INDEX
Please note that index links point to page beginnings from the print edition. Locations are approximate in e-readers, and you may need to page down one or more times after clicking a link to get to the indexed material.
“A, B, C, D” properties, 125–126
Action (see Taking action)
Active real estate investing:
comfort level with, 153–154
investors’ attitudes in, 20
Administrators (self-directed IRAs):
facilitators vs., 74
list of, 75
role of, 74
vetting, 76
Age of properties, 139
All cash, up front financing, 57
All wins, celebrating, 35–36
Analyzing data, for making investments, 150–154
Annual gross income, on spreadsheet, 152
Annual net income, on spreadsheet, 152
Appraisals, 155
Appraised value, 151
Appreciation of property, 54
Appropriateness of turnkey investing:
personal evaluation of, 21–23, 161, 206
Turnkey Safely Checklist for, 27, 188–189
Assets:
communicating with turnkey company about, 136
selling, for funding self-directed IRA, 81
Attorney, closing, 155
Auto industry, 95–96
Bank loans:
with down payments, 55
when leveraging properties, 56–57
Bankruptcy laws, 72
Best Real Estate Investing Advice Ever Conference, 183–184
Blogs, researching, 98–100
Borrowing money:
to fund self-directed IRA, 80
(See also Loans)
Business journals, finding and reading, 97–98
Capital gains, 61
Capital improvements, on spreadsheet, 152
Capitalizing on investments, 59
Cash purchases, 57
Celebrating wins:
all wins, 35–36
Census Bureau, 94
CESAs (Coverdell Educational Savings Accounts), 77
Chambers of commerce, researching, 98–100
Cheap properties:
low-cost properties in struggling neighborhoods, 89
as poor turnkey investments, 49, 108, 202–203
value of more expensive companies vs., 148, 149
Choosing a turnkey company, 12, 105–130
evaluate company’s stock, 124–126
identifying good options, 110–111
importance of, 18
key considerations in, 107–109
Shiny Object Syndrome in, 127–128
three-part process for, 109
Turnkey Safely Checklist for, 129, 194
in Turnkey Safely System, 24
Turnkey Test for finalist companies, 111–124
value in, 128–129
Cities:
diversifying among, 140–141
researching (see Research funnel)
Closing:
problems at, 156–157
before renovations are complete, 156
on turnkey company contract, 155
Closing attorney, 155
Closing costs:
change in, 156
and size of down payment, 50
typical, 53
Clothier, Kent, Sr., 1–2, 9, 29
Communication:
with self-directed IRA companies, 76
with turnkey companies, 164–166, 169–171 (See also Following up on investments)
Contract closing, with turnkey company, 155
Cost(s):
hard, 152
holding, 116
for maintenance (see Maintenance costs)
management, 120–121
soft, 152
on spreadsheet, 151–153
with turnkey investing, 20, 51–53 (See also Financing)
Courage, for turnkey investing, 10, 11, 26–27
Coverdell Educational Savings Accounts (CESAs), 77
CPAs:
as SDIRA disqualified person, 70
Creative financing, 28
as not a good option when you buy turnkey real estate, 28, 201
(See also Self-directed IRAs [SDIRAs])
Credit, communicating with turnkey company about, 136
Credit score, 56
Custodians (self-directed IRAs), 73–74
list of, 75
as SDIRA disqualified person, 70
vetting, 76
Customer service programs:
asking about, 121–122
of Memphis Invest, 169–171
Dallas, Texas, 95
Data analysis, for making investments, 150–154
Debt-to-income ratio, 56
Decision making:
analyzing data for, 150–154
based on emotion or excitement, 41, 91, 153
based on facts–not feelings, 103, 203
based on market research, 101–102
financial, 11
impulsive, 142
Deductions, 60–61
Depreciation, as tax deduction, 61–62
Disqualified persons:
and funding of self-directed IRA, 80–81
of self-directed IRAs, 70–71
Distance from turnkey investments, 22–23
Distribution industry, 96
Diversification (of investments):
in investment plan, 140–141
with self-directed IRAs, 69
Diversification of local industry, determining, 94–97
with bank loans, 55
on spreadsheet, 152
Due diligence:
and earnest money, 154
neglecting, 132–133
for turnkey investing, 11
Duff, Turney, 143
Earnest money, 154
Economic stability and growth, determining, 94–97
Emotion-based decision making, 41, 91, 153
Employment, as loan criterion, 56
Engagement, 164–165, 171 (See also Following up on investments)
Equity position in properties, 50
Executing investment plan (see Making investments)
Expanding your vision, 12, 175–182
by acting on success, 181
first step in, 178–180
by going where growth is, 177–178
personal relationships in, 180–181
Turnkey Safely Checklist for, 182, 199–200
in Turnkey Safely System, 25
Expenses, with investments, 52 (See also Cost(s))
Experience:
of self-directed IRA companies, 76
of turnkey companies, 14, 117, 201
Facilitators (self-directed IRAs):
list of, 75
role of, 74
Fairless, Joe, 183
Fannie Mae:
5-10 Properties Financed Program, 56–57
lending guidelines from, 56
Fees:
with financing, 50
lease, 152
management, 120, 127, 153, 155, 158
Financial planners, as self-directed IRA disqualified person, 70
Financial planning, Turnkey Safely Checklist for, 65, 191
all cash, up front, 57
amount needed, 48–53
bank loans with down payments, 55
hard money lending, 57–58
leveraging property purchases, 55–57
private money lenders, 58
and return on real estate, 53–55
scaling portfolio, 58–60
with self-directed IRAs, 58 (See also Self-directed IRAs [SDIRAs])
taxes, 60–63
top questions about, 48–63
Financing strategy, 50
Finding your “how,” 39–41
Finding your “why”:
in setting your vision, 36–37
Turnkey Safely Checklist for, 44, 189–190
5-10 Properties Financed Program (Fannie Mae), 56–57
Following up on investments, 12, 163–173
checklist for, 165–168
importance of, 164–165
by keeping in touch with partner, 168–171
monthly, 166
ongoing, 167–168
Turnkey Safely Checklist for, 172, 197–199
in Turnkey Safely System, 25
yearly, 166–167
Foresight, 41–43
401(k)s:
roll over funds from, 77
self-directed, 77
self-directed safe harbor, 77
Solo, 77
Fraud (with self-directed IRAs):
risk of, 81
warning signs of, 82
Funding, for self-directed IRAs, 77–78, 80–81
Getting started:
analyzing return from real estate investing, 53–55
avenues for financing investments, 55–60
money needed for, 48–53
tax considerations, 60–63
top financial questions when, 48–63
Turnkey Safely Checklist for, 14, 188
Goal setting:
to accomplish your vision, 39–41
Turnkey Safely Checklist for, 44, 190
Goals:
adjusting, to fit vision, 39
communicating with turnkey company about, 136, 137
in creating investment plan, 42–43
long-term, partner’s understanding of, 182, 207
as reality check, 35
specific and realistic, 39–40
vision vs., 34–35
Google research:
on business journals, 97
on chambers of commerce, 98
on job growth, 96–97
on turnkey companies, 110–111
Graham, Benjamin, 128
Gross income, annual, 152
Growth, as an investor, 177–178
Growth trends:
determining, 93–94
job growth, 94–97
Guaranteed returns, 82
Guarantees:
as marketing gimmicks, 127–128
rental and maintenance, 115, 128
in third year, 128
Hard costs, on spreadsheet, 152
Hard money lending, 57–58
Health Spending Accounts (HSAs), 77
History of turnkey investing, 18–19
HOA, on spreadsheet, 152
Holding costs, 116
Home office deduction, 61
Honesty, in communicating with turnkey company, 136–137
“How,” goal setting as finding, 39–41
HSAs (Health Spending Accounts), 77
HSAs, self-directed, 77
Improvements to properties:
capital improvements, 152
as tax write-off, 62
Impulse-buy decisions, 142
Income:
annual gross income, 152
annual net income, 152
debt-to-income ratio, 56
less than expected, 142
more than expected, 143
positive income on properties, 52
from real estate investments, 53–55
on spreadsheet, 152
when using self-directed IRAs, 79
(See also Return on real estate)
Individual Retirement Accounts (IRAs):
REIT investments with, 78
roll over funds from, 77
self-directed, 73, 77 (See also Self-directed IRAs)
traditional, 69
transferring funds to self-directed IRAs from, 80
Industry diversification, determining, 94–97
Industry strength, 95
Initial contact with turnkey companies, 111–113
Inspection reports, 155
Inspectors, choosing, 155
Insurance:
choosing, 155
following up on, 164
Memphis Invest program for, 167
mortgage, 50
on spreadsheet, 152
yearly follow-up on, 166–167
Interest rates:
with bank loans, 55
and size of down payment, 50
Internal Revenue Service (IRS):
annual contribution limits set by, 78
and prohibited transactions, 71, 74
Publication 925, 63
SDIRA custodians approved by, 73
Investing mistakes:
of author, 131–134
in real estate, 15–16
by turnkey companies, 122–123
Investment plan, 131–146
assessing risk threshold, 137–140
celebrating small wins, 143–144
creating, 12, 135–137, 195–196
defining your vision and goals for, 42–43
diversification, 140–141
executing (see Making investments)
importance of, 134–135
retirement savings in, 85, 203
self-directed IRAs in, 26
sticking with your, 141–143
turnkey as launching pad for future investments, 161, 206
Turnkey Safely Checklist for, 195–196
in Turnkey Safely System, 25
Investment portfolio:
financing (see Financing)
managing, 21
scaling, 58–60
Investments:
calculating value of, 149
Investors:
growth of, 177–178
saying no to, 179–180
turnkey companies as, 113–114
IRA (see Internal Revenue Service)
IRAs (see Individual Retirement Accounts)
Job growth, determining, 94–97
Journals, business, 97–98
Knowledge, of self-directed IRA companies, 76
Lease fees, on spreadsheet, 152
Lease renewals, asking about, 118
Lease-term fulfillment, asking about, 118–119
Leveraging property purchases, 55–57
and cash purchases, 57
with hard money lending, 57–58
increased return with, 22
with private money lenders, 58
Living in the moment, 143
Loans:
with down payments, 55
employment as criterion for, 56
interest rates with, 55
nonrecourse, to fund self-directed IRA, 80
when leveraging properties, 56–57
(See also Financing)
Local blogs, researching, 98–100
Local business journals, finding and reading, 97–98
Local industry diversification, determining, 94–97
Long-term capital gains, 61
Long-term goals, partner’s understanding of, 182, 207
Losses on properties, 63
Low-cost properties (see Cheap properties)
MACRS (Modified Accelerated Cost Recovery System), 62
Maintenance, 54–55
deferred, 115–116
monthly follow-up on, 166
Maintenance costs, 52
with deferred maintenance by company, 116
following up on, 164
monthly follow-up on, 166
on spreadsheet, 152
as tax write-off, 62
Maintenance guarantees, 115, 128
Making investments, 12, 147–161
analyzing data for, 150–154
pacing yourself in, 149–150, 157–159
pitfalls to avoid in, 156–157
safety in, 159–160
steadily and systematically, 149–150
Turnkey Safely Checklist for, 160, 196–197
in Turnkey Safely System, 25
what to expect when, 154–156
Management costs, asking about, 120–121
Management fees:
asking about, 120
following up on, 164
as indicator of company quality, 127
monthly follow-up on, 166
tier pricing for, 168
Market research (see Researching the market)
Market stability, determining, 93–94
Marketing gimmicks, 127–128
Maximizing profits, 59
Memphis, Tennessee, 96
Memphis Invest:
current status of, 9
customer services at, 169–171
insurance program of, 167
investment guidelines from, 24–25
origin of, 9
personal relationships at, 180
research funnel of, 92
resources from, 178
return from investments with, 148
saying “no” to potential customers at, 88
Metro statistical areas (MSAs), 94
Mistakes:
in author’s investing, 131–134
in real estate investing, 15–16
by turnkey companies, asking about, 122–123
Modified Accelerated Cost Recovery System (MACRS), 62
Money:
earnest, 154
for getting started, 23, 48–53
setting goals related to, 40–41
(See also Financing)
Monthly follow up, 166
Mortgage insurance, 50
Mortgage interest:
Mortgage payments, 52
with bank loans, 55
on spreadsheet, 152
Motivation:
celebrating all wins as, 35–36
celebrating small wins as, 143–144, 146, 205
clear vision as, 33
MSAs (metro statistical areas), 94
Multiple properties, power of, 158, 205–206
Net income, annual, 152
Net on investment (NOI), 153
“No big deal fund,” 51–53
in planning for the unexpected, 59–60
and rainy day fund, 51–52
and self-directed IRA investing, 78–79
NOI (net on investment), 153
Nonrecourse loans, to fund self-directed IRA, 80
Occupancy lengths, asking about, 121
Ongoing follow up, 167–168
Operating expenses, as tax deduction, 61
Ownership of properties, by turnkey companies, 115–117
Pacing investments, 149–150, 157–159
Partners:
as self-directed IRA disqualified persons, 70
in turnkey investing (see Turnkey company[-ies])
Partnerships:
for funding self-directed IRA, 80–81
of turnkey companies, 114–115
Passion, 37
Passive activity, as tax write-off, 63
Passive investing:
comfort level with, 153–154
engagement in, 164–165, 171 (See also Following up on investments)
not being passive about, 173, 206–207
in real estate, 4, 18 (See also Turnkey investing)
self-directed IRAs as, 71
Perfect-day exercise:
reviewing, 141
in setting your vision, 31–32, 37–39
Personal relationships, with turnkey company, 180–181
Pitfalls to avoid, 156–157
Plan for investing (see Investment plan)
Ponzi schemes, 81
Population, as market stability indicator, 93–94
Portfolio:
financing (see Financing)
leveraging purchases to build, 56
managing, 21, 164 (See also Following up on investments)
number of properties in, 157
plan for building, 53
scaling, 58–60
Portfolio under management (turnkey companies), 116
Positive cash flow, understanding importance of, 66, 203
Positive income on properties, 52
Power of multiple properties, 158, 205–206
Price of property, on spreadsheet, 152
Private money lenders, 58
Profits, maximizing, 59
Prohibited transactions, with self-directed IRAs, 71, 74
Promotional companies, 19
Properties:
“A, B, C, D” method of labeling, 125–126
age of, 139
appraisal of, 155
appreciation of, 54
assessing, 124–126
cheap, as poor investments, 49, 108, 126–127
equity position in, 50
losses on, 63
low-cost properties in struggling neighborhoods, 89
maintenance of, 54–55
multiple, power of, 158, 205–206
pacing acquisition of, 149–150, 157–159
positive income on, 52
Scope of Work on, 156
Property appreciation, 54
Property maintenance, 54–55
Property ownership, by turnkey companies, 115–117
Property tax:
following up on, 164
as tax deduction, 61
Protecting capital, 52
Psychological sales techniques, 112
Publication 925 (IRS), 63
Real estate investing, 2–4
active, 20
author’s family’s experience in, 9–10
to earn positive income, 52
hands-on vs. hands-off, 21
interest in, 2–3
as long game, 35
mistakes made in, 15–16
passive, 4, 18 (See also Turnkey investing)
to protect your capital, 52
reality of, 3
risk with, 10–11
sources of income from, 53–55
talking about vs. acting on, 176
various types of, 23
via self-directed IRAs, 58, 78–79
Realistic goals, 39–40
REIT investments, 78
Remodeling, as tax write-off, 62
Renovation costs, 53
responsibility for, 108
Renovations, closing before completion of, 156
Rent collection, asking about, 119–120
Rental income:
monthly follow-up on, 166
on spreadsheet, 152
Rental payments, 54
Repair costs, 53
asking about, 120
as tax deduction, 61
Research funnel, 92–101
determine job growth potential and local industry diversification (step 3), 94–97
determine market stability and recent growth trends (step 2), 93–94
find and read local business journals (step 4), 97–98
research the chamber of commerce and local blogs (step 5), 98–100
Researching the market, 12, 87–103
for making informed decisions, 101–102
research funnel for, 92–101
Turnkey Safely Checklist for, 102, 193
in Turnkey Safely System, 24
value of, 90–91
and visiting markets, 100–101, 103, 204
Resident support, asking about, 121
Retirement Industry Trust Association (RITA), 75
Retirement planning:
real estate investing in, 63
self-directed IRAs in, 26
(See also Investment plan)
Retirement savings:
communicating with turnkey company about, 136
as part of your plan for reaching your vision, 85, 203
transferring funds to self-directed IRAs from, 80
(See also Self-directed IRAs [SDIRAs])
Return on real estate, 53–55
expected, 153
guaranteed, 82
less than expected, 142
more than expected, 143
sources of, 53–55
in turnkey investing, 22
(See also Income)
Risk(s), 10–11
evaluating, 21
with low-cost properties in struggling neighborhoods, 89
of paying renovation costs, 108
with real estate investing, 10–11
reducing, 23
with turnkey investing, 47–48
with using self-directed IRAs, 81–83
Risk threshold/tolerance, assessing, 137–140
RITA (Retirement Industry Trust Association), 75
Roth IRAs, 77
Scaling portfolio, 58–60
Scope of Work, 156
SDIRAs (see Self-directed IRAs)
Self-awareness, 136
Self-dealing, 69–70
Self-directed HSAs, 77
Self-directed IRAs (SDIRAs), 67–85
accounts eligible for, 73
annual contribution limits on, 78
big-name players in, 75
custodians of, 73–75
defined, 68–69
disqualified persons with, 70–71
fraud with, 81–82
funding, 77–78
increasing funds in, 80–81
investing in real estate via, 58, 78–79
leaving healthy cushion in, 79
opening, 77
options for, 77
in overall investment plan, 26
risk with, 81–83
and self-dealing, 69–70
third-party administrators of, 74, 75
transactions with, 79–80
Turnkey Safely Checklist for using, 84, 192
types of accounts, 77
uses of, 69
vetting SDIRA companies, 76
Self-directed safe harbor 401(k)s, 77
Self-directed SEPs, 77
Self-employment tax, 62
Selling assets, for funding self-directed IRA, 81
SEPs, self-directed, 77
Setting a path:
Turnkey Safely Checklist for, 44, 190
(See also Goal setting; Setting your vision)
Setting your vision, 29–45
celebrating all wins in, 35–36
foresight in, 41–43
getting vulnerable in, 31–32
and goals vs. vision, 34–35
keys to setting vision, 36–39
power of, 33–34
setting goals in, 39–41
Turnkey Safely Checklist for, 44, 190
in Turnkey Safely System, 24
Sheets, Carleton, 6
Shiny Object Syndrome (S.O.S.), 127–128, 130, 204
Short-term capital gains, 61
SIMPLEs, 77
Small wins, celebrating, 143–144, 146, 205
Soft costs, on spreadsheet, 152
Solo 401(k)s, 77
S.O.S. (see Shiny Object Syndrome)
Specific goals, 39–40
Spreadsheets for investments, 150–153
Stability, market, 93–94
Stock of turnkey companies, assessing, 124–126
Strategy, financing, 50
Struggling neighborhoods, low-cost properties in, 89
Success, acting on, 181
Taking action:
in direction of your vision, 45, 202
in expanding your vision, 181
on real estate investing, 176, 177
in turnkey investing, 185–186
Tax professionals, 62
Tax returns, 56
Tax traps, 62–63
Taxes, 60–63
capital gains, 61
depreciation, 61–62
following up on, 164
with self-directed IRAs, 69, 72
on spreadsheet, 152
tax traps, 62–63
yearly follow-up on, 166–167
Team for investing (see Turnkey company(-ies))
1031 exchange, 62
Third-party administrators (self-directed IRAs):
facilitators vs., 74
list of, 75
role of, 74
vetting, 76
Tier pricing, 168
Transportation industry, 96
Travel expenses, as tax deduction, 61
Turnkey company(-ies):
all cash payments required by, 57
bad reputation of, 19
choosing (see Choosing a turnkey company)
communication with, 164–166, 169–171
in creating your investment plan, 135–136
desirable characteristics of, 108, 112–113
doing due diligence on, 90
evaluating stock of, 124–126
initial contact with, 111–113
Internet presence of, 110–111
keeping in touch with, 168–171
length of experience of, 14, 117, 201
managing investment portfolio in, 21
personal relationships with, 180–181
promoters of, 19
property maintenance by, 54–55
psychological sales techniques used by, 112
questions to ask, 113–124
renovation and upkeep by, 54
specialization by, 139–140
that take the time to listen and learn, 41–42, 202
tier pricing with, 168
value maximization by, 59
(See also Memphis Invest)
arguments for and against, 20–21
author’s experience in, 5–8
cost of, 20
distance from investments in, 22–23
evaluating personal appropriateness of, 21–23, 161, 206
history of, 18–19
lack of clear standards for, 19
by Memphis Invest (see Memphis Invest)
process for, 24–26
qualities needed for, 11
risks with, 47–48
Turnkey Safely System, 24–26
(See also specific topics)
Turnkey Mastery Tips, 12, 201–207
avoid Shiny Object Syndrome, 130, 204
celebrate small wins, 146, 205
cheap properties are not good turnkey investments, 49, 202–203
creative financing is not a good option when you buy turnkey real estate, 28, 201
don’t forget to include your retirement accounts or a retirement account strategy as part of your plan for reaching your vision, 85, 203
in the end, it’s about what’s right for you, 161, 206
a great partner understands your goals for the long term, 182, 207
harness the power of multiple properties, 158, 205–206
how do I define value?, 130, 205
how long a company has been in business is very important, 14, 201
if it feels like a sales pitch, it’s a sales pitch, 107, 204
look for a partner that takes the time to listen and learn, 41–42, 202
make decisions based on facts–not feelings, 103, 203
review your plan often to make sure you stay on target, 146, 205
take steady, patient action in direction of your vision, 45, 202
turnkey is great launching pad for future investments, 161, 206
understand importance of positive cash flow, 66, 203
you cannot be passive about your passive investments, 173, 206–207
you do not have to visit a market before you choose to invest, 103, 204
Turnkey portfolio:
financing (see Financing)
leveraging purchases to build, 56
managing, 164 (See also Following up on investments)
number of properties in, 157
plan for building, 53
scaling, 58–60
Turnkey real estate, 17–18
advantages of, 17–18
defined, 17
Turnkey Safely Checklist, 12, 187–200
choosing a turnkey company, 129, 194
creating an investment plan, 145, 195–196
determining appropriateness of turnkey investing, 27, 188–189
expanding your vision, 182, 199–200
finding your “why,” 44, 189–190
following up with your investments, 172, 197–199
is turnkey investing right for me?, 188–189
making investments, 160, 196–197
researching the market, 102, 193
using self-directed IRA to buy turnkey real estate, 84, 192
Turnkey Safely System, 24–26
“who” and “where” in, 90
(See also individual steps in system)
initial contact with companies, 111–113
most important questions in, 121–124
questions to ask in, 113–121
The unexpected, planning for, 59–60
Unsolicited investment offers, 82
Vacancies:
asking about lengths of, 119
asking about rate of, 118
Value:
appraised, 151
of investments, calculating, 149
maximizing, 59
reflected in price points, 127
of researching the market, 90–91
in turnkey companies, 128–129
Vision:
adjusting goals to fit, 39
in creating investment plan, 42–43
designing, 11
expanding (see Expanding your vision)
goals vs., 34–35
perfect-day exercise for creating, 31–32, 37–39
as personally fulfilling, 37
power of, 33–34
setting, 36–39 (See also Setting your vision)
setting goals to accomplish, 39–41
taking steady, patient action in direction of, 45, 202
Visiting the market:
determining need for, 100–101
Visualizing your perfect day, 31–32, 37–39, 141
Vulnerability, 31–32
“Why,” finding your:
in setting your vision, 36–37
Turnkey Safely Checklist for, 44, 189–190
Wins, celebrating:
all wins, 35–36
small wins, 143–144
Yearly follow up, 166–167