Hello, friends and welcome to another episode of Ask Marco where I answer your investing related questions.
Today’s question comes from Jamie and Jamie. He or she says, hi Marco, huge fan and longtime listener of the show here. I have pondered the idea of reaching out to your counselors for a very long time now and haven’t pulled the trigger yet. I have had several friends and friends of friends, et cetera, contact me over the years to let me know that they can help me get my portfolio started. Much like your counselor’s offer. My question for today is how would you suggest we as investors evaluate our options of the service providers like your company out there? What are some of the factors that some can offer, offer better than others? Thanks very much for your thoughts and your continued efforts to help upcoming investors like myself enter the world.
Well, Jamie, thanks for the question and I appreciate this. Uh, it’s a good question because there are options out there, several, not a lot, but there are different options to approach your real estate investing journey and building your portfolio. So I’ll just kind of break this down into two general categories if you will. What are your options and then I’m going to maybe spin off a little bit and just kind of cover some of the benefits that are available to you as you get to the top of the food chain if you will. Think of these options like escalating value added services and there’s essentially four layers. If as I like to look at it, you could make this very simple but this is certainly not the best option, but you can search online and you can go to one of many websites like zillow.com or realtor.com that’s plugged into the different MLS, multiple listing services around the country and it just aggregates all that listing data.
Of course, all these listings, if they’re listed by real estate agents or brokers, you may ultimately be connected to a real estate agent or broker, whether it’s the listing agent or not. But someone is going to be involved in the transaction if it’s listed on the multiple listing service, but shopping on Zillow or realtor.com or Trulia or you know, some of these other property websites is really just nothing more than searching online. It’s like going to amazon.com if you’re searching for a product, be it earbuds for your smartphone or a new TV, you’re not going to get a lot of guidance and counseling and advice and recommendations. Sure, there’s reviews online, which is helpful, but you’re not going to get a whole heck of a lot more than that. The next layer up, if you want to call it that, it’s really your agents and brokers.
The reality is, and this is not only my own personal experience, but just conversations with many, many people over the years in the industry, the majority, great majority of real estate agents and brokers are not well versed, if at all when it comes to real estate investing. They’re great salespeople. They understand real estate laws and listing and selling property. And you know what makes a home sell to a home owner? And this is great, I used to sell real estate myself, but they often don’t have a great knowledge or a lot of knowledge when it comes to investment property and how investments work and all the different ways to analyze financial performance and your rates of return and all that good stuff. And that’s not a knock in any way, shape or form. In fact, a friend of mine, uh, an elderly gentlemen who has been a real estate broker for most of his life actually wrote a book and I forgot the title, but it’s something about the 1% and what he’s referring to and specifically geared towards real estate agents.
But it’s really a book about how 1% of real estate agents understand real estate investing and actually invest in real estate. The other 99% know about it or know nothing about it at all. And I don’t know where you know he gets those stats, but I’ve heard those stats many times over the years for many different people. So it may not be a hundred percent accurate, but it gives you the idea of what I’m trying to tell you. Real estate agents and brokers may have good to great knowledge, local knowledge of the market or the area that they work in, but more often than not, they’re not real estate investors and they have that limited investment knowledge. Now, if you find someone who’s a Jim or a golden nugget in a local market that you want to invest in, great work with that person and you know, be very clear and specific as to what you are looking for so they can help you find it.
Now keep in mind they don’t own the properties that you might be buying through them or from them. They are simply representing the seller of the property. 99% of the time they don’t own that property. In fact, I would almost say a hundred percent of the time the next layer up is a local turnkey provider. Now, this may be a new home builder or it might be a professional, large scale turnkey company. Basically they are a fix and flip operation. They are buying distressed assets, distressed properties or properties from distress sellers at a discount to be able to fix it up and bring it into like new condition, what we’ll essentially call a turnkey rental property. And they do this primarily because their business is to create that product that you want and then provide it to you, the investor. And of course they’re going to buy or keep some of those for themselves for their own portfolio.
The principles of the company and people that work there obviously want to invest too, so they’re going to buy some of their own stuff. But the reality is is they’re running an operation, a business of producing this turnkey property product for other real estate investors. And those are people who are typically living out of that city or out of that state. So local turnkey providers have a very good local knowledge of the area and the market and the neighborhoods that they’re in. But it’s of course up to you to a discover them and B vet them, vet them well and properly because a lot of them look good and I can think of a few people right now off the top of my head, a few companies that come across as very polished, very knowledgeable, but they cut corners in terms of their renovation work and the scope of work that they write up to renovate those properties.
And this is not overly common, but it’s common enough that it is an ongoing problem and this is really the one area where sometimes turnkey property providers get a black eye or bad rap is because as there are in every single industry, there’s always a bad Apple. What you’re trying to do is you’re trying to find these companies, vet them and avoid the bad apples and work with those who are quite reputable. And now the fourth level is rather than a local turnkey property provider or promoter, it’s a national turnkey property provider. There are, I guess in a way, fortunately for us, not a lot of competitors, not a lot of these nationwide based turnkey property providers, but we are one of them and one of the very first ones actually starting 16 years ago. The advantage there is that as a nationwide turnkey provider, a company like ours would have a network of local providers and builders that we’ve been working with that we trust that we vetted.
And that’s a benefit that we pass on to you. Two very big things that play into the whole nationwide turnkey provider level is that we can be completely market agnostic because we’re not rooted in one market that we operate in like a local turnkey provider. It allows us to be unbiased and agnostic. So we look at markets independently of each other and we just look at it as in terms of what are the pros and cons, what are the benefits and strengths, why should we be there, and how does that compare to other markets? And so as long as we’ve got inventory and a whole bunch of different markets, it gives us choice. It gives us options to choose and work in markets that make sense and markets change over the years. So you could be in one market one year and it’s very favorable and then the fundamentals and the dynamics change and there’s no inventory or the numbers don’t make sense and you move on.
You don’t stay married to that market. So you can be marketing Gnostic. A big one is being provider. There are many different kinds of property providers like turnkey property providers around the country. We can pick and choose and be agnostic and not be married to a property provider. In fact, we’re not married to any provider or service provider of any kind, whether it be a lender or property manager or anything like that. So we are agnostic across the board and this all comes down to vetting the providers and then having history with them, working with them. So those are the four levels. So you can search online like Zillow, realtor.com you can work with agents and brokers within a local market or multiple markets. Again, they’re going to be focused locally. They are not going to know other markets because they don’t work in multiple markets.
They’re in one metropolitan area or one particular region or city or suburb, local turnkey providers, same thing, but they are focused on turning over properties that are like new or what we would call turnkey, hopefully not always. And then of course taking that one step up instead of being local, being national. And that’s just a national turnkey provider. So that is essentially the answer to your question as far as where and what you could be looking at. Now just to touch on some of the other benefits, Jamie, the big thing is experience. When you’re looking at different companies or agents or brokers or whoever you want to work with, whoever you’re talking to or getting advice from. Look at the level of experience. You know when you uh, mentioned us, our company here, we’ve been doing this for over 16 years. All our investment counselors, all six of them are investors themselves and they’ve been involved in everything from new construction and new builds to of course turnkey properties, fix and flips, fix and holds the small multiunit large multiunit property syndications.
I mean we’ve done all of that in terms of experience. We have been helping investors through our own experiences but also through the experiences of our clients, of other investors and then when you look at that collectively, what is the combined experience of all of our investment counselors as well as are all of the market providers that we work with. Experience is a big thing and I think you should take that into consideration because you learn a lot through experience. You step on landmines, you get bruised, burnt, knocked down, you get up and you learn from that and you move on and you do things better and faster. The vetting process that we take is important because we vet our market providers and they have to go through this process to work with us. Your learning curve is smaller. When you work with someone who is part of your team, whether it’s a national turnkey provider or you know, a real estate agent or broker, whatever the case is, it helps cut down that learning curve for us.
We do a lot of that work for you. A lot of that research. We vetted the teams, we going to provide you those teams through our network. Figuratively speaking, we like to say we hold your hand so we’re going to help you right from the beginning with that free strategy session. And then throughout that whole process of choosing markets, neighborhoods, connecting you with different property providers, lenders, property management companies. So that is built into the whole process and you know that research and the vetting is all just part and parcel of the value add. Uh, so handholding from beginning to end and even after the close, you know, and we also like to give you a reality check because we’re unbiased and agnostic. We’re going to tell you right from the get go that real estate investing is not a get rich quick scheme or endeavor.
We’re going to give you direction and help and counsel hold your hand and guide you through. But your success will come from making good decisions from the beginning. But understanding that you’re on a path that has a mid to long term horizon, it’s not something that is going to make you wealthy, rich, or completely financially independent within a year. It just doesn’t work that way. So we have to keep it real. You know, I mentioned network a few times, but the network that we have is of huge value to you. So those lenders, inspectors, CPAs and tax advisors, insurance companies, property managers on and on the list goes, uh, that, that is just something that we’re going to provide to you. And last but not least, what I’ll loosely call a rent guarantee in the form of a rent default insurance, most if not all of our properties come with that as a freebie to you.
It is a one-year policy, rent default insurance policy. So essentially it’s guarding against any missed payments, lost payments, tenant move-outs, lost jobs of your tenants. So it’s something that protects your cash flow, if you will. And it’s something that you could be purchased and extended beyond that first year. We’re going to buy it for you essentially for that first year. But if you want to continue that policy, it is free to, you know, not free and price but free to continue that. So there’s no obligation. But you’re welcome to continue that as long as you like. Bottom line here is base your decision on the people that you trust or feel trust for and feel most comfortable with. So just work with those that you trust. Second, uh, don’t discount the investing experience of both the people that you’re going to be working with and the company that you’re working with.
It’s not just the people that’s critically important of course, but look at the experience, the collective experience of the people, and the company that you’re working with are choosing to work with or looking into. Thirdly, services and referrals that that person or that company can provide you. And also the ones that they can’t provide you because you can’t be everything to everybody. So the more value and the more resources and knowledge and experience that they can provide you, the less work you have to do and the less they provide, the more research and work that you’re going to have to do. Maybe that was a long answer to a short question, but I hope that was helpful.
Okay. Jamie, thanks for submitting the question. That’s it for this episode. Remember to subscribe. If you haven’t done so already, share the show with other likeminded individuals, friends and family. Visit us on iTunes. Leave us a rating review. Thank you for listening and I will see you on our next episode.
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