A Real Estate Investor’s Guide To The Housing Market

If you read financial news, you will read a lot about the “housing market.” Most of it will seem to circle around homeownership — not real estate investing. Very little breaking financial news directly addresses the concerns of real estate investors … even turnkey single-family real estate investors like the clients of MartelTurnkey.


It becomes necessary, then, to learn to “read between the lines” of the financial news — to pick around the details that speak directly to homeowners or aspiring homeowners, and discover the hidden messages that real estate investors can use to select a market, pick a property, and exit with the highest-possible ROI. 


Let’s explore the main economic drivers affecting the housing market and discuss strategies for investors to thrive in this environment.

Demand and Supply Dynamics

One of the most fundamental economic forces in the housing market is the balance between supply and demand. This is Econ 101 — when demand for single-family homes outpaces the available supply, prices tend to rise. If you already own real estate in such a market, you may reap the benefit through increased property values … but the market will become more expensive to enter and possibly have less headroom for appreciation. 


However, when there is an oversupply of homes, prices can stagnate or even decline. This is bad news for current property owners. The low prices may be tempting, but if there are more available rental homes than there are renters, the new landlord in the market may face long periods of vacancy and disappointing rental rates.  


To stay ahead of the game, investors should closely monitor local market conditions, including population growth, employment trends, and new housing development projects. This information can help to gauge the potential for future demand and identify undersupplied areas with strong investment potential.


One of the most important metrics to look for is the Th. This measures how fast new homes on the market are getting taken. You should be able to find absorption rates for both purchases as well as rentals. If the current supply of homes is taking an average of only 30 days to get absorbed, demand is red-hot and you might expect to enjoy steep appreciation, high rental revenue, and little vacancy. 


If, on the other hand, the housing supply is taking twelve months to absorb, you know houses are sitting on the market and/or vacant, depressing purchase and rent values and possibly portending large vacancy losses for your rental property.  

Interest Rates and Financing

Interest rates play a significant role in the housing market, affecting both property prices and the cost of financing for investors. As interest rates rise, borrowing becomes more expensive, leading to reduced demand for homes and potentially lower property values. On the other hand, low-interest rates can spur demand, driving up prices and rental rates.


When rates are low, it may be an opportune time to acquire properties or refinance existing loans to lock in a lower interest rate. During periods of rising rates, home prices can actually go down as mortgages become more expensive. These low home prices can be tempting, but investors should be cautious about over-leveraging and carefully assess the potential impact on their cash flow. 


Read more about the impact of changing interest rates on real estate investors here.


Inflation is another important economic factor to consider in the housing market. Higher inflation can lead to rising construction costs, which can put upward pressure on home prices. Moreover, as inflation erodes the purchasing power of money, investors may seek tangible assets, such as real estate, as a hedge against inflation. This increases the demand for new homes, which can also put upward pressure on home prices.


For investors who already own rental property, inflation is good news — their property values and rental rates are likely to increase, while the value of their outstanding mortgage debt remains the same and effectively becomes less valuable. Buying investment property into a period of high inflation may be a good idea if you want to protect your cash against inflation — but be careful of overpaying. If inflation slows down, you will enjoy fewer benefits. 


Read more about the impact of inflation on real estate investors here.

Government Policy and Legislation

Government policies and legislation can have a significant impact on the housing market, affecting everything from property taxes and zoning regulations to rental laws and mortgage lending practices. As a single-family real estate investor, it’s crucial to stay informed about local, state, and federal policies that could influence property values, rental demand, and the overall investment landscape.


Some examples of government policies that could impact investors include tax incentives for homeownership or rental properties, changes to rent control laws, and new regulations on short-term rental platforms like Airbnb.


If you need help parsing what you read about the housing market, and wondering what it means for you as an investor or aspiring investor … MartelTurnkey is here to help! We have decades of collective experience monitoring the housing market and using that data to make successful real estate investments. 


Please reach out to us any time — we’d be happy to tell you how the local housing market informs the cities and property types we choose for our inventory of turnkey real estate investments available to investors like you.

Is Your Money Safe?
Reflections on the SVB Collapse, and What to Do About It

Most of us were taught as children that a bank is the safest place to put our money. The interest rates may be pitiful, there’s no protection from inflation … but by golly, you can sleep soundly knowing that the money you put in your bank account yesterday will still be there in the morning. With recent financial news it is worth asking “Is Your Money Safe?”.


But what if we woke up one morning to discover that this was no longer the case?


The recent collapse of Silicon Valley Bank (SVB) has raised concerns about the stability of the entire banking system. Founded in 1982, SVB became the go-to bank for entrepreneurs and startups. Why not? “Silicon Valley” is right there in the name! It’s the cradle of digital-age innovation. Who wouldn’t want the good luck charm of an SVB bank account? 


Then 2020 happened. Among other things, interest rates were reduced to zero and stimulus money flooded the economy. Banks and individuals had a problem that you would never in a million years think of as a problem — too much money. 

How Does A Bank Fail Because Of “Too Much Money?”

What does that even mean? How does “too much money” add up to disaster?


US banks operate on a principle called “fractional reserve banking.” Under this principle, a bank is required to keep cash in reserve … but not every dollar on their deposit books. They only have to keep a fraction of the grand total of customer deposits on hand. 


The Federal Reserve sets what that reserve fraction will be. Let’s say they set it at 10%. If bank customers have a total of $100 million on deposit with that bank, the bank is only required to keep $10 million in cash on hand at any given time. 


That’s why a “run on a bank” is so dangerous. If every customer somehow showed up on the same day and demanded their money back, the bank simply would not have it.


Well, buckle up … in March 2020, the Federal Reserve reduced the reserve requirement to 0%. Banks no longer had to keep any percentage of their deposits as cash-on-hand … leaving them free to lend it out and invest it as they saw fit. 


How did SVB use that freedom? It invested heavily in government-backed bonds with a significant portion locked away for three to four years at an interest rate of just 1.79%. 


See the problem? When high interest rates and inflation hit, those investments immediately revealed themselves to be losers. Who wants to be holding 1.79% bonds in a 7% interest rate environment and an inflation environment of nearly 8%?


At the same time, SVB’s biggest customers — the tech companies — saw their revenues take a hit due to the exact same economic forces. At a key moment, SVB found itself unable to raise capital, and Federal regulators stepped in and shut the bank down. 

Will SVB Customers Get Their Money Back?

So what happens to all the money on deposit at SVB, with little or no fractional reserve requirement to cover it? It’s FDIC-insured, right? The government will pay. Right?


Actually, wrong. FDIC only insures balances up to $250,000. Only 2.7% of SVB’s deposits are less than $250,000, meaning 97.3% of their money is not FDIC insured, leaving the fate of that money uncertain. 


Now, the Federal government has stepped in to guarantee 100% of depositors’ funds in the SVB debacle … but if they hadn’t, customers with more than $250k on deposit would be stuck waiting to recover their money in a bankruptcy court, a process that could take years and result in only partial restitution.

Is This an SVB Problem, or an Everyone Problem?

Everyone, potentially. The SVB failure could ripple through other banks and companies, as it was a major bank for venture-backed companies in the US. With over $342 billion worth of customer funds held by SVB, the collapse could cripple many businesses that relied on these funds for growth. 


And if more banks fail, who knows if the Federal government will be able to guarantee all the affected deposits. There’s only so much money in the US Treasury, and our national credit card is already overtaxed. 

So if banks aren’t safe … what now?

If you’re scared, I don’t blame you. What do you do with your money if you can’t trust a bank of all places?


Here’s what to consider:


Don’t keep more than $250,000 in any single bank. As long as your deposits in each bank are under $250,000, you still have FDIC insurance (for what it’s worth).

Choose larger, more diversified banks. Will FDIC insurance always save you? Better question — wouldn’t it be nice not to have to find out? Give yourself that peace of mind by choosing a bank that is less likely to fail due to more sound reserve and investment policies. 

Diversify your own assets! In this era of high inflation, consider shifting from cash to real assets — like cash-flowing real estate. The US has a strong history of defending property rights, and with a real asset like rental property, you have the security of owning a scarce, in-demand resource that will rise with inflation, rather than lag behind it like cash.


If you’re ready to take some of your money out of the wobbly banking system and put it into cash-flowing, inflation-resistant property, it doesn’t have to be difficult — MartelTurnkey has you covered. We constantly replenish our inventory of cash-flowing rental real estate available for our turkey investors. 


Click here to see what properties we currently have available.


Click here to watch Eric Martel’s YouTube video on this topic.



Want to take some cash out of the struggling system and quickly transition it into something real? Reach out to us today!

The 1031 Exchange — How It Saves You Taxes, and How to Do It Correctly

Whether you’re a seasoned real estate investor or new to the game, you may have heard about the 1031 Exchange – a powerful tax-deferral strategy that allows you to defer capital gains taxes on investment property sales. One of the biggest problems we solve at MartelTurnkey is to help our investor clients execute successful 1031 exchanges.


Let’s take a look at what a 1031 exchange is, how it works, its benefits and drawbacks, and how we help investors take advantage of this valuable tool.


What is a 1031 Exchange?

A 1031 exchange, also known as a like-kind exchange or a Starker exchange, is a provision in the U.S. tax code (Section 1031) that allows real estate investors to defer paying capital gains taxes on the sale of an investment property by reinvesting the proceeds into a new, qualifying property. The primary goal of a 1031 exchange is to enable investors to reinvest their profits and defer taxes, allowing them to grow their investment portfolios more efficiently.


How Does a 1031 Exchange Work?


Sell the Relinquished Property. The investor sells the original investment property, referred to as the “relinquished property.”


Identify Replacement Property. Within 45 days of the sale, the investor must identify up to three potential replacement properties. These properties must be of like-kind, meaning they must be of the same nature or character, regardless of their quality or grade.


Purchase Replacement Property. Within 180 days of the sale of the relinquished property, the investor must complete the purchase of the replacement property.


Use a Qualified Intermediary. To ensure compliance with IRS rules, a qualified intermediary (QI) must hold the proceeds from the sale of the relinquished property during the exchange process. The QI will transfer the funds to the seller of the replacement property when the transaction is finalized.


Benefits of 1031 Exchange


Tax Deferral. The primary benefit of a 1031 exchange is the ability to defer capital gains taxes, which can be as high as 20% for federal taxes, plus any applicable state taxes. This allows investors to use the full amount of their profits to acquire new properties, increasing their overall investment potential.


Portfolio Growth. By deferring taxes, investors can more rapidly grow their real estate portfolios, taking advantage of the power of compounding and leveraging their investments for greater returns.


Flexibility. A 1031 exchange allows investors to adjust their investment strategy, diversify their portfolio, or change property types without incurring immediate tax liability.


Drawbacks of a 1031 Exchange


Strict Deadlines. The 45-day identification window and the 180-day purchase deadline are inflexible, and failure to meet these deadlines may result in the disqualification of the exchange, resulting in immediate tax liability.


Complexity. The process of completing a 1031 exchange can be complicated, and investors must follow specific rules and regulations to ensure compliance with the IRS.


Dependence on a Qualified Intermediary. The use of a QI is crucial for a successful 1031 exchange, but finding a trustworthy and experienced QI is essential, as they will hold the proceeds from the sale during the exchange process.


How MartelTurnkey Can Help With Your 1031 Exchange

MartelTurnkey can help you execute a successful 1031 exchange in a number of ways. Here’s how:


Property Identification. No need to sweat that 45-day property identification deadline. MartelTurnkey always has a selection of cash-flowing turnkey rentals ready to go. Click here to browse our current offerings.


Meet The Deadlines. In addition to sourcing properties, we also pair our investors with professionals who know how to get the job done quickly. You don’t have to worry about that 180-day closing deadline either — our teams can get it done.


Get It Done Right. In addition to pairing you with professionals who can meet the closing deadline, we can also refer you to reputable QIs who will make sure that the complex paperwork is done correctly. 



Considering a 1031 exchange? Or considering acquiring your first investment property so you can take advantage of a 1031 exchange in the future? Reach out to us today!

Exploring Euclid, Ohio:
Insights on Real Estate, Demographics, and Safety

Euclid, Ohio is popular with investors seeking appreciating turnkey rental properties.  Having renovated and sold over 50 houses in this city, we have watched it appreciate and improve over time.  House values continue to increase and rents remain strong. Join us as we explore 12 criteria that make this city so popular with investors.


Affordability: Euclid offers a more affordable cost of living than many other cities in the Cleveland area, making it an attractive option for those looking for a more budget-friendly location.  For investors, this means cash flowing houses can be purchased for under $150,000.


Proximity to Cleveland and airports: Euclid is just a short drive from Cleveland, providing easy access to all the amenities and attractions of a larger city. At the same time, the large yards and recreation amenities attract young families from the city. Euclid is also located just a short drive from Cleveland Hopkins International Airport, providing easy access to domestic and international travel.


Growing economy: Euclid has a diverse economy, with a mix of industries including manufacturing, healthcare, and education, which helps to provide stability and growth opportunities. Cleveland Clinic and Amazon are two very big employers in Euclid.


Strong housing market: Euclid’s housing market has remained relatively stable, with a healthy mix of both new and established homes.


Community events: Euclid offers a variety of community events throughout the year, from festivals to outdoor concerts, providing opportunities to get to know your neighbors. A strong sense of community makes for long term residents.


Access to Lake Erie: Located on the shores of Lake Erie providing access to beaches, boating, and other water activities. The new Euclid Lakefront Trail is a popular destination for walkers, runners, and cyclists, offering scenic views of Lake Erie and nearby parks and green spaces. It also serves as an important link in the larger network of trails and paths in the Cleveland area. It is part of the Lakefront Bikeway, a system of bike paths that spans the entire length of the Cleveland lakefront, and connects to other trails and paths throughout the region….which leads us to….


Parks and recreation: Euclid has a number of parks and outdoor recreational areas, including Euclid Creek Reservation and Sims Park, which offer hiking trails, playgrounds, and picnic areas. Briardale Golf course is here, C.E. Orr Arena and don’t miss the Polka Hall of Fame!


Schools: Euclid has a number of highly-rated public and private schools, providing families with access to quality education options.


Access to healthcare: Euclid has a number of healthcare providers, including Euclid Hospital and Cleveland Clinic Euclid Hospital, ensuring that residents have access to quality medical care. Cleveland Clinic is one of the top rated hospitals in the country, in fact it’s been named The Number One Hospital in the country for cardiology and heart surgery for more than 20 years.


Historic architecture: Euclid has a number of beautiful historic homes and buildings, providing a unique and charming aesthetic to the city.


Diversity: Euclid is a diverse community with a mix of different cultures, backgrounds, and ethnicities.


Safety: Euclid is generally considered a safe community with a relatively low violent crime rate compared to other cities in Ohio. The Euclid Police Department works hard to maintain public safety and provides resources and programs to help prevent crime and increase community engagement.


Overall, Euclid offers a variety of benefits, from affordability and a strong sense of community to access to outdoor recreation, job opportunities, and quality healthcare. These factors make Euclid an attractive option for those looking to buy property in Ohio. We currently have several houses available in Euclid. Click here to see our inventory and add a Euclid house to your portfolio.


5 Ways to Reduce Your Risks When Buying a Turnkey Rental Property,
Without Paying Extra

There’s no getting around it — every investment involves risk. Wiring your deposit money can be nerve-wracking, especially for first-timers. It can be hard to shake the feeling that you’re making a big mistake with a large amount of money. This is especially true when buying turnkey real estate you have never seen, several states away. In this article we will show you how to reduce your risks when buying a turnkey rental property.


But unlike the stock market, which is completely unpredictable, real estate — especially turnkey real estate —  offers you several avenues to reduce or control your risk, without reducing your exposure to profit or even costing you any extra money (insurance, emergency funds, option fees, etc.)


Here are five ways to reduce your risk when buying a turnkey rental that don’t cost you any extra money …


1. Research the Market

Real estate is a highly localized industry. Even a weak property will do well if it’s in a good area. If you’re thinking of investing in a particular market, learn everything about that market you can. 


Information breeds confidence. Find out if people are moving there, if companies and jobs are moving there. Look for news articles about the local economy.


Consider setting up interviews with local professionals. Be wary of realtors — they will definitely want to talk to you, but they tend to be cheerleaders for the market because they only get commissions if you do deals there. Property managers or contractors are a better source, because they actually have to run the deals you do there.


If you have a particular neighborhood in your sights, check the area amenities on Walkscore.com, the average market rent on Rentometer.com, the crime heat map on Trulia.com.

2. Partner with a Reputable Turnkey Rental Provider

On easy and free way to reduce the risk of your turnkey rental property purchase is to partner with a reputable turnkey provider. If only we had one to recommend you …


But seriously, folks, MartelTurnkey has been in business for over six years. We have testimonials and reviews online attesting to the quality of our work. We’re in this for the long haul and have no interest in jeopardizing our reputation by selling you a lemon. This isn’t rocket science.


Just as you can reduce the risk of further damage to your car by choosing a reputable mechanic, partnering with a reputable turnkey provider is the best investment in peace of mind you can make. The first few deals may be nerve-wracking, but once you get comfortable with the provider (and hooked on the cash flow and increasing property values), you’ll get to the point where you’re buying deals as quickly as you can raise the money.

3. Check the Property’s Condition

One of the biggest risks of purchasing real estate is the secrets that might be hiding in the bones of the property. Every buyer fears a major system failure — a collapsed roof, a flooded basement, etc. — rearing its ugly head while the ink is still drying on the mortgage contract.


The remedy is to verify the property’s condition before you buy. How can you do this with a turnkey rental property you don’t plan to visit? Several steps:


The Property Inspection. This is a standard part of any property purchase, and it doesn’t require you to be there. The inspector will furnish you with a detailed report, accompanied by photo evidence.


The Renovation Contracts. Most turnkey rentals have been extensively renovated, and the provider will provide you a list of all the work that was completed. Photos provide good evidence of the work and city inspection certificates (when required) help clarify things


Boots On The Ground.  This is supposed to be about how to reduce risk with no extra cost so I don’t want this to be about hiring help, but if you happen to have friends or family in the area — or someone you can barter services with — have them visit the property for you to verify its condition. Just remember to pick someone who isn’t affiliated with the seller or turnkey rental provider so they have nothing to gain by misleading you. 


That being said, eventually something always breaks in every property. It is inevitable.  Whether it happens in Year 1 or Year 10 is only a question of how long you have to save up a contingency fund to cover it. At MartelTurnkey we always recommend you have a cushion for unforeseen situations.


So although this article is about not spending extra money, it bears repeating — have a contingency fund from the get-go.  We discuss how to do that here.  A property can suffer tens of thousands of damages and still be wildly profitable over a 5-10 year time horizon. If you have the cash cushion to get you through it, you’re still in great shape. 

4. Check the Financial Documentation

The physical condition of the property isn’t the only thing to verify — you should also consider the financial condition. 


Check documentation for every bill you will be responsible for. Look up property tax records. Ask to see every service contract. Call insurance agents and find out what it will cost to insure this property so there are no surprises. If there is a tenant in place, examine the lease. If anything is a mismatch, ask questions until you are satisfied with the answers.

5. Target Positive Cash Flow on Day One

Positive cash flow is about more than just financial freedom. Cash flow is liquidity. Cash flow gives you options. Positive cash flow reduces risk. 


So if you’re buying a turnkey rental property, you can de-risk your investment by targeting a property that has positive cash flow on Day One — no deferred maintenance, a tenant in place, enough rent coming in to cover all the projected expenses, including the mortgage payment.


What if you don’t intend to have a mortgage? What if you’re buying all cash? With no mortgage payment it’s certainly a lot easier to achieve positive cash flow and reduce your risk. 


But if you want to still adhere to the principle of de-risking your investment, follow the “75% Rule” — do the math as if you were borrowing 75% of the purchase price. If the math returns positive cash flow, you’re taking a pretty minimal risk, even with a mortgage … which means you have very little risk as an all-cash buyer.


Ready to invest? MartelTurnkey has a sterling reputation in the Turnkey Rental industry, with the results and testimonials to back it up. We are always replenishing its inventory of fully-renovated, tenant-in-place rental properties in strong markets ready to produce cash flow on Day One. The next one could be yours! See what properties we have available right now.

When Should I Refinance My Rental Property?

One of the most exciting times in the life cycle of a real estate investment is when it’s time to refinance. Your wealth has been tied up in equity … but at refi time you get to turn that equity into cash! Best of all, a refi is a not-taxable event — no capital gains taxes to pay to Uncle Sam. In this article we help you answer the question: “Is it the right time to Refinance My Rental Property?”


That being said, there’s a right time and a wrong time to refinance. Here are some circumstances when it may make sense to refinance your rental property …

1. When You Paid All Cash

If you paid all-cash because you couldn’t get a loan or didn’t like the lending environment, you might want to refinance to add leverage to your investment and pull out principal for other investments. This isn’t “refinancing” since you didn’t finance in the first place, but on paper it’s a “cash-out refi.”

2. When You Can Get A Lower Interest Rate

As I’m sure you know, interest rates are higher now than they have been in the past ten years. The Fed is making big moves. If interest rates come down in a few years, it might be worth refinancing into that lower interest rate to get a lower payment. But be careful — read #6!

3. When You Can Pull Out The Principal

If you have built substantial equity in the property — either through appreciation or principal paydown — it may be time to pull out the principal. For example, if you put $50,000 into acquiring the property and your refi will net you $50,000 cash, you have pulled out all of the principal. If your refi will net $25,000 cash, you have pulled out half of the principal.


Why do this? Because it de-risks the investment. There’s no more risk of losing all your money … because you have all your money back. But you still own the asset! You still get to collect cash flow and enjoy future appreciation.


But refinancing to a bigger loan adds risk in a different sense, as we’ll see in #4 … 

4. When Your Cash Flow Increases

A cash-out refi usually means replacing a mortgage loan with a bigger mortgage loan. After all, you have to pay off the first loan. Unless you got a much better interest rate in #2, that also  means a higher mortgage payment. 


A bigger mortgage payment eats into your cash flow. Smaller cash flow means a greater risk that you can’t pay the bills, which can have drastic consequences – up to and including foreclosure.


In other words, you don’t just want to refi when you have more equity — you also want more cash flow. Focus on increasing revenue and lowering operating expenses today to set up your refi for the future.

5. When You Can Get Higher Loan-To-Value

The bigger the loan-to-value (LTV), the more leverage you have. Sometimes you may only be able to get 75% LTV, but you find a refi of 80% LTV or more. At this point, you can probably pull out a substantial amount of cash by refinancing … but watch out for that cash flow (#4) and those fees (#6).

6. When You Can Avoid Heavy Fees

Okay, this is a big one. Your cash-out refi won’t be pure cash-out. You will probably owe application fees, appraisal fees, and possible loan points, which will eat into your cash-out. 


Additionally, if your loan has prepayment penalties, you might want to wait until those penalties expire — even if you enjoyed a big increase in equity. Excessive fees are just a gift you’re giving to your lender. Yes, they’re doing you a service … but that should be your money!

7. When You Need To Finance Construction

If your asset is in need of serious repairs — new roof, HVAC, foundation, etc. — a refi might provide the cash to do it. You might also consider a refi for products that add value to your asset, like an addition, extra bathroom, or ADU.

8. When You Had Short-Term Debt

If you bought the property with short-term debt — a hard-money loan, construction loan, or bridge loan — the ultimate goal is to refinance into long-term debt. Otherwise, you will owe a balloon payment in the form of the entire remaining balance.




Think of the above points as stars that have to align. When the stars align, the time is right to refinance. In our experience, the time is usually right at about the five-year mark.

Want to add cash-flowing assets to your portfolio the easy way? Click here to check out the assets we have available for deposit right now. Any one of these is perfect for a lucrative refinance strategy, and we can introduce you to the lenders that can make it happen.

How Much Should I Put Down, Given Current Interest Rates?

Unless you have been living under a rock, you probably know that interest rates have gone up sharply in the last year. It’s now more expensive to take out the same mortgage … which makes positive cash flow harder to achieve with leveraged real estate investing. So the question is: How Much Should I Put Down when buying my rental property?


One consequence of higher interest rates is downward pressure on market value. In other words, some attractive prices are appearing on the market. But with interest rates higher, many buyers are considering taking out smaller loans … which means bigger down payments. Instead of 80% or 75% LTV, they’re considering 70%, 50%, even all cash. 


Is this a good idea? How much should you put down in this interest rate environment?

Interest Rates Are Actually Closer to Normal

First things first — the past decade of bargain-basement interest rates is not the norm. What we’re seeing now is closer to the norm. We’re actually still below the sixty-year median for interest rates.  


This means they have not only been higher on average, but there were periods of time when they were much higher. In 1983, the average mortgage interest rate tipped the scales at over 16%!


So while mortgages seem like a worse deal now than they were last year, they’re still a good deal historically speaking. 

Should You Make a Bigger Down Payment to Achieve Higher Cash Flow?

What about the buyers considering a bigger down payment to achieve positive cash flow? Remember, positive cash flow is the key building block of financial freedom. If it takes a little more skin in the game to achieve it, why not?


I understand that temptation … but let’s not lose our heads completely. At MartelTurnkey we believe in the 75% Rule — if you can’t achieve positive cash flow with 75% LTV, regardless of the interest rate environment you happen to find yourself in, it’s probably not a good-enough deal. Something is out of whack, and it’s probably a pass.


As such, whatever down payment you ultimately intend to make — even if you intend to buy all-cash! — I strongly recommend underwriting 75% LTV with a 25% down payment, and just seeing how the numbers fall.

Should You Buy All Cash and Refi Later?

Many buyers are bitter about the higher interest rates … but tempted by those compressed prices. Federal monetary policy is expected (well, hoped) to result in declining interest rates over the next year or two. If you have the disposable cash, would it be wise to snap up some of those properties with all-cash purchases and refinance them later?


There’s nothing wrong with this strategy (as long as the property passes the 75% rule). Why take on a big mortgage at a higher interest rate? 


Yes, you could make a bigger down payment, take out a smaller loan, and still refi later … but then you will face two application and underwriting fees. Plus, you might face a prepayment penalty on the first loan. As a rule of thumb, we recommend either maximal leverage 75% – 80% (assuming the deal passes muster), or no leverage.




The most important thing to do in an environment of rising interest rates is to not panic. Interest rates have been higher — much higher, in fact — and odds are they will come down again. Just keep your head and keep looking for positive-cash-flow deals. 


MartelTurnkey is here to help with that. We built our business on supplying our select buyer list with real assets that cash-flow from Day One, and that hasn’t changed. Click here to view our inventory of renovated, rented, ready-to-go investment properties just waiting for your deposit!


The Hidden Income Stream of Real Estate Investing

In August, we announced that we updated our financial projections on our turnkey rental assets to include equity buildup.  This helped many of our investors discover a Hidden Income Stream.


This is a wealth-building factor of real estate investing that most people ignore … or at least discount the importance of.


We talk a lot about 1) rental cash flow and 2) appreciation. We even mention 3) the tax advantages of real estate investing pretty frequently. But equity buildup is the unsung hero of real estate wealth creation. 


When all four income streams are combined, the compounding effect turns real estate investing — or at least, leveraged real estate investing — into one of the most effective wealth-building mechanisms ever known to humankind.

What Is Equity Buildup?

As we refer to it here, equity buildup is a function of paying down the principal balance of your mortgage. 


To recap, your equity in a piece of real estate — whether your primary residence or an investment property — is the difference between how much it’s worth and how much you owe. Subtract the remaining loan balance from the market value, and that’s your equity.


Equity = Market Value – Remaining Loan Balance


Equity is the asset value of the real estate on your personal balance sheet. It adds to your net worth. You can’t spend it at a grocery store, but it is worth money. If you were to sell the property, in theory the equity is how much cash you would pocket (after closing costs). You can also use your equity as collateral for a refinance loan.


So how do you gain more equity? Well, appreciation adds to your equity by adding to the value of the property.


But you can also build equity on the other side of the equation — the loan balance.


In an amortizing mortgage (i.e. not “interest-only”) every monthly payment includes interest, but it also includes some portion of paydown of the loan principal balance.


Early in the loan, those monthly payments are mostly interest and very little principal paydown.


But as the years pass, those payments become less and less interest, more and more principal paydown. Over time, your buildup of equity starts to accelerate from your mortgage payment alone. Combine that with appreciation, and your net worth is effectively turbocharged.

Why Most People Ignore Equity Buildup … But They Shouldn’t

Why do people overlook this? Because it’s easy to forget. They can watch the cash flow land in their bank account. They can watch the Zestimate spike. They can pump their fists with glee when their CPA returns a tax bill of zero dollars.


But the mortgage payment? It stays the same. It’s downright boring. The same payment, month after month after month. 


The magic is built into the amortization math. With every payment, the math pushes the interest expense lower and lower — and the principal repayment higher and higher — without ever changing the payment amount.


Years later, when the property owner decides to sell the house or refinance the loan, they find the principal balance greatly diminished. They thought they had increased their net worth by the amount of appreciation … but because they have been diligently paying down that loan, they actually increased it much more. 




Of course, equity buildup through principal paydown only works if you leverage your investment with a mortgage loan — which, if at all possible, we recommend that you do. Every one of our turnkey rental assets is structured to produce positive cash flow on day one — even with maximum leverage. Check out what properties we currently have in our inventory, — renovated, rented, and ready for acquisition by an investor like you!


Never taken out an investment mortgage before? Don’t panic. We partner with lenders who finance investors from all walks of life. Ask us for referrals — we’re here to help.


What Happens if the Appraisal Comes In Too Low on my Investment Property?

It’s the worst nightmare of every seller — what happens if the property “doesn’t appraise?”


Of course, this is a euphemism. It’s not like the appraiser is going to visit the property and then run away to join the circus. (At least, not usually.) No, if you hire an appraiser, that appraiser is definitely going to give you an opinion of that property’s value.


So what does it mean if a property “doesn’t appraise?” It means that the appraiser comes back with an appraised value lower than the purchase price on the contract.


So what, right? The buyer and the seller agreed to the price; what does the opinion of the appraiser matter?


Here’s why the appraisal matters … and why it could be a problem if it comes in too low … 

What Is The Purpose of the Property Appraisal?

Let’s go back to basics — why is the appraiser there in the first place?


Yes, appraisers offer professional opinions of the value of the property … but realtors, investors, even most homeowners are smart enough to come up with a pretty good idea of a property’s value. 


With homes, it’s particularly easy — you just find out what similar nearby homes have sold for recently. There’s an industry term for this — comparative market analysis (CMA). Realtors do them all the time.


So why pay the appraiser?


The appraiser is there not for the buyer, not for the seller, and not for the realtor. The appraiser is there for the lender. In fact, if the buyer intends to pay all-cash with no mortgage loan, there’s actually no reason for the appraisal.


But if a mortgage lender is going to write a six-figure check with the property as collateral, she needs to know what the property is actually worth. Otherwise, if the borrower defaults and the lender has to foreclose, she may find herself with a lemon property she has to sell at a loss. 


So she needs a professional opinion of the property’s value … and that opinion of value needs to come from someone neutral. 


The realtor isn’t neutral. He gets a commission if the deal closes.


The buyer may not be neutral. She may really really want the property and be willing to overpay for it.


The seller is not neutral. He wants the highest price he can get — whether the home is worth that much or not!


The appraiser? She has no dog in the fight. The appraiser is the only party to the transaction with nothing to gain at closing (she gets paid either way). So hers is the only opinion the lender can trust.

What If The Appraisal Comes Back Too Low?

Suppose you want to buy a house in Detroit as an investment property. You and the seller agree on a sale price of $150,000. Your lender is willing to lend 80% loan-to-value. 80% of $150k is $120k. All you need to bring to the table is a $30,000 down payment (plus closing costs) and the house is yours! 


… except that pesky appraiser comes back with an opinion that the house is only worth $130,000. What to do? You’re still under contract at $150k. Heck, you’re willing to pay $150k because it’s a fantastic location in a growing neighborhood. You think it’s a good deal at that price!


… but the lender. The lender was willing to lend 80% of the home’s value … and the appraiser just told her that the value was $130k, not $150k. Based on that appraisal report, the lender is now only willing to front 80% of $130k — or $104,000.


Where does that leave you? If you want to satisfy that original $150k contract, you no longer have to come up with a $30,000 down payment … you have to come up with a $46,000 down payment. Remember, the lender is only willing to give you $104k! You have to make up the difference.


Do you have the extra $16,000? Are you willing to tie it up? Is the seller willing to renegotiate to a lower price so you still only have to put $30,000 down? This is why “failure to appraise” causes deals to fall apart … and why sellers and their agents try hard to price their listings correctly and only accept offers that will “appraise.”

What If The Appraisal Comes Back Too High?

What if the circumstances are the same as above … but the appraiser comes back with an opinion of value of $170,000? Is the deal in trouble in this circumstance as well?


Not at all. Under these circumstances, the lender would actually have been willing to lend more. 80% of $170,000 is $136,000. She will certainly lend a measly $120,000 against this value.


Now, this doesn’t mean the buyer gets to borrow $136,000 and only put $14,000 down. The lender will still want that 20% down payment so the seller has “skin in the game.” But, this bodes well for a cash-out refi in the future. 


The seller may feel a little salty for accepting a price lower than the appraised value, but he’s under contract. There’s nothing he can do about that. Meanwhile, the buyer has the satisfaction of knowing she got a swimming deal!




One thing you don’t have to worry about when buying investment properties from MartelTurnkey is whether or not the property will “appraise”.” Our conservative analysis, collaboration with professionals, and experience in our target markets means we never price our properties above their likely appraised value. And to take it a step further, at MartelTurnkey we often match appraised values!  And this still results in some screaming deals with no-brainer ROI profiles. 


Click here to see what deals we have in our inventory right now — renovated, rented, and ready to start delivering passive cash flow into your bank account on closing day!


6 Things Our Clients Do When They Achieve Financial Freedom

Most investors come to Martel Turnkey on the quest for financial freedom. We dig deeper into what this means in this article, but in a nutshell, it means they have enough passive cash flow from rent income that they no longer have to report to work in order to sustain their lifestyle financially. 


What would you do if you no longer had to work? For a lot of people, worn down by the rat race, the obvious answer that springs to mind is “Nothing at all!” But believe it or not, even lounging on beaches gets old after a while. 


You have to do something with all that free time. In fact, in our experience, having a plan for that free time makes our clients more likely to actually achieve financial freedom — because they have a clear “North Star”  in mind.


Here are six things our clients tend to do after achieving financial freedom once they can no longer stomach another Mai Tai … 

1. Start A Business

Many of our clients dream of doing freelance work, starting a consultancy, or starting a business based on their passions. They never pull the trigger, though, because they craved the security of a paycheck. As such, they remain salaried workers in service of someone else’s vision rather than serving a vision of their own.


Financial freedom gives them the safety net they need to take the leap. It gives them the courage to try, fail, and try again. And if the business hits, they can, create jobs, solve problems, add value to the marketplace, and drastically increase their financial legacy

2. Become Stay-At-Home Parents

Many of our clients are parents of minor children, and all of them agree on one thing — life would be a lot more fulfilling if they got to spend less time at the office and more time with their children. 


Financial freedom empowers them to be stay-at-home parents. Some of them decide to start home-schooling their children. All of them build stronger relationships and nurture in their children a greater sense of confidence and self-worth. Still others enjoy a significant financial boost simply by eliminating their day-care expenses.

3. Do Charity or Non-Profit Work

Many of our clients wish they could do work that makes a difference in the world outside of solving business problems and fattening up the shareholders’ stock prices. They long for the personal fulfillment of non-profit work … but they can’t absorb that kind of pay cut.


Financial freedom enables them to take on the work that matters to them, not just the work that pays the mortgage and fills the college fund. Many are even able to do the volunteer or pro bono work 

4. Take Up Hobbies

Most people have a hobby they always meant to take up. Learn a language, learn a musical instrument, learn a dance style, play sports, practice martial arts, write or paint. Things that enrich your life … but take time and attention. 


With financial freedom, you have all the time in the world. The sky’s the limit for the amount of value you could add to your life through new hobbies and interests. Some of our clients become full-on renaissance men and women, chocked to the gills with interesting and amazing hobbies.

5. Travel The World

It’s near the top of nearly every bucket list — see the world! Hard to do if you’re anchored to a job … but easy to do if you’re financially free. You don’t have to request time off … Just book a ticket and go!


Some of our clients even go so far as to sell their home and possessions and become full-time nomads, living in hotels and bed-and-breakfasts, touching down in a new magical destination each month. Others downsize to an RV or a motorcycle and become road warriors.

6. Buy More Real Estate!

Just because you have achieved financial freedom doesn’t mean the party is over! Many of our clients become addicted to the thrill of buying new property … but unlike retail therapy, it’s a buying impulse that makes them richer instead of poorer. Why stop at financial freedom? We have a legacy to build!




Whatever you dream of doing after punching the clock is a thing of the past, our job at MartelTurnkey is to help you get there. Check out our inventory of ready-to-go properties, renovated with tenants in place. With our help, you can easily, quickly, and affordably start building a portfolio of passive cash flow — one that will eventually set you free!