Why “Cheap” Turnkey Houses Scare Me

I hate the word “cheap.” I really do.

Not because it sounds well, cheap, but because it’s ambiguous. It’s open to interpretation, and when it comes to real estate, I don’t like gray area. I like to know what I’m dealing with and where.

To be honest, “cheap” turnkey properties kind of freak me out.

A property can be cheap because it’s a low price for the marketing you’re buying in, or it can mean cheap because you could never find that house in your market. It really doesn’t matter.

What you need to be sure of – as an investor – is that you’re choosing properties that are the right price for your market.

Hey Moguls, it’s Chris Clothier back with another lesson on choosing the right house for your market, so let’s talk properties.

Look for Value

But first, we need to define (for real) the word “cheap.”

You hear investors throwing the word around constantly as if it’s appealing.

News flash! “Cheap” screams uncertainty and uncertainty leads to hesitation, which is not the reaction you want when you’re proposing properties. So find out what “cheap” means, and be sure the price comes with a reasonable amount of risk for you, the investor.

“Cheap” doesn’t mean good. That’s the bottom line. In fact, oftentimes it can mean trouble. So the rule of thumb is this: Look for the value, not the low price tag.

“Price is what you pay, value is what you get.”
~Charlie Munger

What Does Value Mean to You?

Value means different things to different investors, so you have to figure out what is valuable to you.

deer For me, value means that I’m buying the right house at the right price in the right market with the right team that will work to get me the right return.

That may sound like a tall order, but it shouldn’t be. All those stars need to align for a deal to be valuable – to me.

Notice that I never mentioned price, and I certainly never uttered the word cheap. I look for houses that make sense – for me – houses that can enhance my portfolio and help grow my business.

4 Questions to Help Determine Value

Investors are always asking me what questions to ask when buying properties out-of-area. My advice is to answer these 4 questions to help you figure that out:

Do you want to be a long-term investor or a short-term investor?
Do you want to get in and out of the property quickly?
Is this something that you want to consider holding and eventually passing on to your children?
Can you build a portfolio where the property is located?

You need to make sure that your motivation and reason for buying a given property is in sync with the value that you’ll get from that property.

For me, investment properties have a long-term purpose and value. I purchase them with my family in mind, so I make sure that I buy quality properties that I can envision myself and my family owning for years to come.

That’s what matters to me. And that’s why I stay away from cheap properties.

Think Big or Go Home

Now, you just need to determine what valuable means to you and what properties can fulfill that value for you.

Whether you’re buying your first house or your 50th, be sure your long-term goals are met. The here and now is great, but the value that the right property can mean for you and your family is priceless.

“Training, Books, Learning is all expensive. Being stupid though is still much more expensive.”
~Ziad K. Abdelnour

Note: Want a step-by-step process to finding, securing, and managing out-of-state rental properties? This is only 1 of 7 super-secret keys that I cover in my brand new real estate investment success report.