In my last two articles I discussed why the area is more important than the house and I discussed the dangers of over emphasizing the returns on a Pro Forma. In those articles, I have determined the importance of a well-renovated home in a great area which, in essence, is what Memphis Turnkey Properties and Little Rock Turnkey Properties was founded upon. I concluded that if you buy a well-renovated home in a good area, over the long haul, you have greatly improved your chances of being a successful investor. Having said that, I left out something very important—and that is the Quality of the Team.
A great property in a great area can struggle with a sub-par team. Any time you invest- in stocks or in Real Estate- you need a team in order to be successful. More and more, we are seeing investors look for a property online, find the price point they are comfortable, search some online reviews, read a Pro Forma, have a conversation or two with the seller and then decide that is the property for them. Think about buying a vacuum cleaner on Amazon, what do you do? Find the price point you want to spend, read the online reviews, look at what the vacuum cleaner claims to be able to do—then make your purchase decision. Buying a property in the same way you buy a vacuum cleaner from Amazon is a very risky endeavor. Ok, I know, that is an extreme example. After all you can order an appraisal and property inspection before you buy. But this will simply confirm that you are not paying too much for a home and the house is not currently a money pit. I emphasize “currently” because if your house is not renovated with the thought of tenant turns and rent ready cost, then you will have high costs down the road.
In addition to buying a well-renovated home in a fantastic area, the last thing you need is the right Team to bring it all together. If you have all of that, then the reality of “Invest where the numbers make sense and live where you want to live” is much more achievable.
So what are some of the things to look for in a good team? You may have your own criteria, but here are my suggestions:
- Ask your team where they expect to be in real estate in the next 5 years. At some point in time, selling turnkey properties will fizzle out. A good Team has a strategy that will keep them in the Real Estate business.
- Does your Team currently own property in the areas in which they are selling? If they do not, this is a major red flag.
- Is your Team really a Team—or a 1 or 2 person show farming everything out?
- Do they offer in house Property Management? This is the most important requirement. The Property Management ties the seller back to the property for several years down the road.
- During the courting process, are they quick to respond to emails—as an out of state owner, there is comfort in knowing that your team is working for you well beyond normal business hours. This shows they understand service and it will give you comfort knowing individuals will go that extra mile for you!
- Are requested tasks during the sales process getting done in a timely fashion? With all the mobile devices and forms of communications available today there are no excuses for a lapse in communication. The quicker the response, the better indication you have the right Team working for you and the better indication your Team understands that you (the buyer) are about to invest a lot of money with them and the responsibility that comes with that.
- Does the team show professionalism? Did your seller dress professionally when you met with him? I am not saying suit and tie are necessary, but a clean cut appearance and simple effort to dress well is important. This may not be important to everyone—but it is surely important to some individuals. Since the team does not really know you or your personality, they should be trying to impress you by putting their best foot forward!
- Were they prepared when they met with you? A solid team should have folders, property listings of what they have available, examples of their lease and Property Management Agreements and other items directly related to the company and other items that may help you make an informed purchasing decision. Again, the team should be trying to impress you—sales support items show the company is interested in looking professional and spending money on items that put the company’s best foot forward.
- Do they have a company email address? This cost less than $50 a year—if they are not spending the money to have a company email address, where else are they cutting cost?
- Professional looking website—you are investing thousands of dollars with this seller—the website is the image of the company. Successful money managers have professional websites, why is your Turnkey Provider any different?
The last 4 items may seem trivial to you, but the company watching over your investments should look and portray a professional image. This includes trust, competence, knowledge of the market, solid property management fundamentals, quality property renovation, and excellent customer service. If the company you are considering working with does not convey these attributes, then it’s probably in your best interest to move on and look for a better team to align yourself with REGARDLESS of how beautiful a property they have in their offerings. I’m going to end by making a bold claim- it’s better to pass on a great investment property if it’s being offered by a sub-par team, than it is to buy that property and have it managed poorly. Be patient, find the right team to align yourself with and then wait for the best offerings to come along. You will be successful!
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We’d be interested in your feedback on some of the criteria you look for in a great investment team. Please LEAVE US YOUR COMMENTS!!