Turnkey REO’s – The Tricky Part
You may have seen offers on various websites about “Turnkey REO’s”.
They can be really good deals with equity, cash flow, and a good long term investment. But before you jump into them, consider this checklist when you research the opportunity:
1. Check if the company who is offering the investment is a reputable company that has been in business for some time, or if it’s just a fly-by-night operation that will be gone once you run into any questions.
2. Check if the properties are currently bank owned, or if you are buying from an investment company that has owned the investment for a period of time while they were fixed up.
3. Check the neighborhood and don’t rely on “comps”. Require a bona fide appraisal. Look at the comparable homes used in the appraisal. Make sure your property has the same features as the comparables, such as size, bedrooms, bathrooms, floors, lot size. If these important features differ, and are accounted for by making aadjustments in value, only go with that house if it’s superior.
4. Get detailed information about the kind of repairs have been done to the house, and who performed them. Get an independent inspection report to verify the condition of important systems in the house.
5. If the house is intended for use as rental to government supported tenants, make sure it has already passed government housing inspections.
6. Don’t rely on estimated rent amounts, or if you have to, run your numbers with 20% less rent and see if you still like the return on your investment. That way you’ll be in for a nice surprise if the quoted estimates were actually correct.
7.If the property is already rented, make sure you get all the tenant screening information and double check the procedures, credit reports, and income verification for the tenants.
I prefer “turnkey houses” that are already rented to carefully screened tenants, with rents preferably being paid by a government agency (“Section 8″ or similar program). The property should be managed by a reputable, professional management company.
We offer this type of investment from time to time in our “Turnkey Houses – Lifetime Cash Flow Program”. Click here to register for the next buying webinar <== LINK!
