on a basic shower stall. It’s just mind-blowing. We even have contacts and regular suppliers that we’ve built relationships with, who are telling us their hands are tied because no shipments are coming in. This is what we meant when we said, even if you are a master plumber, good luck getting your materials for your BRRRR. It’s going to be a long, hard wait. 

 

Now, the other three risk factors will be mitigated since property values are up and rents are up. So you won’t have to worry too much about your appraisal coming in too low, filling the place with a tenant, being able to charge a high enough rent or getting refinanced. But if you make it to this stage, you must have so much luck on your side that we recommend you run out and buy a lottery ticket right now! Because it’s near impossible to find qualified workers and source materials. That’s why we can’t in good faith recommend that you do a BRRRR right now.

 

We’ve said it before and we’ll say it again. The best way for you to invest your money right now is in turnkey rentals. You get a fully rehabbed property, already rented out and pulling in passive income. What more could you ask for from a real estate investment? We’re MartelTurnkey and we have your turnkey rental opportunity ready to buy.

 

 

Customer Testimonial:

 

“I am very fortunate to have found you and your company. I really look forward to working with you more in the months and years to come! It’s very rare to find someone who is honest and sincere in their dealings with others. You truly treat your investors like family and likewise treat your properties like your own.”

 

~ Edna Los Angeles, CA

 

 

At MartelTurnkey, we are committed to doing business with honesty, truthfulness and transparency. One of the ways that we strive to honor that commitment is by providing financials about our available turnkey rentals on our website. Anyone who is interested in delving into the financials can access them with a few clicks. You don’t have to be a member, you don’t have to be preapproved and you don’t have to go through a lengthy telephone conversation in order to be vetted. All anyone needs to do is click to download, and the financial spreadsheets will arrive in your inbox for you to peruse at your leisure. If you’re interested, following is a handy guide to reading our turnkey rental financials.

 

For the purposes of this guide, we’ll be looking at the spreadsheets for a turnkey rental property located at 5037 Greenhurst Drive in Maple Heights, Ohio. Maple Heights is a bedroom community of Cleveland, Ohio with about 23,000 residents, located in Cuyahoga County. 

 

When you first receive the email after clicking the “Download Financials” button, you’ll be presented with a link that will take you to the Google Doc spreadsheets for all of our available turnkey rentals. You’ll see that the Greenhurst Drive property is one of the available properties listed. The first thing to notice is the three tabs at the bottom. Begin with the Summary Page.

The Summary Page Tab

 

Eventually down the line you’re going to have a vacancy in your property. For instance, if your tenant moves out December 31st, your property management company is going to clean up the property, take care of any needed repairs, take new photos, list it for rent again, etc. Somebody might move in on January 15th, but you’ll still have a vacancy for those two weeks in January. With single-family homes, many tenants end up staying for two or three years, but vacancies do still occur at some point. Vacancy hold back allotment is 5% which is the equivalent to two weeks of vacancy each year.

 

Also, over the course of a year you may have other maintenance needs; a towel bar comes off the drywall or a toilet part needs to be replaced; things like that. Recommended hold back allotment is 5%. 

 

Management fee percentage is at 10% because that’s how much property managers charge of the rent. 

 

So vacancy and maintenance percentage amounts are the amounts that the owner should retain out of the rental income so that these costs can be handled out of reserves when the time comes.  The 10% management percentage covers the cost of the property management company and is included in the ROI.

The Vacancy and Maintenance expenses aren’t a true cost; look at it like a reserve bank account. It’s listed here so that prospective investors can better evaluate the earning potential of a property and be conservative in their evaluations.

 

The Cash Purchase Tab

This offers financials for a situation where you’re not financing your turnkey rental purchase, which in our experience happens only about 1% of the time. 

 

This spreadsheet is pretty self-explanatory; it offers a summary of returns both without maintenance and vacancy and Summary of Returns With Maintenance & Vacancy. 

 

Note Lines 14 and 15, where it says Estimated Annual Gross Income NOI and Estimated Monthly NOI. 

The Leverage Tab

The third spreadsheet is entitled Leverage, which represents the scenario used 99% of the time, where the buyer uses financing to buy a turnkey rental. The assumptions for the figures on this spreadsheet are that the buyer is putting 20% down and getting a low interest rate. In this example, the interest rate used is 4% over 30 years, as you can see in the top right-hand box labeled Loan Terms.

 

Hopefully this little guide will help you to more easily read the financials for any property you’re considering with MartelTurnkey. But if you have any questions about the financials for any turnkey rental property, please don’t hesitate to reach out to us. We’re more than happy to clarify the figures and answer any questions you have.

 

 

“I don’t want to sell you just one property, I want to sell you ten.”

– Lynn Martel, MartelTurnkey 

 

When searching for a turnkey rental company to work with, it’s important to make sure that you’re going to invest with someone who is diligent, thorough, and trustworthy. Because many people purchase turnkey properties in states they’re not actually residing in, it’s absolutely essential that the company you’re working with has a great reputation and is going to take every precaution to ensure that your new investment is in ideal condition when the transaction closes.

 

Unfortunately there are many turnkey companies out there that, metaphorically speaking, put lipstick on a pig. What we mean by that is that these companies – rather than take all precautions necessary to ensure your house is renovated correctly – will focus instead on doing things as cheaply as possible. Rumor has it that some companies do a bad job evaluating a home at the initial acquisition stage and then get stuck with unmanageable bills, so they have no option but to do substandard work and slap lipstick on a pig. Others are just greedy or have poor money management and they skip over important and more costly work. 

 

At MartelTurnkey we do everything we can to ensure that your property is in the best condition for a cash flowing turnkey rental property. We pay extreme attention to detail, make sure that all necessary repairs are made, and we are completely transparent and communicative during the entire process. Because of this, over the past few years, the majority of our clients have purchased at least two properties from us, and several have bought many more. Like I always say: “I don’t want to sell you one property, I want to sell you ten.” That means that we want to do things the right way so we can build customers for life.

 

In order to create the best possible experience for our customers, we focus on three things: going above and beyond for our customers, having third parties double and triple check our work, and remaining transparent through regular communication with our clients. Below is a breakdown of exactly how we are able to manage all three and why we have such a high client retention rate. 

 

 

We Go Above and Beyond 

 

There are unfortunately many turnkey rental companies out there that solely focus on money. By doing things as cheaply as possible, these companies are possibly able to achieve a higher profit. What these companies don’t realize though, is that this leaves their customers unhappy, and deters them from buying future investment properties with that company. MartelTurnkey is more concerned about maintaining a happy customer base than making a few extra thousand dollars. For instance, let’s say we have a $25,000 renovation budget, but the rehab bid comes back at $20,000. MartelTurnkey won’t take the extra $5,000 and keep it as profit. Instead, we will take that extra $5,000 and see where we can spend the money to ensure the buyer won’t have any big ticket items to fix in the future. We strive to ensure everything in the property has a significant lifespan, is operating safely and efficiently for the tenants, will provide the investor a reliable source of monthly cash flow, and that we’re not just, metaphorically, slapping  lipstick on a pig. 

 

 

We Have Third Parties Check Our Work 

 

This second fact check is really important for all of our clients, especially since the majority are purchasing turnkey rentals outside of their home state. For instance, if you live in Los Angeles and are purchasing a property in Cleveland, Ohio, we understand how important it is that you feel secure and can trust how we are managing the project since you are not physically in the vicinity of your turnkey property. In order to ensure this, you will feel confident knowing that we have not just one other party check our work, but FOUR independent professional companies. As an example, in the Cleveland area, several cities require a “Point of Sale Inspection”. Every single house we sell has to have a city inspector come out and inspect the house before it can be marked as completed. After this inspector checks the property, the property management company sends out a “quality control expert” who visits the property and reviews a checklist of items before giving their stamp of approval denoting that the house is ready-to-rent. And it doesn’t stop there. The third inspection is conducted by the bank’s appraiser who will evaluate the house and say what it is worth, taking into account the renovations and other factors.  Lastly, many of our first time clients hire a home inspector who will provide an in-depth report to the buyer. That means that there are FOUR independent professionals who go through the property with our client’s best interest at heart.

 

 

We Are Transparent and Regularly Communicate with Our Clients 

 

At MartelTurnkey, we don’t just want to sell you one property, we want to sell you ten. That’s why it’s so important for us to be transparent and honest with our clients and communicate regularly along the path to turnkey rental ownership.  Like any solid relationship, we find we face triumphs and challenges better together when we have established trust, and this is done through open communication. Because we own this business, and our reputation is of paramount importance to us, we are available 24/7 to answer our customers’ calls.  It’s really no surprise that more than 60% of our clients come from happy customer’s referrals. Our goal is to make sure all of our turnkey projects result in happy customers who will buy another house themselves, and refer their friends to us. Ultimately we want to sell all our investors 10 houses, and we work with that goal in mind. 

 

Purchasing a turnkey rental property can be one of the most exciting and satisfying experiences of a lifetime. That being said, it’s important to work with a company who understands this and prioritizes their clients’ happiness. At MartelTurnkey, we do everything in our power to make the property buying experience stress free, simple, and transparent. By remaining in constant contact with our clients, ensuring the properties they purchase are rehabbed and managed correctly, and having inspectors double and triple check our work, we are able to maintain our incredibly high standards. If you’re interested in learning more about turnkey rentals or would like to purchase a turnkey property, please don’t hesitate to reach out. You can contact us at info@martelturnkey.com. 

 

 

 

 

 

 

At MartelTurnkey, we believe that the quickest way to ensure happiness, independence, and continued financial success is to find a way to achieve financial freedom. That’s why we’re so passionate about helping our clients purchase turnkey rentals. By purchasing a turnkey rental, you’re giving yourself the opportunity to achieve financial freedom and generate passive income from a property that requires little to no maintenance on your part. It’s important to note, however, that in order to buy your first turnkey rental or your first investment property, you’re going to have to work with a lender. Traditional lenders such as Fannie Mae provide investors with a stable source of liquidity for mortgage lending, which “supports greater access to affordable home and rental housing finance in all markets, at all times” (Fannie Mae). In order to secure such a loan, however, you will need to have proof of income. And, the easiest way to do this is to present your W2 to a lender. Because using a W2 is the easiest and surest way to secure a loan, MartelTurnkey encourages all of our clients who do have a full-time job to keep that job before they decide to pursue a full-time career in real estate investment. By using your W2 to leverage financing, investors will be able to achieve financial freedom faster.

 

Preparing to purchase an investment property takes commitment, research, and patience. However, owning an investment property is well worth the hassle. At MartelTurnkey, we help our clients secure loans for their properties that they then use to purchase turnkey rentals with. And, as stated above, leveraging your W2 in order to secure a loan is the easiest way to get started in your investment journey. That being said however, it’s common nowadays for people to have non-traditional income that doesn’t fall into the W2 category. For instance, freelancers who work in what is referred to as the “gig economy”, business owners who take draws instead of paychecks, and people who are retired or have independent sources of wealth unfortunately won’t have a W2 to present to a lender. In these specific cases, investors are able to rely on their tax returns or, in some states, a Bank Statement Loan Program that looks – not at your W2s – but at your bank deposits for the last 12 to 24 months (CBC National Bank Coverage). Although these options are available for those without W2’s, relying on tax returns or the possibility of a bank’s Statement Loan Program may not always guarantee you a loan. That’s why, at MartelTurnkey, we encourage all of our clients who do have a full-time job to keep that job before they decide to pursue a full-time career in real estate investment. Quitting a full time job leaves potential investors without a proof of income, and in turn, they almost always have a much harder time securing a loan. As soon as you leave that day job and you don’t have those paystubs coming in, it becomes much harder to get financing.

 

If you do still have a full-time job, we suggest looking for a lender who will work with you in order to grow a scalable portfolio. Conventional lenders such as Fannie Mae allow you to use conventional financing on your first ten properties. That means that you’ll be able to take out ten loans on ten different properties. And, the good news is that if you get your first investment property using your W2, then properties two through ten will be even easier to secure loans for. The additional benefit of being able to take up to ten loans out at once is that you’ll be able to use the cash flow from your other properties to pay off one of your loans. So, for instance, if you have loans out on ten homes, you would be able to use the cash flow from those homes to pay off one property, and then secure one more property with conventional financing. After your first ten properties, you can start thinking about using hard money, asset-based lending, private lenders, or other creative financing deals to purchase future investment properties. However, if your W2 worked to secure your first loan, we recommend sticking with this type of lending. As the popular saying goes: if it ain’t broke, don’t fix it. 

 

So, what do you do once you do secure your first loan? We suggest getting started by buying a turnkey rental, or doing your first BRRR project out of state. That’s because these two options are relatively affordable, and will provide you with a stream of passive income, all while allowing you to keep your full time job. For those investors who are looking to scale their portfolios as quickly as possible, we still suggest using your W2 as leverage, especially on the first ten properties you purchase. We do not recommend using asset-based lending or hard cash lenders for single-family homes. For larger, multi-family homes these other methods are almost a necessity. Because of the more complicated nature of these loans, however, we suggest focusing on securing your first ten rentals with your W2 and then working on a plan to purchase a multi-family home after that. 

 

The biggest mistake we see people who get into real estate investing make is that they leave their full-time job to pursue a real estate investing career. We know how exciting it can be to begin your real estate journey, however, it’s incredibly important to make sure you have all of your affairs in order and enough proof of income to make this happen. By forgoing your W2, you’re leaving yourself in a much more difficult position, as your odds of securing a traditional loan immediately become much harder. If you are interested in learning more about our investment opportunities or are ready to begin growing your investment portfolio, don’t hesitate to contact us at info@martelturnkey.com 

 

The real estate industry is incredibly lucrative and offers a variety of opportunities for all levels of investors. Whether you’re a new investor, or a seasoned one, you’ll be able to find alluring opportunities that aren’t available in other industries. Because there are so many different investment paths and an abundance of resources readily available, getting started in the real estate industry can feel overwhelming for new investors. That’s why MartelTurnkey chooses to focus on selling turnkey rental properties. Not only are turnkey rentals some of the easiest investments to get started with, they also require very little maintenance and management on the investor’s end. For the new investor, turnkey rentals are the best way to get your feet wet in real estate. In order to help you out on your investment journey, MartelTurnkey breaks down the three most commonly asked questions of new investors, whom we speak with every day.

 

Can I Do What MartelTurnkey Is Doing, by Myself?

 

By far, this is the most common question we get asked.  While we don’t like to dissuade anyone from pursuing their dreams, most new investors don’t have the two main things required to do what we do: time and connections. Getting MartelTurnkey to the level we are at now, where we sell approximately ten turnkey properties a month, took a lot of time including hundreds of phone calls, numerous out-of-state visits, hours of migration and demographic analysis, all complicated with lots of trial (and some error). Over time we pulled together the trustworthy teams we now have in place. Strong relationships with our construction crews, project managers, property managers, escrow and insurance companies, and on-the-ground advisors, result in our ability to offer a cash-flowing, rehabbed turnkey property in a short time frame. It’s very difficult to manage all of these moving pieces at once, and the time required makes it much less feasible.  If you are determined to undertake an out-of-state rehab project, and you are in no rush to be cash-flowing, and you feel you can manage a project of many, many pieces, remotely, our advice is to achieve financial freedom first.  And the best road to financial freedom is by building a cash-flowing, turnkey rental portfolio.

 

Should I Finance or Pay Cash on My Investment?

 

The idea of owning a property for only $20,000 is very attractive to our buyers and most of them choose to finance the balance.  Sometimes, however, an investor will question if they should buy a property outright or get a mortgage. Before we give you an answer, a little more information is required.  If you are purely looking to maximize your cash-on-cash returns, then the best choice is to finance an investment property. On the 20% down, you will be making approximately 15% annually after fixed costs. So, if you are planning to retire 15 years from now, then we recommend that you use financing. On the other hand, if you are close to retirement and want to maximize your net cash flow, then it might be better to buy the property with cash. While the return will be less, percentage-wise, it will be heftier as far as monthly incoming cash. At MartelTurnkey, we often recommend financing to our investors, but we also like to understand your goals and situation so we can help you achieve them. On each property in our inventory, the related financials show you the numbers for both cash and financing scenarios. Be sure to take a look.  

 

Why Does MartelTurnkey Invest in Markets Like Cleveland and Memphis? 

 

With a statistician on our team at MartelTurnkey, we are continually analyzing migration statistics, demographics, housing prices and current events across the country in search of the best markets for our buyers. Cleveland and Memphis are two of the best markets we have found to invest in today. 

Memphis has a beautiful mix of historic and modern architecture. As a river city, it’s known as a booming transportation and industrial hub, and is home to the second largest cargo airport in the country as well as the FedEx Corporation Headquarters. Additionally, the city boasts more than ten colleges and several medical centers, both of which provide major employment opportunities for residents. Beale Street, Graceland, and the National Civil Rights museum bring thousands of tourists each year to the city. Housing wise, the median sales price is incredibly affordable, at $81,000. The average rent on our properties is also very affordable, around $750/month.  

Cleveland and its numerous bedroom communities check all of our criteria boxes as well. Home to a whopping TEN Fortune 500 Company headquarters, the city also brings world class medical teams to the area at the Cleveland Clinic, which is rated the second best hospital in the USA and employs thousands of people at its many campuses. Amazon’s presence is also continually growing, and continues to regularly open warehouses throughout the city. Home prices in Cleveland are slightly higher than Memphis, but we select properties bringing a minimum 15% ROI to our investors.  

 

Have more questions about real estate investing? Bring them to us. MartelTurnkey provides downloadable financials on any property and will review the cash vs. lending analysis with any potential investor. If you want to learn more or get started, simply book a call with an advisor at Info@martelturnkey.com. 

 

 

 

When it comes to investing in residential real estate, choosing between single family rentals and multi-family rentals is one of the most common decisions that investors will have to make. While some will argue for one over the other, at the end of the day, it really comes down to what works best for you and your investment goals. While single family rentals may appeal to less seasoned real estate investors because of the lower cost, multi-family rentals are popular amongst those investors looking for more cash flow, but who are also comfortable with taking more risk. And that’s because while multi-family rentals can be a great option for those who have more cash to spend, single family rentals provide for a safer, and less expensive investment. Below are advantages to both single family rentals and multi-family rentals. 

Single Family Rentals

 

1. They’re More Affordable 

A single family rental unit, also known as a “SFR”, is basically a home that is rented out. The simplicity of these units is what makes them such great investments for new real estate investors. They’re typically less expensive and also require a lot less capital upfront. For instance, in less costly areas of the country, new investors are able to find single-family rentals for as low as $100,000. MartelTurnkey caters to these buyers as most of our homes sell for $80,000 to $100,000. On the other hand, multi-family rentals, even in less desirable locations, could fall into the millions, depending on how many units the property has. 

 

2. Quicker Cash Flow 

Whereas multi-family rental units can take you at least six months to see some cash flow, single-family rental units from MartelTurnkey will generate cashflow within just one month. This is a critical consideration when we acquire distressed homes which we then rehab and tenant.  After fixed costs, our goal is to ensure that our investors are cash-flowing the first month. Additionally, there’s a very high chance that your property will appreciate in value over time, leaving you wealthier than when you first purchased the property. 

 

3. Easier to Sell and Manage

Single family rentals aren’t just easier to buy – they’re also easier to sell. And that’s because they’re available not just to commercial real estate investors, but also normal families. The barrier to entry is lower, and so is the barrier to exit. You’ll have more options to choose from when selling, as there are typically fewer buyers for multi-family homes. Additionally, because single family homes are a lot smaller, they’re infinitely easier to manage. Unless there’s a major issue in the single family home, they’re less costly to repair and replace anything that may need to be replaced. 

 

4. Growing Demand for Rental Units

Data from NAREIT, the single family rental has lingered around a 30 percent growth rate for the past three years, compared with less than a 15 percent growth rate for the multifamily market during that same period. That means that single family rental units are more popular than ever. And this is partly due to the fact that millennials are around the age where they are looking to purchase homes and start families. Real estate experts predict that the demand for single family rentals will continue to grow, so it’s a great opportunity to hop on the bandwagon. 

 

Multi-Family Rentals

 

1. The Rental Income Can Be Higher

Because multi-family homes have more housing units, and therefore more tenants occupying them and providing rental income, investors can generally earn more than they would on single family rental units. Additionally, if there are rent increases, you’ll be making more income as well. 

 

2. Loans for Two-to-Four-Unit Properties Are The Same As Single Family Rentals 

If you’re looking to finance a multifamily property with two to four units, there’s good news: these loans vary very little – or not at all – from loans for single-family homes. So, while two to four units are typically classified as multi-family units, they’re almost as accessible as single family units. After four units is when you need to take out larger, commercial real estate loans that are more complicated and more expensive than ones for single family units. Lending rates for rental properties are slightly higher than for your primary residence, but we are seeing very good rates these days.

 

3. You Can Live There

Unlike single family rentals that are limited in space, multi-family rentals provide investors with the ability to live in their property. Not all investors choose to do this, however, if you are looking to live within the property you own and are managing, this could be another plus. If you missed last week’s article on house hacking, read it here: https://martelturnkey.com/why-we-dont-love-house-hacking/

 

4. Economies of Scale 

Economies of scale are also known as reduced costs per unit. This typically comes into play if you’re deciding between purchasing multiple single family units or just one multi-family unit. For instance, if you need to make repairs on the unit, such as the roof, then you’d only have to invest in one roof that will cover all of the units, as opposed to having to repair multiple roofs on more than one single family rental. If you choose to hire a management company to manage your property, you’ll also only have to hire one to manage your multi-family unit.

 

When deciding to invest in a single family unit versus a multi-family unit, it’s important to note that both come with their own set of risks and rewards. However, if you’re a new investor, are looking for quicker cash flow, and want to deal with minimal stress, a single family rental is the best way to go. Single family rentals are more popular than ever which is a testament to their profitability and accessibility. At MartelTurnkey, we encourage our new investors to start building their real estate portfolio with single family rentals because of their many advantages.