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How to Avoid This Big Turnkey Pitfall? (2019 Update)

Real estate investment has become a Millennials game. Members of the younger generation are themselves putting off home ownership, while looking for high performance investments that won’t take up much of their time and don’t require hands-on DIY work to become tenant-ready. This search for low-maintenance investment opportunities can lead investors on a wild goose chase as they attempt to find relatively safe transactions that offer long-term yield and a self-sustaining property model.

The truth is that turnkey is not a get-rich-quick scheme, and it involves making solid choices and not just buying whatever comes along because the marketing is slick and implies huge returns on a small investment. So how do you avoid falling into the trap of big hype and overstated promises? It can be confusing sorting out all of the investment property advice in Dallas.

Be Discerning

The best thing you can do as an investor is seek out not only properties that have a promising future as far as ROI, but those that are suitable candidates for smooth management and upkeep. By its very definition, turnkey means that the property is already renovated (or that step is being taken care of by the management company), and either has tenants, or tenants will be installed by the management company.

What can get in the way of these foundation steps? When you only go for properties because the initial outlay is cheap and promises of lavish returns are being bandied about, there can be serious underlying issues that turn the entire thing into a nightmare you can’t get out of soon enough.

The problem is that when the price is rock bottom – under $50k is considered a “cheap rental” in most average markets – there’s not enough padding built into the transaction to allow for proper reno. When renovation prices have to be kept on the cheap, you end up with deferred maintenance costs, which then eat into your rent ratio over the long term. Not only that, but deferred maintenance can mean malcontent tenants, and unhappy tenants translate into high turnover, which parlays into more expenses for the owner – you.

Put Quality First

Protect yourself from money pits by going for quality, customer service, and long-term hands-free sustainability over shiny promises on low-end properties. While a higher quality property managed by a company that provides a high level of service and comprehensive communications with clients and tenants will cost you more on the front-end, these are the properties that are going to demonstrate the best results. This will materialize in the form of happier tenants, fewer deferred maintenance issues, less oversight required on your part, and a smoother overall transaction for everyone involved.

Make sure you’re not only choosing high quality turnkey rentals in Dallas that have been renovated right the first time, but that your investment and management company have the staffing and experience to provide top notch services and prompt communication.

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What Makes a Rental Property Profitable? (2019 Update)

When you’re first getting into real estate investment, you may be under the impression that you can simply pick a house for sale, negotiate a good price on the deal, and then watch the profits roll in. While that’s the ideal outcome, there’s a little more to it than that. There is a variety of factors that contribute to how profitable – or not – your rental properties will be. By taking these things into account when deciding on rental houses to make offers on, you’ll maximize your chances of creating a lucrative long-term investment that is beneficial to all involved.

Some things to look for when evaluating rental properties:

The local job market – areas with robust employment growth attract people, that’s no secret. Take a look at existing job opportunities in the area, as well as any companies that may be planning to move into the neighborhood. Of course the type of business it is will dictate whether this is a good or bad thing.

The crime rate – it’s harder to get quality tenants into high crime areas. The Internet makes it easy to not only check for these statistics, but the location and quantity of sex offenders in the area as well.

The school system – for people with families, rental houses in good school districts are a hot commodity. The quality of the school system will not only affect your efforts to get tenants into your rental properties, but the resale value of the home down the road.

Neighborhood characteristics – is the house located near a college? This could mean student tenants, which translates into high tenant turnover and summer vacancies. Other things to look at – are the yards well kept? Are there blight laws that help keep visually unappealing debris under control?

Local amenities – close shopping, dining, theaters, mass transit access, parks, gyms, etc. all make rental properties more attractive to tenants, as well as to buyers when the time comes to sell your investment.

Average rent – this will be a crucial deciding factor in your ultimate choice of rental houses. The reason for this is because you can’t just set the rent at whatever you need to make to cover your expenses and make a profit each month. Whether you pay $80,000 in a cheap market or $150,000 in an upturn, if the house next door rents for $1200, that’s about what you’ll be able to charge (given equivalent square footage, features, etc.).

Property taxes – this is another vital piece of information that will have a significant bearing on your bottom line. Property tax information is typically available through the assessment office.

No matter where you are shopping for rental houses, these guidelines should give you a good start on evaluating properties to figure out whether they will ultimately translate to a profitable piece of your investment portfolio puzzle.