APPENDIX A

THE TURNKEY SAFELY CHECKLIST

I first wrote the Turnkey Safely Checklist when I was building my own portfolio for the second time. I had already made enough mistakes to last me a lifetime and promised myself I wouldn’t ever make the same mistakes twice.

So, I made a list to guide my next decisions, and even to this day, every time I add a property to my portfolio, I follow this list. I have invested in four different states and seven different cities and have plans to add more. Each time I consider adding to my portfolio, I go through the same checklist and honestly assess the ways in which I am achieving my goals and building my vision. I always ask myself if a particular investment property or investment decision moves me closer to my goals and vision, and I evolve my plans over time.

With this checklist to guide me, I no longer accept “feeling” good about buying a property. I have a high level of confidence every time I decide to add a new turnkey property to my passive portfolio. Following a set of processes protects me and keeps me moving forward.

Here are my answers to the Turnkey Safely Checklist. I hope my answers will help guide you to making great decisions building your turnkey portfolio!

Getting Started

What is my background in real estate?

At this point, I am totally comfortable buying real estate. I have purchased 5 homes for me and my family to live in and close to 75 for my personal portfolio.

Have I bought my first home to live in?

Yes.

Have I bought my first investment property?

Yes.

Do I have friends or family who have invested in real estate?

Yes, I have both family and friends who have invested in real estate including some who have lost money.

Do I have a local real estate investors club to attend?

I have a couple of groups that I can meet with. I have only heard good things about one of them, so I’ll start there.

Is Turnkey Right for Me?

Do I want to be hands-on or hands-off with my investments?

This is a tough question for me since I like to be hands-on and know about all of my investments. But I don’t have the same investment opportunities nearby, and I know I need a professional manager to hold the residents accountable. So overall, I think I will be comfortable with the right management company.

Do I want a quick return, or am I in it for the long game?

I want to build a long-term portfolio that may have a generational impact for my family. I want that portfolio to be passive, so turnkey is the right way to fulfill my long-term strategy.

Do I need to be close to my investment, or can I handle the distance?

I have always wanted to be close to my investments. As I have grown in experience, however, I have realized that being near my investments has probably hurt more than it has helped me. I am completely comfortable investing far from where I live so long as I am following the steps I set up to do it safely and correctly.

Do I have enough money to get started?

Yes. I have enough money set aside for my passive portfolio to purchase two to five turnkey properties to get me started with an average price point of $100,000 to $125,000. That is with me putting 25 percent down on each property and covering closing costs.

Finding Your “Why”

What is most important to me? What two or three things would I keep if I had to give up everything else?

My family is the most important thing to me without a doubt. My five kids and my wife are my everything, and they help inspire me. Providing opportunity and seeing their joy is very important. Second, giving away money to charitable causes is almost as satisfying as making money in the first place, so I definitely want to create the environment where I have the resources I need to contribute to good causes.

What does my perfect day look like?

My perfect day is definitely spent near the water. I can smell the salt of the sea and hear the birds outside. More than anything else, my perfect day is built around me doing the things that make me happiest. It’s not about being retired, but about being able to decide and do the things I want to do each day. Isn’t that what retirement is, anyway? So, my perfect day is all about my family!

Setting a Path

What are the top five investing goals that will take me to my vision?

Buy two or three properties per year.

Buy in markets far from me offering lower price points and hiring professionals.

Use the cash flow from my properties to reduce principle. I don’t need the income.

View each property as my kids’ college fund or my retirement. Not as properties.

Only buy the assets that fit my plan. I will be disciplined and will not get knocked off of my plan.

Financial Planning

What resources do I have to get started?

I am putting a portion of my monthly income into an account for savings that I will use as a down payment and closing costs on each property. I already have savings set aside for college and retirement that we are going to use to buy assets providing income. We are going to use the cash flow to reduce the debt and own the properties faster. I have a good credit score and a spouse with a good credit score, and we both are working. I have an IRA that I can move into a SDIRA. All of these are assets we can use to build our portfolio.

How much money will I need to build my portfolio?

I estimate that it will take between $400,000 and $500,000 over the next four to six years to build my portfolio. It could take much less, but I am estimating high and planning on buying the best properties possible and not settling for cheap properties.

What are the hard costs that come with owning a turnkey investment property?

Interest Rate

Appraisal fee (one-time cost)

Inspection fee (one-time cost)

Closing costs (one-time fees)

Taxes

Insurance

Using a Self-Directed IRA to Buy Turnkey Real Estate

Do you have an IRA that you can convert or an SDIRA already set up?

Not yet, but I need to get one set up and check to see if my wife and kids can have one too.

How much is in your IRA accounts?

N/A

What are you allowed to invest in with your SDIRA?

Almost anything, as long as it is not owned by me or part of my direct family.

What is disqualified for you as an investment with your SDIRA?

I cannot invest in things with my family. I cannot invest in collectibles or insurance policies.

What are the most crucial qualities in a good SDIRA company?

Experience

Knowledge

Communication

What are two warning signs of fraud when investing your SDIRA?

Unsolicited investment offers

Guaranteed returns

Researching the Market

Have I put in a lot of time and effort to research markets of interest to me?

Yes. I want to invest in markets that give me the best opportunity for my money to be protected, whether I am familiar with the market or not.

Does this market I’m interested in have strong population stability and economic growth potential?

Yes, each of the markets I invest in and even other markets on my list that I have not invested in have strong economic outlooks. They are all different, with different strengths and weaknesses, but they are all strong and stable.

Does this market have a local business journal?

Yes.

What have I learned about this market from reading the local business journal, chamber of commerce brochure, and local blogs?

I am much more confident in the markets because I have taken the time to read what is going on behind the scenes. I’ve read about everything from the rosy predictions to the dirt from the alleyways.

Taking all of this under consideration, does this market pass the research funnel test?

Yes.

Choosing Your Turnkey Company

Are there any turnkey companies available in my target city?

Yes, they are XXX Invest and YYY Investments.

Does my potential turnkey company have a strong online presence?

Yes. There are a lot of different white papers, videos, and customer testimonials that help me get educated and a behind-the-scenes look.

Am I satisfied with my potential company’s answers to the Turnkey Test?

Yes.

Does my potential company offer stock that meets my investing needs?

One company has properties that are a little riskier and in riskier neighborhoods, while the other is more expensive, but definitely less risky. I’m going with the higher priced, lower risk company.

Am I signing on with my company based on value instead of price?

Absolutely!

Creating an Investment Plan

Did I sit down with my team to create an investment plan, or have I been trying to do it all by myself?

One of the reasons I loved my team is that they were patient and spent time working with me. I never felt rushed. I knew there was demand for their product, but I never felt like I had to move quick to keep working with them. They made me feel comfortable and answered my questions patiently.

How many properties do I need to include in my portfolio to reach my vision?

10.

What is my time frame for purchasing these properties?

Two or three properties per year with a plan to have all ten within four years.

Does my plan take into consideration . . .

•  My long-term financial goals?

Yes. I want to use my portfolio to provide funding for my kids’ education, their weddings, and even our retirement. Our ultimate vision would be to give our kids a wedding present of a paid-off rental property to help them get started in life. The properties will be in nice enough neighborhoods where they could either live there or keep them for passive income.

•  The steps I’ve taken so far toward meeting those financial goals?

Yes. I have included not only the steps I’ve taken in passive income, but also included my other investments.

•  What kind of risk I’m comfortable with, and how much?

I want to reduce risk by buying the best properties I can in the best locations. That means they will be more expensive, but they will attract a higher qualified client. I want to buy above the median home price with above median rent rates. I think this will hold down my vacancy and maintenance.

•  The level of portfolio diversification that will work best for me?

Yes. By focusing on these types of neighborhoods and properties, I will see fewer opportunities, but they will be the better opportunities. I can diversify across multiple cities and have fewer investors competing for these properties since most are attracted to lower price levels.

Making Your Investment

Do I have all the numbers I need to calculate my return?

Yes. I know what my hard costs will be, and I can reduce my vacancy and maintenance to a minimum based on the property I buy.

Does the calculated return on my potential investment meet my personal criteria?

Yes. I am okay with a lower return but higher cash flow by putting a larger down payment on each property. I will use the additional cash flow to reduce the principle and can hopefully own the property outright more quickly.

Am I able to choose an insurance company and attorney that make me feel comfortable?

Yes. This was a big deal because several companies I looked at would not let me use my own attorney. They wanted to require me to use their services. Ultimately, a company that makes suggestions and requires that I use their list made perfect sense so long as they provided good service and competitive pricing. Not having a choice was not an option for me.

Am I moving forward with my investments at a steady pace?

My plan is to buy two or three a year—and yes, I am on pace.

Following up with Your Investments

Do I consistently check my monthly ledger for missing rents, duplicate charges, and overcharges?

Yes. Every month I look at my ledger to make sure my direct deposit matches my statement.

Do I reevaluate my investments for taxes and insurance savings each year?

Yes. I have challenged increases in taxes and ask for a reduction in insurance costs each year.

Am I keeping track of the tier pricing levels offered by my turnkey company?

Yes. Essentially, the companies I have chosen have lower-cost properties that are right at median price for a market and higher price properties in nicer neighborhoods. They also have properties that they build from the ground up that are more expensive. This gives me a range to choose from when building my portfolio, but they do not offer cheap price properties. They do not offer discounts, but their services such as management and maintenance are reduced if I build a portfolio with more properties.

Do I talk to my turnkey partner by phone every month?

Communication was a must for me, and I marked several companies off my list that either did not offer to talk each month or said they did but had poor follow-up and were difficult to reach. I figured if I couldn’t talk to them before I purchased when they were trying to sell something to me, it would be impossible to talk with them after I had already bought. In the end, I spoke with other investors and liked that I continually heard that they had good communication.

Is the person I touch base with at my company the same individual each month?

Yes. I have my own assigned representative at the company who is familiar with me, my family, our situation, and what we expect from communication and our portfolio.

Expanding Your Vision

What actions am I taking to continue building my portfolio and move closer to my vision?

The biggest actions I take now are reviewing my goals and vision each year. For instance, I have taken several years off in the past from adding to my portfolio when it is performing and meeting my goals. In other years, I have added as many as five properties to my portfolio. Being aware and reviewing years are two actions that have really helped me to build my portfolio.

Am I continuing to be inspired by my turnkey company to review my portfolio, my goals, and my vision?

Each year I have an appointment with the turnkey companies I work with to review my portfolio and performance. I initiate this conversation so they know I want to see where I stand and see what they think. Since I am so familiar with so many turnkey companies around the country, I also take the time to keep visiting with companies that I have never worked with. This helps me to stay up-to-date with different markets in case I need to make any additional purchases, but it also helps me to hold my turnkey company accountable to giving me the best customer service. Memphis Invest continues to set the bar very high for other companies.

Where is my confidence today as a turnkey real estate investor? What concrete steps can I take to feel even stronger about my investments?

I am very confident that the portfolio I have built will help me reach my goals and achieve my vision. My perfect day is right around the corner! The easiest way to feel stronger as an investor is to connect deeper and more often. Visit the company you have chosen to work with. Spend time with them and meet the team. One visit is great, but visiting on a more routine basis is even better. When you visit, a quick drive-by of your properties is another great way to stay connected and grow in confidence as an investor that you have made a wise choice.