A couple weeks ago we sent out a survey to all our newsletter subscribers, because Hipster is all about YOU! One of our questions was, “If you could ask Ali two questions, what would they be?” And you answered! (If you missed out on this, make sure you subscribe to everything awesome to get all the latest and greatest!)
We then sat down with Ali and asked her your questions about real estate investing, turnkeys, her own experience, and more!
These are seriously amazing questions and superb answers from Ali, so we’ve split it into 2 blog posts to help you read it all and really take in her wisdom.
Even split in two, there’s a lot of info, so we’ll get right down to it. Here’s Part 2 of the fantastic info Ali has for you (and if you missed it, make sure you check out Part 1 here!):
General Real Estate Investing “How To” Questions
Does turnkey investment actually work or are there some gotchas after the first couple years?
It actually works. I bought first one in 2011 and it’s still putting cash in my pocket every month, as are the rest of them I bought after that. Everyone I know who has bought them, same thing. There are no “gotchas” but there will always be maintenance issues that come up or whatever expenses, so that’s why we keep estimates for those in our calculations, and it’s always good to have a nest egg. But no, turnkeys are actually for real.
How to check out a turn key company?
If you are working through us to find turnkey companies, we will do a personal intro with you and the company and you can be in touch with them directly to learn more or schedule a property tour or whatever you want to do. If you mean check them out as in verify they are legit, you can ask for referrals, or ask people who have worked with them how their experiences were, you can check their licenses, etc. More than anything I recommend doing a market visit and checking out their operation in general. Very educating. If you aren’t working through us, I do warn you to use caution when you are talking to turnkey companies. There are a lot out there that aren’t as much on the up and up about their business models!
Who has my back in turnkey investing as the seller and property management sometimes is represented by the same company
I have your back! ☺ Me and a couple people will have your back, actually. Well, from the emotional standpoint and the mentoring standpoint at least. In terms of verifying what the turnkey seller is pitching, when a lot of their team members all the have the same incentive to tell you only good things, there are easy ways to verify things with 3rd properties. That’s no problem at all.
What are your thoughts on buying and holding long term?
I think it’s fantastic, as long as the property is cash-flowing. That’s all I’ve ever bought for myself—long-term buy and holds. But while I’m holding, I still work the equity side of it and pull out the equity when possible to buy more properties. But I’m still holding the initial property.
How do you identify a good buy and hold 1-4 unit residential rental market within the US that is NOT local to you?
I work with market experts who are able to figure out the best markets out there. I don’t trust myself to be that smart about it, so I leave it to the professionals and then I sort through what they say and judge for myself after that.
What is the best way to acquire multiple turnkey properties with the least amount of money down?
Well the least amount of money down would be to work with an investor partner who puts up the cash. I don’t usually recommend that if you don’t have to do it, but it’s an option if you really don’t have any cash. Otherwise for traditional mortgages you’ll be looking at a minimum of 20% down.
I have no cash to put down and my credit is less than perfect, will you please show me the quickest route to owning a turnkey property to generate passive income please?
The only thing I can think of is to find an investment partner. Private financing would be an option if you don’t have the credit to get a mortgage, but it would depend on how much $ a partner was willing to put up.
How to find good turn key providers?
Talk to me! ☺ I know the best of the best in the industry. Reach out on the Contact Page and we can send you some names.
How to determine is if an area is good to invest in?
Several ways. First is the price-to-rent ratio. You want to be sure you are going to cash flow. Then it’s market trends—is the market growing or declining? What quality are the properties and neighborhoods will you have to buy in? I don’t like super low-income or risky areas, personally.
You can read more on that in Ali’s blog post: The 6 KEY Attributes That Affect the Risk Level of a Market here.
How are you selecting areas (data-driven)?
I’m working with market experts who actually do all of the research on various markets. They are much smarter at it than I am so I work closely with them to see what all they have found and go from there. So I can’t speak to their exact process as far as where they get all of the data, but wherever it comes from, it’s quite impressive!
How do you find a remote team that you can trust when you can only visit the City/State once a year?
The best way, truly, is through networking. Find other investors who are using successful teams remotely and piggyback off of that. That networking can either be casual with individual investors who are working in whatever markets, or it can be like reaching out to us and having us tell you who we work with. I only refer people to teams I’ve personally bought through myself, so it’s still a referral.
What’s the best way to learn about all the tax laws/advantages/tricks when investing and taking out a loan? Maybe you could write up an example from your life or make one up.
Not sure I understand the question? In general for taxes and loans, the best thing to do is to talk with investor-friendly accountants and lenders. Don’t worry, we know some! Feel free to reach out on the Contact Page and elaborate more on your question or get some names to call.
What’s the best way to shop for a mortgage?
If you are wanting a mortgage on an investment property, ask around and ask for referrals. You want to find an investor-friendly lender, otherwise your whole deal may go south. To find those, or to know who they are, you’d have to ask other investors. OR, just ask us. We know some. Reach out on the Contact Page.
What’s the best way to shop for insurance quotes?
Hmmm…not sure really. I’d first ask the seller (if turnkeys) for recommendations, then call up more widely known insurance companies and compare all the prices. The big thing with insurance is—make sure you realize the cheapest quote won’t always be the best way to go. A lot of insurance companies end up making it very hard, if not impossible, to get a claim through. You don’t want that. I pay more for the insurance on my properties because I know the company is awesome and they pay out fast.
What are some creative ways to get financing?
Private financing, investor partners, credit cards, loans…
How to get financing for multifamily investments?
If the properties are 2-4 units, you can get financing the same way you would a single-family property—traditional mortgage typically. If you don’t qualify for that, private lending is available in some cases. If you are talking about multi-families 5+ units, that would be commercial lending.
What is the best way to leverage equity in existing properties owned?
Don’t miss out on our answer from Part 1, here. And if you want to be among the first to get the info on top deals, surveys, and more…