I’ve been a turnkey provider in the Detroit, Michigan marketplace for years. From my experience, I’ve realized the importance of addressing specific questions that arise when working with new clients. Here are essential queries to consider before purchasing an investment property with a turnkey provider.
What Property Management Services Do you offer?
Verify if the company offers in-house property management or relies on external groups. Inquire about their current property management portfolio, client referrals, software used, tenant screening, fee structures, and state licensing.
What is your experience in turnkey real estate investing and how many deals have you done?
Assess the provider’s experience, successful deals completed, and familiarity with the marketplace’s pros, cons, and risks.
Have You Invested in the Marketplace You Are Offering?
Understand the provider’s personal investments in the marketplace to gauge their commitment and belief in the properties they offer.
How Do You Source Your Properties?
Gain insights into their property sourcing process, methods for property selection, and the potential issues and risks associated with the properties offered.
What Is Your Approach to Ensuring Property Appreciation?
Understanding how the provider aims to increase property value over time can provide insights into potential long-term returns. Selling returns on a piece of paper is easy, but remember non-paying tenants, or turnover costs can eat up profits. If you are choosing appreciating areas, it helps level off some of the cons you may encounter. Lastly, Real Estate wealth is built through increase in property values (appreciation). I would take a Ten percent (10%) cash on cash return in an appreciating market over a Twelve percent (12%) cash on cash return in a flat market, any day of the week. Location is important, and understanding the area you are buying in is vital to remotely investing.
What Are Your Fees and Costs?
Seek transparency about fees, costs, and any hidden charges, while understanding the company’s business model and how they generate profits, whether through property resale or charging commissions/fees.
Can You Walk Me Through a Typical Investment Process?
Gain a clear overview of the investment process, from property selection to post-purchase support, to understand what to expect as a client.
What are the pros and cons and risks associated with the marketplace?
Ensure the provider transparently explains the market’s pros, cons, and risks, aiming to provide a comprehensive understanding of the marketplace. An honest turnkey provider should be able to explain the pros, cons and risks associated with the market they are selling in. If they only focus on the pros, chances are they aren’t showing you the full picture. You want to work with a team that will tell you the ins and outs of a market.
These questions are vital for any turnkey provider, irrespective of the market. Feel free to reach out to my team and I at Upside Investments should you have any further questions regarding turnkey real estate investing or the Detroit, Michigan real estate market.
