I purchased my first eight single-family rental properties without ever physically visiting them.
In fact, it would be nearly five years before I visited and toured any of my real estate investments.
Since first investing in these rental properties as a remote real estate investor, each of them offered cash flow while appreciating nicely (thank you post-pandemic inflation).
Investing in real estate sight unseen might seem daunting, but it’s an increasingly popular method, especially as turnkey single-family real estate investing has grown in popularity.
When properly executed, this approach allows investors to purchase properties without physically visiting them, leveraging technology and trusted professional service providers in the acquisition process.
As one who has personally been through this process, I’ll discuss some of the process highlights, pros, cons and steps to ensure successful investments in real estate sight unseen.
Contents
Understanding Turnkey Real Estate Investing
Turnkey real estate refers to properties that are ready for immediate occupancy or rental, with minimal to no additional work required by the investor.
In fact, the best turnkey properties already have have cash-flow with stabilized renters in-tow.
These “turnkey” properties are often managed by companies specializing in preparing and maintaining them, making them particularly appealing for sight-unseen investments.
The turnkey model is ideal for investors seeking passive income and real estate appreciation all while investing from a distance (it even works great for foreigners looking to invest in US real estate).
In short, turnkey properties provide a hassle-free entry point into the single-family real estate market.
Pros and Cons of Investing Sight Unseen with Turnkey
Turnkey investors are often those who don’t personally have the time to fully vet properties and investment property managers.
They are more often investors with disposable and investable money but little time.
And the properties they invest in are typically in markets with higher capitalization rates several states away.
Pros of Sight Unseen Turnkey Real Estate Investing
- Time-saving: Investing in a property sight unseen eliminates the need for travel and rental property visits, saving significant time and expense (think plane tickets, hotels, etc.).
- Access to a broader market: Regardless of your location, you can invest in high-yield areas across the country or even internationally.
- Convenience: Technology and professional services enable seamless transactions and property management, all remote.
When you can’t see it, touch it and inspect it, there is greater risk.
Unless, of course, you have a trusted professional service provider that can do that for you.
Cons of Investing in a Property Sight Unseen
- Risk of unseen issues: There’s a potential for undiscovered property problems, which can lead to unexpected expenses.
- Reliance on third parties: You must trust investment property managers, inspectors, and real estate agents to provide accurate information and manage the investment property effectively.
- Limited personal assessment: You cannot personally evaluate the neighborhood and the rental property’s condition, relying instead on reports and virtual tours.
- Cost: Typically turnkey properties offered through turnkey platforms are not the best “deals.” They don’t include heavily discounted foreclosures or other off-market opportunities that may have a bit higher yield.
Steps to Invest in A Property Sight Unseen
To keep investors in focus, we have the following mantra:
But your first “at bat” will be the most important.
Here’s how to make it great…
Step 1: Conduct Thorough Research
Start by identifying a high-potential local rental market for single-family turnkey properties.
This typically includes markets with higher cap rates, high demand and good overall metrics.
Analyze market trends, rental property values, and rental demand.
Use online resources, market reports, and real estate websites to gather data and make informed decisions.
Research could include everything from schools to local employers.
Ideally, you want a rental property in a market that will be viable far into the future.
Step 2: Build a Reliable Team
This is the MOST critical step investing in a property sight unseen real estate investment strategy.
Find reputable real estate agents, property managers, and inspectors who have experience with investing in a house sight unseen and turnkey properties.
Your team should be trustworthy, knowledgeable, and able to provide detailed reports and updates.
Trust is paramount, especially if you’re a thousand miles away and completely detached from your tenants.
Vet investment property managers by reading online reviews and interviewing your proposed local property management partner.
Make sure your contracts can be severed for lack of performance.
Hire fast and fire slow!
Step 3: Leverage Technology
Use virtual tours, 3D walkthroughs, and detailed property photos to evaluate properties remotely.
Utilize online platforms and tools for property assessment and investment analysis.
Technology can provide a comprehensive view of the property and its surroundings, helping you make informed decisions.
Your property inspection should be recent and pictures and walk-through videos should be requested to ensure there are no gotchas.
Ideally, and typically, many turnkey properties are actually new builds, which completely avoids many of the issues of aged homes.
New builds also typically include warrantees to cover any initial issues.
Step 4: Perform Due Diligence
Review property reports, inspection results, and maintenance records carefully.
Verify the credentials and track record of the turnkey provider (and their proposed property manager) to ensure they have a history of delivering quality properties and reliable property management services.
Step 5: Secure Financing
Explore financing options suitable for turnkey investments.
Ensure you have pre-approval for mortgage or investment loans, and understand the terms and conditions.
Having financing in place will streamline the purchasing process.
Step 6: Finalize the Purchase
Negotiate the terms and finalize the deal with your real estate agent.
Ensure all legal and contractual obligations are met, and thoroughly review the purchase agreement before signing.
Your real estate agent or turnkey real estate provider will guide you through the closing process.
Step 7: Post-Purchase Property Management
Establish clear communication with your property manager to ensure smooth post-purchase management.
If tenants are in place and rents are stabilized, 9/10ths of the initial risk in property management is cleared, but the long-term relationship is truly what matters most.
Set up regular updates and reports on property performance to stay informed about your investment.
A good property manager will handle tenant issues, maintenance, and other aspects of property management.
Again, finding a good property management partner is the MOST critical step in your turnkey journey.
Tips for Minimizing Risks of Sight Unseen Real Estate Investing
To mitigate potential risks associated with sight-unseen real estate investing, follow these recommendations:
- Choose Experienced Professionals: Ensure that your real estate agents, property managers, and inspectors have extensive experience in sight unseen transactions.
- Check References and Reviews: Look for reviews and ask for references to verify their reliability and past performance.
- Interview Multiple Candidates: Don’t settle for the first professional you find. Interview several to find the best fit for your needs.
- Cross-Check Data: Verify property information from multiple sources, such as online listings, local real estate websites, and public records.
- Request Additional Photos and Videos: Ask for extra visual documentation of the property to get a more comprehensive view.
- Get Comprehensive Property Insurance: Obtain comprehensive insurance for your property.
- Inspect the Property Regularly: Schedule regular inspections to ensure the property remains in good condition.
- Build an Exit Strategy: Have an exit strategy in place in case the investment doesn’t perform as expected.
Conclusion
Investing in real estate sight unseen, especially in the single-family turnkey market, offers a unique opportunity for savvy investors.
By following the steps outlined in this guide, conducting thorough research, and building a reliable team, you can make informed decisions and enjoy the benefits of real estate investing from a distance.
Ready to explore turnkey real estate investment opportunities?
Visit our turnkey properties at Invest.net to find opportunities that fit your specific investment goals.
We also have investment consultants on staff, including your dedicated real estate agent, who can provide personalized advice and services to help you succeed in your real estate investment journey.
Contact us today to get started on your path to passive income and financial growth through real estate investing.
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