In an interview with CNBC Squawk Box on February 27, 2012, Warren Buffett, considered by many to be the greatest investor of all time, stated that:

Turnkey: hands-off real estate investing

“If I had a way of buying a couple hundred thousand single-family homes… I would load up on them… it's a very attractive asset class now. I could buy…them at distressed prices and find renters and … [take a] mortgage, it's a leveraged way of owning a very cheap asset, and I think that's as attractive of an investment as you can make.”


Enter, stage right: investing in turnkey real estate with EquityBuild.

Turnkey investing is the ideal solution for those, like Buffett, who recognize the alluring opportunities in buying single family homes and other properties for rental income in the rebounding real estate market in the United States, but are intimidated by the challenges.  Investing in turn key real estate with EquityBuild allows for profits without the potential problems that loom in housing maintenance and ownership.  Experienced and successful professionals from EquityBuild, who have been tested by The Great Recession and prevailed, handle the vital functions that can easily overwhelm a newcomer.

That was clearly demonstrated by the millions of foreclosures during The Great Recession.

“Without a doubt, turnkey investing is one of the best ways to profit from the recovery in housing in the United States, “advised Jerry Cohen, founder of EquityBuild and EquityBuild Finance, its funding arm, who has been a principal in more than 1000 real estate transactions.  “For a novice real estate investor, it is probably the safest way to get started in the industry.”

Just finding the property to invest in can be daunting enough.  Just look at Buffett, who is worth over $55 billion.  For an individual, figuring out where and what to buy can be an insurmountable barrier.  There is certainly no shortage of properties on the market today, which can easily confuse an investor, resulting it what should be an asset becoming a money-losing liability over the term of a 30-year mortgage!.

That is why finding the right property is the most important step in real estate investing.

There is no profit in buying a house, multi-unit building or a condo that is fully valued.  To profit, an investor must buy properties in an area that are selling at a discount.   The best way to profit in real estate has always been to “get in early and stay late.”  About this, Shaun Cohen, Vice President of Equity Build, stated that, “Our firm buys properties that are so undervalued that the most a property will ever be financed for is 65% of its market value. This is classic value investing: you always want to buy a prime asset when the market is undervaluing its intrinsic worth.  That profits sizeable profits over the long term.”

After finding a property with enough upside to make the transaction feasible, financing must then be secured that makes the transaction profitable.  That is very difficult due to the impact of The Great Recession on the mortgage market in making it harder to obtain financing for a home.  It is particularly tough to secure a loan for a foreclosure or an investment property.  Fees from banks, credit unions, and mortgage brokers can make buying a property even more expensive, if not too costly to justify the deal.

“That doesn’t happen with EquityBuild,” declared Jerry Cohen.  “In a turnkey package, our goal is to make it work for the buyer.  Short term, we want the buyer to make money on the turnkey property they are buying.  Long term, we want to do more deals with that person.  Piling on the fees and other settlement costs can easily result in a loan that is not in the best interests of the purchaser.  That does us absolutely no good if the deal does not go through and work out in the best long term interests of the new owner.”

Shaun Cohen added that, “When EquityBuild finances real estate, you don’t pay the market or assessed value, you buy these rental income properties well below what others would pay. This means that your mortgage loans more than cover the entire cost of purchase and rehabilitation. The minute you buy foreclosures with EquityBuild, you already have 30 to 40 percent vested equity in your property. This, however, is only the beginning of our turnkey service.”

After a property has been located and financed, the turnkey providers from EquityBuild will then do what is needed so that it is in the shape that will bring in the most rent to maximize the cash flow.  “There can be a great deal of work needed, especially in a foreclosure deal,” warned Shaun Cohen.  “But at EquityBuild, we have the resources and experience to make it as attractive as possible for the buyer, and then the renters.  This is crucial as in a strong market like the one today, it is very tough to find a general contractor to do work.  If the contractor turns out to be a problem, that can prove to be a very expensive nightmare. That is no problem for us as we have our own crews and methods that we have used over the decades.”

When the work is done so that the property is ready to be marketed, EquityBuild also manages the unit after a tenant is found.  Not only does that relieve the owner of the hassles of finding an ideal renter, it spares them of phone calls about maintenance and repair issues.  It also saves them from having to find the service providers to take care of plumbing, electrical, and others parts of routine home ownership.

“The best way to look at the turnkey solution from EquityBuild for real estate investing is to picture a buffet of everything you could possibly want to eat at your favorite restaurant.  EquityBuild takes care of everything from finding the property to finding the financing to finding the tenant to finding a plumber or electrician, if needed.  It is truly a soup to nuts experience with a complete menu,” observed Jerry Cohen.

A variable not to be overlooked in the turnkey equation is the time factor in real estate.  “It is a steep learning curve in buying properties to fix up and rent that can also be an expensive one if you do not know what you are doing,” warned Jerry Cohen.  Shaun furthered this by saying, “I remember how much time and effort my father spent over the decades mastering the art of acquiring homes to fix up and rent.  Turnkey investing is a great way to profit from my father’s experience.  It would be impossible for an amateur investor to learn what my father has from being a real estate professional.”

Turnkey investing in real estate should also benefit from massive shifts in the culture of the United States.  A research report from Oliver Chang, an analyst with the investment firm Morgan Stanley, detailed how Americans are now forming more of a “rentership society.”  That is why companies such as Ebay and Amazon have done so well, as buyers no longer have to bear the full costs of ownership.  It is also why rental real estate has such a promising future, according to Warren Buffett and many, many others.

For turnkey investing, Charlie Munger, Warren Buffett’s partner, stated that when buying a company, “Management matters… You do get an occasional opportunity to get into a wonderful business that’s being run by a wonderful manager. And, of course, that’s hog heaven day. If you don’t load up when you get those opportunities, it’s a big mistake.”(1)

Turnkey: hands-off real estate investingThat same is true with turnkey investing in real estate involving the Cohens and others from EquityBuild.

Over the decades and with more than one thousand real estate transactions settled and closed, the Cohens have prospered through an era featuring The Great Recession, stagflation, housing bubbles, wars, terrorist attacks, the impeachment of a president, and double digit mortgage rates.  Wall Street would have been shut down during The Great Recession without trillions in a taxpayer bailout that continues to this day, but EquityBuild profited due to its turnkey real estate model while others went under. Turnkey investing with EquityBuild has passed the most important test of all, that of time, and it should continue to do so well in the future with its proven model of providing rental real estate to buyers in one easy step.

by, Jonathan Yates: EquityBuild News Contributor