Investor Spotlight: Krystal
Krystal is one of our valued investors and she kindly agreed to be interviewed for our Investor Spotlight series. Krystal lives in San Jose, California, which is just an hour south of San Francisco. Living in the Bay Area has been both a benefit and a drawback for Krystal in terms of real estate investing, as you’ll learn more about in this interview. As Project Manager at a technology company, Krystal is adept at managing business operations, and she handles her own real estate investment operations very skillfully. She was happy to share her experiences with the hope that others could learn more about investing in real estate.
MT: What first inspired you to get into real estate investing?
Krystal: When I was 26, I bought my first home from a builder who was constructing new customized homes. The market did really well and my family was growing so I sold and bought another home in a nearby city with a better school system. This time I figured I could get more value if I bought a fixer-upper and renovated it myself. While living in the home I renovated, the market crashed so I just worked my full-time job and waited for the market to improve.
When the market eventually recovered, I sold that home as well. The real estate in the Bay Area was appreciating rapidly and I just continued buying and selling my home and rolling the profits into my next house. At times I also rented one of my rooms to friends or family that needed a place to stay. With the extra income, I wanted to invest in a second property but as prices kept rising in the Bay Area, it became problematic. The solution was to buy out of state in order to continue investing in real estate. I ended up buying a property outside of California with some family members, but that didn’t really go so well. I learned to never buy into an area where you haven’t sufficiently researched the market or trends.
MT: Do you have a particular investment strategy that you employ?
Krystal: My current strategy is to generate a passive income stream through investments with a decent ROI. I’m not seeking short term gains. My focus is on long-term investment properties where I can build equity using rental income. Therefore, I’m not using the income from the turnkey properties to make any lifestyle changes. I’m just reinvesting the monthly cash flow into my investment properties to pay them off quicker. My original plan was to purchase as many turnkey rentals as I could, but I hit the Fannie Mae 10 loan limit pretty quickly. Now I’m looking at other ways to generate passive income with my investments.
MT: Can you tell us more about how MartelTurnkey came onto your radar?
Krystal: Last year, someone mentioned Antoine’s Instagram account to me and that’s how I became interested in turnkey rentals. At the time, my main source of information about real estate investments was Antoine’s Instagram account. Then I found the MartelTurnkey website a few months later. The website was really helpful for me since I could see all the turnkey properties listed for sale. Mainly, I just followed Antoine on Instagram for a few months to understand how the company was run. He would post all the time about the different types of real estate investments and also provided ROI examples on turnkey properties. I absorbed all the information over a few months before I made my first offer through their website.
MT: Had you considered other turnkey rental companies apart from MartelTurnkey?
Krystal: I did look into a few online, but their websites were not as clean, nor did they provide much information about the properties, such as a list of recent renovations. The MartelTurnkey website also provided access to a worksheet which was critical for me to make purchase decisions. It gave me a detailed view that broke down the numbers for investing in a turnkey rental. I decided not to go forward with other turnkey companies since they didn’t offer any of the advantages that MartelTurnkey did.
MT: Can you tell us what your experience has been like working with MartelTurnkey?
Krystal: Sure. It’s been great working with the Martel team. They are all really responsive and professional. That helps me in terms of trust and their accountability. From the beginning, they’ve always provided answers very quickly. Whether it was for a bid on a house or a question on a property, I would usually get a response in an hour or two.
They’ve set up a really good structure in terms of their notifications throughout the process, which keeps me informed. Also, we did most of the document signing via an online signing tool that they have. This helped me because I was able to sign the documents from home or office, from a computer or a mobile phone.
Throughout the process of buying the turnkey properties, the team did things that I appreciated as an investor, especially as an out of state investor. They sent really nice photos of the homes after renovations were completed, they introduced me to all the different people I needed; they introduced me to the bank that provided the loan, the local property management that was going to take care of the property and the local insurance provider. It was really easy to work with all the recommended companies also. MartelTurnkey was able to address all my concerns and questions every step of the way.
MT: Did you decide to use the lenders that MartelTurnkey recommended?
Krystal: I did. They had really good rates and an online portal that made the paperwork easier for remote applicants. Prior to going with their recommendation, I also checked out rates from my local bank and some online banks but their rates came in much higher. Also the selection of banks was limited because a lot of banks don’t lend to investors when the house price is under a hundred thousand dollars.
MT: Have you had any real estate investment challenges that you had to overcome?
Krystal: Yes. It takes a while from the time of agreeing to purchase a property to when you actually close on the property so it’s a bit of a waiting game. Also, once I closed on the properties, there were occasionally some unforeseen repairs at the properties that couldn’t have been predicted. For example, a raccoon had taken up residence at one of the properties prior to the property being rented out. The property managers took care of it, but it was an unexpected expense. The other challenge I have faced is finding non-conventional financing, since once you reach ten mortgages, you can’t continue with a traditional lender.
MT: Finally, what advice would you give to first time investors?
Krystal: A few pieces of advice I would give to first time investors:
1. Determine in advance what your goals are for buying properties; whether it’s for income or resale. I was looking for monthly passive income so I wasn’t too concerned that the properties weren’t appreciating in value quickly, since I was going to hold the properties for a long time.
2. I’d recommend going the financing route even if you have enough cash for a full purchase because you are able to leverage your cash to get a better return on your money.
3. Anticipate that there will be repairs even if the house you just purchased has been fully renovated.
4. If you can, purchase a few rental properties or have other sources of income, since there will be times when one property doesn’t provide any income due to vacancy or a large repair.
5. Keep on top of what’s happening with your rental property using the property management’s portal. You shouldn’t hesitate to ask questions about anything that you don’t understand. The property management company is very good but they are managing many properties and sometimes do make mistakes.
6. It seems like a rental property may be a big investment but it’s low risk and worth it for the returns!