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How to Finance Turnkey Investment Properties

August 02, 2016

How to Finance Turnkey Investment Properties

When it comes to finding stable investments, it’s hard to beat real estate. While the stock market can shed thousands off your investments overnight, property purchased for rental income, or turnkey investment properties, have stability in terms of percentage return that can weather any dips in value until you’re ready to sell it on for even greater profit.

It is, however, an investment that often requires a more sizeable initial investment than other passive income sources. Whereas you can add extra funds to shares as and when you have them, a real estate portfolio takes considerable liquid funds to set up.

Ways to Finance Turnkey Investment Properties

If you already own the property you live in, you probably know that trying to buy with less than 20 percent of the value as a downpayment can be difficult. Raising that kind of liquid cash can be tricky if your assets are either already tied up in your home, or if you don’t have assets at all.

However, there are a variety of ways in which you may be able to access the funds you need to start your turnkey portfolio:

Move. If you’re not tied to a particular location, there’s the possibility that you can get an owner-occupier loan, which will require a significantly smaller deposit. Some lenders even offer at 0 percent down, although a figure of around 5 percent is more common. You could then live in the house for at least a year before renting it out, and repeat the process with another similar source of finance. The downside of this is that it can be difficult to be persuade your family to uproot and move house so frequently, but if you’re in a position to do so, the potential to build a sizeable portfolio and the cash flow to place those 20 percent deposits on the side as well is enormous.

Borrow. If your credit rating is good, take full advantage of 0 percent borrowing, either from your bank, or from credit cards. This kind of borrowing can be risky, though, so make sure that you will be in a position to cover the repayments, and pay back the capital raised before the 0 percent period ends. If you have concerns about putting all your eggs in such a risky credit basket, consider raising the money through peer-to-peer lending or through friends and family. The former will undoubtedly want to see your credit history, especially if you have no history of successful real estate trading, but they are likely to be a more human face should you experience difficulty.

Become a real estate agent yourself. If you’re not necessarily looking for an entirely passive income and wouldn’t mind a career change, you could look into obtaining your own license and earning the income to finance your own portfolio from client commission.

Once you have decided on how you’re going to finance your turnkey investments, it’s important to make sure that you’re buying the right properties. You may feel confident enough to go it alone and do your own investigations, but a dedicated property management company who deal in turnkey real estate are going to be able to source you better deals, especially if you’re looking to have the minimum refurbishment outlay or vacant periods. A quick delve into the pitfalls of being a landlord will open your eyes to the problems you could experience, and having a ready barrier there to minimize expenses will make building your investment much easier.

JWB has helped over 400 investors for over 10 years earn passive income and above average returns on their turnkey rental property investments. Learn more about how JWB can help you!

By Gregg Cohen

I am a co-founder at JWB Real Estate Capital, and I love to talk about investing in rental properties! You’ll often find me here contributing to our blog and in our Facebook group connecting with the community & sharing insights.

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