One of the newest and most popular ways to invest in real estate is through “turn key” or fully passive real estate providers.
They do all the work to acquire and fix up a property, and even oversee management on an ongoing basis, while you own the investment property and receive the net income and value appreciation.
But who can you trust to deliver on their promises?
Today I’m sharing 4 keys to cutting getting great results and avoiding scams.
Key #1: Get Testimonials
There are 3 types of testimonials that allow you to hear from real customers and their experiences:
Written text testimonials (easiest): These are the easiest to view, but also the easiest to fake… and therefore should be taken with a grain of salt.
Video testimonials (better): Video testimonials take a bit more time to watch, but the payoff is powerful. You can usually tell the difference between a paid actor and a genuine customer speaking from the heart. Use of paid actors is a sign that there are not real happy customers willing to appear and endorse the real estate provider. Genuine customers sharing their real experiences is what you want to find in a trustworthy provider.
Referrals (unrealistic): The old school method of asking for other customers’ phone or email so you can contact them is no longer a good way of vetting a service provider. This is because providing the contact information for a shill is just as easy as a fake written testimonial. Plus, real customers don’t want to receive dozens of phone calls per week if their reason for investing was to create time freedom!
Key #2: Get Exit Strategy Support
A realistic investment property approach involves acquiring properties and exiting properties. Even if you’re holding long term, there are many reason you might want to sell down the road.
Does your potential real estate provider help with selling your investment property later? While it’s rare, you can find providers who will support you that way long term.
Key #3: Repairs Completed & Tenant In Place BEFORE You Buy
This is critical. You want the income to start coming into your bank account immediately after you close on buying the investment property.
If you have to wait for repairs to get completed in order for a tenant to be placed after you buy the property… you could end up waiting months and missing out on income.
The moment a real estate provider moves to the “we’ll get tenants after you buy” model, it opens up the risk for significant delays and underperformance.
A well-capitalized, top notch real estate provider will have the systems in place to always have the investment property producing income from the day you buy it because there’s already a tenant in place paying the rent.
Key #4: Include At-Risk Due Diligence Partner
This is where it gets a bit advanced, but it’s well worth it to get added safety and security.
Imagine if you had a partner scout everything out, visit the property, inspect the property, and perform thorough due diligence on your investment property BEFORE you buy.
Then, imagine this partner puts up half the money out of his own pocket, wants a flat 5.50% interest rate and lets you keep the lion’s share of the investment property profits.
Now imagine he’s done over 3000 of these transactions with 100% success rate. No bad deals gone sour. He’s never lost money because he knows how to do his due diligence and only choose winning property deals.
Sounds like a dream right?
Well this is possible with the use of a non-recourse lender. Here’s how it works:
Several months before you buy the investment property, the lender goes out and researches all the potential investment properties. He eliminates the ones that don’t pass the muster. He analyzes the numbers and performs property inspections to make sure he’s investing in only the best and safest properties that will perform well.
Once he’s ready to go on a particular property, he puts up 50% of money for you to buy and own the property. He sets up a non-recourse mortgage note… which means he can never sue to you to get repaid.
It also means there’s no credit check or painstaking mortgage application process for you to endure, because the lender is investing his confidence in the property instead of you. (Which instills your confidence in the property too!)
He’s confident that the rental income that the tenant pays will cover your mortgage payment to him and leave plenty of money left over for your profit.
For example: For a $120,000 investment property, you invest 50% in the form of a down payment and the lender puts up the other 50%. That’s $60,000 from you and $60,000 from the lender.
There’s already a tenant in place who pays the rent. Part of the rent goes to the lender and the rest you keep. This is the closest thing to a bank CD that pays you 8-12% interest.
Having a non-recourse lender in place is a great way to have thorough due diligence done on your investment property by someone who will put his money up to match yours, dollar for dollar.
Getting customer testimonials in video format will help you to “reality check” the claims of the real estate provider.
Getting exit strategy support is the best way to know your real estate provider is there for you long term.
Having a tenant in place before you buy is the only way to know your investment will be producing income for you immediately after you buy it.
Having a non-recourse lender in place is the best way to have an at-risk partner do thorough due diligence designed to ensure you have a winning investment property on your hands.
While there are many “turn-key” passive real estate investment providers, there’s only one that meets the 4 above criteria. I personally invest my money with them and have asked them to take great care of my referrals.
If you want to see what they can do for you and calculate how much income your investments could be making, request access here.