If you are thinking of buying a turnkey rental property or are in the process of buying one, there is something about turnkey providers that you need to understand. Knowing this will only make your turnkey buying process smoother, not just for you but for the turnkey seller as well. When everyone is getting along, it can make the process all that much more enjoyable.
But you may not like what I have to tell you.
Before I tell you the situation, though, I want to make a distinction. Keep in mind, I make no judgment whatsoever which category you fall into. But these (unofficial) designations will help make what I want to tell you more clear. These are unofficial designations because I’m basically naming and defining them myself. They are not standard designations.
The Two Types of Turnkey Buyers
This is a good majority of the BiggerPockets crowd. If you are reading this, you are likely in this category. This is the category of investors who are either new to real estate investing and/or are smaller-scale investors. The terms “private” and “individual” really aren’t very clear or accurate terms, but it’s what I mean by them that counts. Actually, I don’t know how to designate this category that would be most accurate, so just bear with me.
Either way, the traits of this group that are important are — they have a lot of questions, they have a tendency to be more emotional in their purchase, and they tend to move forward with a purchase a little slower and with a little more caution. With the emotions, I don’t mean blatant emotions per say, but they are going to care a lot more. I want to be clear when I say that there is absolutely nothing wrong with wanting to ask questions and/or caring more about a property or even in moving slow and cautiously. It is what it is, and you should ask questions and you should always be cautious in who you work with and what you are buying. If you are in this category, you are likely to also expect a certain level of communication and customer service.
What I call “advanced investors” are the ones who only care about the numbers. They have no emotions in their buying or owning. Yes, they will have a set of questions for ordinary due diligence, but the number of questions will be very limited to specifically the only things that truly matter, and they couldn’t care less about customer service levels or communication style. All they care about is the numbers. All they care about is their checks arriving safely in their bank account.
Advanced investors move quickly. They know what they are looking for, they do some due diligence and decide if a property either provides it or not, and then they either buy it or they don’t. There’s minimal to no piddling around and no small talk. They couldn’t care less how friendly the seller is or even anything about them, so long as they get a good financial investment.
Despite a lack of good terminology, are you able to understand the two categories I’m trying to convey? The beginner, more individual type of investor will tend to ask a lot of questions. They care more about the properties they buy than just the numbers, they tend to move slowly and cautiously, and they are going to expect a certain level of customer service and communication. If certain levels of customer service or communication are lacking, their first inclination will be to assume they are getting scammed. The advanced investors only care about the numbers on a property and the sustainability of those numbers. They don’t care what the property looks like, they ask only the minimally required questions during due diligence required to ensure what they are getting, and they couldn’t care less about customer service levels.
Now, here’s what I want to tell you and what you need to understand if you are buying a turnkey rental property. In fact, one could consider it a bit of a conundrum. Like I said earlier, if you are reading this you, are likely more in the beginner or individual investor category, so there’s a good chance you are going to want to be more thorough with your questioning and you are likely to expect a certain degree of customer service. However, the reality is that…
Turnkey providers primarily focus on advanced investors!
The conundrum might be obvious — you are a beginner or individual (or small-scale) investor and they focus on advanced investors. But the effects of the conundrum might not be as obvious. Don’t worry, I’m going to explain everything right here.
Turnkey providers tend to focus primarily on selling to advanced investors because:
Read the full article here…
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