4 Reasons People Don’t Invest In Real Estate
(and how Turnkey Real Estate Beats Them All)
You would be hard-pressed to find people who would tell you investing in real estate is a bad idea.
Of course there are pro’s and con’s, risks and rewards; but in general, investing in real estate is creating wealth for many. In fact, an article in PR Newswire reveals that 89% of all investors have interest in putting their money in real estate. While a similar study from PR Newswire revealed that 80 percent of U.S. investors surveyed believe a real estate portfolio is one of the best financial legacies they could leave for their family. With 94% of investors who have invested in real estate in the past plan on investing again. The stats go on and on, showing the long (and short) term benefits of including real estate in any responsible portfolio.
But even amid the staggering support of this low-risk investment strategy, there are still those who don’t participate. Jeff and I have had many conversations with investors looking to start building their financial portfolio using real estate and we’ve found several revealing reasons why investors haven’t taken the plunge:
Even the dingiest homes have incredible upside if you can see the value.
Lack of Knowledge
We’ve watched the shows on HGTV and the DIY channel. Go buy a fixer-upper, make it look beautiful and flip it for profit. Seems easy…right? And fun! You start mulling it over and think “I can do that”. But the moment you turn your TV off, reality sets in. Where do you start? In its simplest form, the 5 major steps in cash flowing or flipping a property is Find, Assess, Fund, Rehab and Flip/Rent. Countless real estate experts provide programs, books and memberships showing you how simple it is to be successful but… let’s get real, it can be overwhelming. On top of that, you are competing against those same experts who have the resources and know-how to Find, Assess, Fund, Rehab and Flip/Rent the very properties they tell you to find. The learning curve can be steep and many mistakes can be made. In fact, you’ll find most of these experts admit that they themselves made many mistakes before finding their stride.
How Turnkey Real Estate Investing beats “Lack of Knowledge”
“If you can’t beat ‘em, join ‘em” as they say. Turnkey Real Estate Investing frees you from needing to do all of the initial heavy-lifting as it relies on the Real Estate Experts to do their job and handle nearly all 5 steps of real estate for you. By relying on the knowledge of the experts, you can simply be the investor by purchasing properties prepared for you, at wholesale pricing. If you’re looking to be a real estate “Investor” and NOT a real estate “Developer”, then turnkey investing may be right up your alley. North Peak offers a large inventory of turnkey ready properties nationwide to satisfy the investor living inside of you screaming to come out.
“If you’re looking to be a real estate Investor and NOT a real estate Developer, then turnkey investing may be right up your alley.“ -Grant Diggles
Lack of Capitol
While there are a variety of ways to invest in real estate for little to no money down, these opportunities more often than not, involve processes that most people won’t do. Your other option is to go the more traditional route of purchasing a property yourself, rehabbing the property and then selling the property. Each one of these steps requires money. Either your money or money from a third party such as a hard money lender, charging rates and points that only get more costly every day your property isn’t sold. I recently spoke with a flipper in my area who has been sitting on a completed project for nearly 10 months. That’s 10 months of mortgage payments cutting into his profits forcing him to potentially put a tenant in the property and take the home off the market. Not a bad strategy actually, if that was your plan. But my buddy is flipping in the Northwest where prices are high enough the home flipping is favored over cash flow.
Now, I don’t want to sound like a complete Debbie-downer here; greater risk comes with great reward as long as you keep winning. But many investors have a finite amount of money to work with that could be tragically lost on their very first try if costly mistakes are made.
How Turnkey Real Estate Investing beats “Lack of Capitol”
Can you say 20%? Nearly all turnkey real estate investment opportunities can be purchased with 20% down, with many of these cash-flowing properties selling for as little as $60,000. In this example, you only need to come up with $12,000 to own a tenant occupied property with instant month-to-month cash flow. No purchasing dilapidated homes. No rehabbing. No hard-money lenders. No mortgages payments. Just 20% and you’re collecting rent checks with your tenant covering the mortgage for you. In theory, a real estate investor with $100,000 could purchase 5 turnkey properties using the 20% down method. If each property was cash flowing $250 per month after expenses, then the investor is enjoying a cash-on-cash ROI of 15%. Not bad. Seems too simple? Well, my friend, that’s why its called “Turnkey.”
Lack of Time
In the book “The ABCs of Real Estate Investing” by Ken McElroy (a highly recommended read by the way), one of the chapters discusses the topic of how to find potential investment properties in your area. While this chapter is very insightful, it also exposes the insane amount of time you could spend on simply finding a potential property in the first place. One particular recommendation in this chapter is “driving for dollars” meaning you drive around your local area during your free time on weekends and evenings looking for properties that fit the profile of a potential investment opportunity. While this is only one of several ways to find properties, it is one that is recommended go in tandem with one or more other strategies such as direct mailers, billboards, networking and a variety of other options.
While there are people who do put in the time to find properties themselves, most people would rather invest their free time in other ways. Does this mean you’re lazy? Nope. It may mean life is happening when you’re not working and you can’t use that time looking for investment deals. Kids in sports? Have a hobby? Want some quality of life? These reasons and more are what cut into your house hunting time and are perfectly legitimate.
How Turnkey Real Estate Investing beats “Lack of Time”
We’ve spoken with many investors who spend so much time making money, that they don’t have much time left over to invest in real estate from a traditional standpoint. They know they want to own property but need an easier “in” to property investment solutions that require a minimal time requirement. Turnkey Real Estate Investing is designed for these people. Initial purchasing of Turnkey Real Estate is cost effective and simple with a qualified management company overseeing your investment every month. In fact, most Turnkey Real Estate Investors only need to work with North Peak for a handful of hours as compared to days, weeks or even months using other, more traditional investment routes.
On top of that, all North Peak properties are managed by the actual investment property developers in their respective markets, not third-party management companies. To understand the significance of management companies, check our blog article “How Management Companies Make or Break Your Real Estate Investment ”.
Lack of Confidence
Risk is no laughing matter and is a real factor that prevents investors from “taking the leap” in real estate. Consider the three previous elements collectively and you’ll find many would-be real estate investors paralyzed and overwhelmed, leading to a lack of confidence in assessing the risks involved to make a confident, well-informed decision.
How Turnkey Real Estate Investing beats “Lack of Confidence”
It’s good to have options, but too many options typically lead to “analysis paralysis”. Turnkey Real Estate Investing is designed to take out decision-making options that are best left to experts such as finding great investment homes, rehabbing them “just right” and finding qualified tenants. With Turnkey Real Estate Investing things are simplified for the investor, leaving them with only a handful of factors to consider such as property location and potential return-on-investment (ROI). North Peak makes it even simpler by connecting investors with qualified developers all over the country who meet specific quality standards to ensure your new investment properties is well taken care of.
How North Peak Investments can help you:
North Peak Investments is an asset-based investment firm that specializes in real estate related opportunities nationwide. North Peak Turnkey is a subsidiary of North Peak Investments specializing in the representation and reselling of Turnkey Real Estate Investment opportunities. We are committed to the education and success of each turnkey investor to ensure they keep coming back to us for all of their real estate investment needs. To get a more information about all the investment opportunities that North Peak has to offer including funding and equity opportunities, please visit our site at www.northpeakinvest.com.
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