I’ve noticed a trend as of late, and I thought that I would give my thoughts on it here. Apparently, there are quite a few people marketing to first time investors to purchase out-of-state properties. These properties are often billed as “turnkey”, meaning that there is no work involved and you will start earning returns immediately. Let’s break this down so I can show you why I’d be skeptical of this situation.
A Turnkey Property is Profitable?
In every instance that I can think of, the way that we have made money in real estate is by taking a property that was less than ideal and improving it. That’s why I have a hard time believing it when these people confess that there is no work that needs to be done to their properties. I never find anything on the market in mint condition that I can rent for a monthly positive cash flow (extra dollars in my bank account every month). Did the people that are marketing the property do all of the necessary repairs? If so, then why do they need me? It seems like something is amiss.
More than just a cutesy farmer’s market phrase, I think it should also apply to real estate deals. I feel very strongly that at least your first few properties should be bought in your local area. All of our properties are in our local area. I know what you may be thinking, “But, I don’t live in a big city and there is just not enough available in my local area.” I think you’d be surprised at how well you can do in a small town. We live in a very small town of 16,000 people. Our entire county is only 68,000 people, and we are doing very well with our properties. You live in the area so you know it well. You know what neighborhoods would be good to live in (and buy property in).
You Can Evaluate In Person
There is something to be said about visiting a property in person. The numbers tell you so much, but there is so much information that you gain by physically visiting a property that I don’t think you can grasp through pictures or video. I wouldn’t feel comfortable investing in a property unless I have seen it with my own eyes.
You Will Learn Faster
Even if these out-of-state property deals are not a scam, I would still encourage you to purchase in your local area. You will learn so much faster. I know it’s scary to make mistakes, and that’s why something like this would be appealing to people, but an opportunity for mistakes is an opportunity for growth. You don’t have to be a genius to figure this stuff out, and you don’t need to know everything there is to know about real estate before you buy your first property. You are capable of being successful!