Property #2 has certainly been a journey, hasn’t it. It goes to show, if you want COMPLETELY passive investment into the real estate market, go with REITs. However, if you are willing to put some work in upfront and set yourself up for a less hands-on real estate investment later on, then I am still a fan of turnkey properties.
But recently, it was time to close on the property.
I will start by saying, as closing approaches, make ABSOLUTELY sure you have your ducks in order. These are your ducks:
- Did you do your due diligence when researching the neighborhood?
- Double check all of your numbers/math to make sure this is still a good deal for you.
- Make sure that your bank account has all the necessary funds for both the downpayment AND the closing costs.
- Give yourself time (about an hour) to close on the property and another half hour to visit your bank and send a wire transfer through.
- You have already had your home inspection, right?
- Have you reviewed the appraisal? Do you need to renegotiate with the turnkey company?
- Start asking the property manager questions about the rental process now. Has the listing already gone up? When do they expect to rent it?
If everything looks good, it’s time to take the plunge! I was surprised that closing wasn’t as difficult for me as I thought it would be. I thought I would get cold feet. However, I went through the process and did my research. By the time closing came around, I was already used to the idea that I would own this investment property, so it only seemed natural to go ahead and sign. Of course, sending the money always stings a bit, but for the most part, it just felt like an investment to me.
As for the logistics, I have always had the title company send out an official notary to the coffee shop just below my office building. I’m the one paying a bunch of money, so I figure that the notary should be able to come to me (especially since closing often happens on a very tight schedule and I have to make time to get it done).
The whole process takes about 30 minutes, but I give myself an hour. The notary is great. He/she will take you through the entire document (and it is a BIG document) and let you know what each section is about. I tend to intently scour sections that I am interested in double checking and more blindly signing sections that are pretty standard-issue. Feel free to approach this in whatever way makes you the most comfortable.
After that, your title company should have sent you instructions on how to wire them money. Simply take that to your bank and send over the total amount that they require (downpayment + closing costs).
That’s it! You now own a property! Or, more accurately, you own 15%-30% of a property and a bank owns the rest.
Now, it’s time to really lean on the property manager and get that property rented out! You should have already discussed the timeframe for renting the property. It’s now time to remind them that you want a HIGH quality tenant (you don’t want to go through an eviction like I had to) and let them do their job. Feel free to check back in with them based on the timeline that they give you, but don’t pester them every single day.
That’s it, folks. That’s the end of the Turnkey Real Estate Investing Series for now. I may add a post or two here and there as I learn more about the process, but as of now, I have closed on Property #2 and am in the process of getting it rented out! If you have ANY questions about the process, feel free to get in contact with me. Best of luck with YOUR real estate investing adventure!
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