How To Analyze A Rental Property | REI | Real Estate Investing | Turnkey | Freedom Vlog Ep. #64

Hi, guys. Welcome back to another Freedom vlog. Today I am here with Mark Woodring, our director of investments. He may look familiar. I'm Caitlin, the marketing coordinator here, and Today's vlog number 64. And we're going to be talking about analyzing your first turnkey property. Not going to go into it too much because as always, we will dive deeper into the topic on our podcast, Real Talk. But to start, what is the most why is it important to have a reserve for turnkey properties?

Well, just because, again, your rainy day fund, you want to make sure that even though you're buying a property, whether it's in need of some rehab or has been completely rehabbed, you always have to prepare for the unexpected. Is the short answer of that. Things always come up in whether you're buying your own primary residence or you're buying an investment property, there's something that's always going to come up. And so you just want to make sure that you haven't spent all your money on your down payment.

Cool. Cool. Yeah, that's a good point. Things definitely come up, especially in rehab, too. You never know what you might get into. Hopefully when you buy a turnkey, though, it's all done, so it should be a late rehab and when you have a turn. So how does this differ from a retail buy?

Well, on a retail buy, again, you're buying this particular house that you're going to be living in, and you may assume that there's going to be things that either you missed on inspections or you didn't ask for or something like that. So, you know, in preparing to buy that primary residence, of course you're factoring in your down payment and then, you know, having some money left over. Sometimes that's asking for closing costs or something like that. Whereas when you're buying an investment property, some of those costs are already going to be associated with what you're buying. And with houses that are finished or something like that, you just want to have a little bit of reserve in the event that maybe it doesn't rent right away or in the event that something happens, like a catastrophe. I mean, you know, even if a catastrophe happens, you still have to pay the down payment on like, say your insurance or something like that. So you just always want to be prepared for that. And so that's the difference, you know, a primary residence, again, filing claims, doing like that. You live there. Yeah, you know, sometimes, you know, for your investment property, you may not want to file a claim in case something happens because why, why ruin your interest Rates, you know, or whatever, your rate on your, your insurance on something that you might be able to come a couple bucks out of pocket for.

Yeah, that's a good point. I didn't think about the insurance factor. I me thinking, I was thinking more like in regards to turns, like I just said. But that insurance factor, that's huge too, on having to pay that down payment. So that's a good point. Now, when you are looking at your first turnkey, or any turnkey for that matter, what are factors that you should be considering? Like what should you be looking at?

Well, of course, I mean, there's so many different factors and so many different investors. Look, you know, at anything, you know, whether it's the neighborhood, school districts, what's it close to, shopping parks, things that you have to put on your renter's hat and think, you know, would I rent this property? Yeah. And then of course the obvious things are looking at the rehab and the longevity of some of the things, you know, carpet versus laminate flooring, things like that, that, you know, instead of replacing carpet, you know, we're seeing a lot more turnkeys are doing the laminate because it just makes it easier for the investor, you know, to just clean that versus you know, recarpeting your whole house. So things like that. But then of course there's some of the gold standards, your cash on cash, your cap rates, purchase price, things like that. Just, you know, because again, like when, when you're really diving deep into what is going to make me purchase that first one, again, just be extremely cautious. But you know, thank God there are groups like us out there that do the homework for you, right?

Yeah, absolutely.

You know, we do a great job of identifying that, the neighborhoods and markets that we shop in, of course we know what the rents are going to be at. Those are ticking up and on the rise as well. So things to maybe even keep into consideration is what does this property look like right now? What's it gonna look like in the future?

Yeah, that's what I was just thinking. The market value and the increase on it. Okay, good, good. Well, as you know, we like to keep the vlog short and sweet and like to save the in depth stuff for our podcast Real Talk. So check it out next Tuesday and we'll dive more into this on what exactly is cash on cash and cap rates and how much you should have in your reserve, not only just for your down payment and things like that. So be sure to check that out. As always, we end this with Invest.

Smart and live Happy.

Thanks, guys.

Thanks.

Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional finance for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss.