Gainesville-based software engineer CJ McGlown earns roughly $12,000 yearly from his passive income property without lifting a finger to maintain it. How?
He bought the turnkey home for just under $30,000, then hired someone to manage it so he wouldn’t have to worry about it once he brought it home and lived in it for a while.
It is not his first passive income property, either; he owns two more in Arizona that provide him with another $3,000 every year. Here, he is sharing his secrets of earning passive money from real estate property deals.
How I Bought My First Rental Property
I always knew I would invest in real estate one day. But it wasn’t until my career took off and I was making more money than I knew what to do with that I started to think about buying a house.
After doing some research, I decided a single-family home was too much of a risk but that a turnkey property might be an option.
The Importance of Turnkey Investments
Suppose you consider getting into real estate, but you do not want to deal with buying, renovating, or renting out a property. In that case, you might consider investing in a turnkey investment instead.
A turnkey investment involves buying or leasing a property that is finished and ready to be rented—you are just left with finding tenants and collecting rent checks.
How I Decided Where to Buy
I wanted to invest in a turnkey home, an investment property that is ready to be rented. This way, I did not have to worry about finding tenants and managing everything—it would be my property manager’s job instead.
How I Paid For It
At first, I focused on buying a single-family home in a neighborhood close to my workplace. My initial goal was to buy it at about 80% of its value and rent it out. It turned out to be more complicated than I thought because I had not saved up much money.
The property ended up costing me 95% of its value, but my hard work eventually paid off when renters began to approach me directly.
Applying For A Loan
If you do not have a lot of cash, there are a few ways to acquire funding. You can apply for an investment loan, known as a hard money loan—or get one from your family or friends.
The lender makes money by taking a cut of your profit on resale. But be careful: if you do not sell (or earn enough rent), you will need to come up with that cash yourself.
What Kind of Property Did I Buy?
When I was 27, I had never bought a single property. When I was 28, I bought my first real estate investment: a two-unit apartment building cost $380,000.
The rent from both units pays off my mortgage (about $1,100 per month) and leaves me with about $200 per month of net cash flow (passive income). That is an extra $2,400 per year to spend on whatever I want!
What Kind of Property Manager Did I Hire?
First off, I did not have time to manage my property. In addition to my full-time job as a software engineer, I was also going through grad school at night. Not only that, but I knew very little about real estate investing.
I had no idea how to rent a place or screen tenants, and although it would not have been hard to learn (at least enough to get by), that would have taken more time than I wanted to spend learning something new.
How Much Do They Charge?
The first step while considering a real estate investment is to figure out how much money you will have to spend upfront. Professional Property Managers typically charge between 8 and 10 percent of your total annual rent.
However, some landlords and property managers will be willing to work on a flat monthly fee—which can ultimately save you money if you plan on renting your home short term.
What Is Turnkey Management?
Turnkey management means a property is already professionally managed. Turnkey real estate generally refers to houses or units purchased and leased out, with all maintenance and upkeep done by someone else.
With turnkey real estate, investors do not have to worry about managing tenants or contractors because It is all taken care of them. It can be appealing to people who want passive income or do not have time to manage a property themselves.
How Does Turnkey Management Work?
If you are thinking about investing in a turnkey property and you are not sure how it works, let us show you what we do to make it work for you. We understand that managing your property can be difficult, and that is why you need to find affordable professional manager with years of experience to do all of the dirty work for you.