As described in Chris Clothier’s recent lesson about The Three Pillars of Turnkey Investing, turnkey investing might be one of the simplest ways to make money in real estate. Most of the hard work is handled by somebody else!
However, like selecting a spouse or a long-term employee, you must be very careful when selecting a turnkey investing company.
Over time, failure to pick the right corporate partner can lead to innumerable headaches, frustrations and losses – in what is supposed to be a very stress-free collaboration.
Accordingly, you must skillfully discern certain insights about each prospective turnkey company at your disposal, before you ever decide to “tie the knot” with a corporate partner (by investing your hard-earned money). Specifically, you will want to know the following information about each turnkey investing company you find:
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How experienced are they?
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How smart are they?
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How honest are they?
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How conscientious are they?
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How much common sense to they have?
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Do they learn from their mistakes?
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How much integrity to they have?
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How committed are they to you, your tenants and your money?
But you can’t just walk into a meeting and ask these questions directly to your prospective corporate partners…
…because they would all submit the exact same answers!
Sample Question #1: “How smart are you?”
Standard Answer #1: “I’m really smart. Now give me your money.”
Sample Question #2: “How honest are you?”
Standard Answer #2: “I’m really honest. Now give me your money.”
(You get the idea…)
Fortunately, Chris Clothier stuck around for 20 minutes after his previous interview about turnkey investing, in order to help Mogul’s turnkey investors with their vital pre-investment sleuthing. In today’s lesson, Chris explains 12 crucial questions to ask any turnkey investment company, drawing on his years of experience as a manager for MemphisInvest – a business that provides comprehensive residential real estate investment services to remote investors.
So before you agree to “take the plunge” with any corporate partners for turnkey investing, be sure to get all the information you need by asking all the right questions.
From Chris Clothier, Turnkey Titan…
{Mogul Elite: Download a transcript and MP3 of this lesson in the Power Pack tools for this lesson.}
Ask these 12 crucial questions to your prospective turnkey partners, before committing to do business…
Size – Ask, “How many full time employees do you have?” and make sure they’re big enough to provide great customer service.
Integrity – Ask, “Do you invest in the specific market(s) from which you are selling?” and make sure they put their money where their mouth is.
Stewardship – Ask, “How will you help me maximize my investment?” and make sure they have a specific program in place to extend occupancy and minimize costs.
Maintenance – Ask, “What do you do to prevent deferred maintenance?” and make sure that they have proactively addressed as many maintenance issues as possible upfront.
Honesty – Ask, “What has been your biggest mistake as a real estate investor?” and make sure they are honest enough to describe their inevitable historical missteps.
Priorities – Ask, “How many investors do you work with?” and try to ascertain your personal ranking in their pecking order of commitments.
Experience – Ask, “How long have you been in the business?” and make sure they possess ample experience.
Conscientiousness – Ask, “What is your average vacancy rate, and does it experience any seasonality throughout a typical year?” (If they cannot give you a straight answer, then they probably are not tracking this metric in a sufficiently conscientious manner.)
Conscientiousness – Ask, “What is the cost of your average repair bill after move-out?” (If they cannot give you a straight answer, then they probably are not tracking this metric in a sufficiently conscientious manner.)
Conscientiousness – Ask, “What is your average monthly occupancy?” (If they cannot give you a straight answer, then they probably are not tracking this metric in a sufficiently conscientious manner.)
Conscientiousness – Ask, “What program(s) have you implemented to keep tenants happy?” (If they cannot give you a straight answer, then they probably are not prioritizing this concern in a sufficiently conscientious manner.)
Conscientiousness – Ask, “Will you call me every month with an update on my portfolio?” (If not, then they probably are not prioritizing this concern in a sufficiently conscientious manner.)
Chris Clothier
owns and operates three multi-million dollar a year marketing brands including 1-800-SELL-NOW, Find Cash Buyers NOW and Find Private Lenders NOW; each brand, under the REI Marketing umbrella, is designed to help real estate investors and agents reach a specific marketing niche.