When you put in an offer on something simple as a turnkey rental… lets face it. Its mostly about price. But there are some terms that I usually put in there such as a credit back for the maximum seller paid closing costs (~2%) in order to minimize the money out of pocket.

Other common things to watch out for especially if you are working directly with a turnkey provider as a non MLS transaction are terms of how your earnest money goes non-refundable (goes hard) and how long you have for an inspection period. And other basic contingencies such as financing contingency or sale pending completed and inspected scope of work and tenanted property.

As much as I don’t like brokers, their job is to walk you through these legalities and be a fiduciary to you. Also you can hide behind their errors and omission insurance. Going directly through a turnkey provider gives you little protection however assuming people are working in good faith there should be no problems. Big deals or small deals I don’t work with people I don’t know like or trust. But starting out we all make mistakes.

Unlike owner occupied properties “Letter To Sellers” for investment grade properties have little impact. Normally these letters humanize the process and helps connect you with the sellers but investors don’t care. In my opinion, you time is better spent researching more vendors or networking with other investors than to write a lame letter.

Set a Deadline – Give the seller a reasonable expiration date usually 3-5 days from the day you submit the offer. This gives them a little pressure.

Earnest Money is typically is suggested to be 1-10% of the property or $500-5,000. Putting down a larger amount of earnest money can make you seem more serious.

Another way to make you offer stronger is to waive contingencies in the contract. These include the mortgage contingency, a home sale contingency, an inspection contingency or an appraisal contingency. A lot of times the appraisal price may come up lower than the sale price you can agree before time should this happen how you will react to that.

Closing date – Most deals these days when using one of our Hui lenders are closing deals in 45-60 days. The seller wants the property sold the quicker but they also know that its a bit outside of your control. Again a broker can help advise you here. I was in one transaction where I was using 1031 exchange money and basically got extorted an extra $5,000 because I need to extend the closing period.

Can I negotiate with a Turnkey Seller? Answer is not really or you risk being seen as that unsophisticated investor who a pain in the butt. Here is the landscape, its been a bull market for over a decade, and there is a line of turnkey buyers around the block. That said you might be able to get $500 off the list price but its not worth it losing your social capital off the bat. My personal negotiation style is to offer full price but I make it clear that I am buying a property with certain expectations on the condition. As we move through the inspection that is where I try to be fair and knock down the price or get extra work done to the property.

I am not going to write that here because its too much to capture in a blog post but that is where it is critical to get someone experienced to look over your shoulder on an inspection report who will advise you on what is fair game to ask for. This is another reason to sign up for a year of group coaching or pay for an hour of consulting.

If you would like to get my form letter for my “letter of intent” (LOI) an offer letter for 2-300+ properties please apply for the Group Coaching Mastermind.

PS – Join the club…

Buying a brand new car can be incredibly annoying with all the haggling.

Here are some steps to follow when trying to get the best price:

1. Use the Internet to do your research on which car you want and exactly what level you want (color, features, and packages). Check out edmunds.com and many other car forums.

2. Go to the car dealership and test drive Don’t negotiate with them. Walk out and tell them you are not interested.  Go to cars.com and search for the exact New Model of your car. You will know the cheapest price they are currently selling for. This is good information but the price will be dictated by the amount of demand and how you position yourself in negotiation.

3. I personally always lease because as investors you want to put the lease amount of cash down so you can put into your next turnkey rental or syndication deal.

4. Look up all the car dealerships around your zip code within a 500 miles radius to find the dealerships with the largest volume.  You might need to build a list of 20 dealerships and
find out the person responsible for Internet or fleet sales along with their email addresses.

5. Come up with a concise email explaining exactly what you want to “BCC everyone.”  If you can time it do it the end of the month or quarter when dealers are most desperate to sell.

Here is an example email:

Hi,

I am very interested in purchasing the car below: 2010 Mercedes C Class, Exterior –  Black Sapphire Metallic, Navigation, and Sport Package.

I can be a little flexible with the exterior color. 

I’m a SERIOUS BUYER and will be paying fully in CASH.  My zip code is 12345 for pricing calculations. 

I need you to provide me with an out the door (tax and title fee) quote by tomorrow the latest since I’m looking to get this car by the end of the week.                                                                                       

I will need your phone number to contact you. For your information, I’m request pricing from many of your competitors so be sure to provide me with the lowest quote possible. Be sure the out of the door price is approved by the Manager.   I’m ready to buy and I do not wish to waste anyone’s time.

Thank you for your time,                                            
                                                                                                                       
                 Hustler

7. Once the offers start to pour in, take some time to think it over. Don’t make a fast commitment and wait for all the offers to come in. Pick some of the top offers and time to negotiate further. Give them a call and get them to lower the price some more.  Some dealers will try to not get into a bidding war or require you to come into the facility.

Should I lease or buy?

Short answer: If you are an investor about to generate more than 12% a year ROI then you want more capital in your pocket to invest in more assets, therefore you should lease a car. If you are not an investor and especially if you can’t seem to accumulate any savings you should buy because it is a forced savings account. Same concept about buying or renting a home.

Long answer….

Pros of Leasing a Car

First off who wants to drive a crappy car?!?

Life is too short and for those of use who work hard and invest right find time more valuable than money… and time spent in a crappy car is wasted time on this earth.

Putting out the Safety Card – newer cars have rear view cameras, more airbags, and lane assistance technologies, mine even drives and parks its self… it could even prevent you from being injured or killed. I know some of you SPC Nation are cheapos and I myself was them as I rode my dangerous 50cc moped in the Seattle rain so I would not have to pay $4 per gallon in 2010.

Leasing a car, in many cases, is cheaper than buying a car on payments that extra cashflow along with a large downpayment can go to investing in cashflowing assets that grow your portfolio 20-30%.

Its simple math: Figure out what the opportunity cost would be if you used the money for a downpayment on a car instead of investing the downpayment into a downpayment on a turnkey rental or syndication.

Did I mention that you don’t have to worry about fixing anything on the car. And you can drive it like a rental!!! Cause it is.

Sure the rental property will have its issues come up but you really should not buy a property that cashflows in the first place.

Either way you are going to buy a car which is a depreciating asset. At least buy an asset that appreciated and better yet produces income too.

While it may be more financially prudent to buy an older more inexpensive car, leasing a newer car might end up costing you less in medical bills down the road.

THE PROS OF BUYING A CAR

It you want to fit in with everyone else who does not want debt and things this is the way to go as a means to justify an old car then so be it.

Look cars are not everything and it might not be your spurge but the numbers say you should rent UNLESS this is you:

You like to install a lift kit, upgrade the stereo, tint the windows, or do that strange inclined wheel thing that is the first sign of me getting old. In this case your car is “ratchet” and you are likely broke anyway.

And you can’t seem to regulate your spending.

April fools! You did not really think blowing a bunch of money on gambling in exchange for a free hotel and some food was aligned with the mission?!?

Here are some other Ultimate Guides if you would like to share with some friends:

For getting started with rentals: simplepassivecashflow.com/turnkey

Free Turnkey rental audio recordings: https://drive.google.com/open?id=1QmipKpvAJZ1WfuMt0IRbxK1yZ8sx5Kvh

Turnkey Rental digital kit: https://drive.google.com/open?id=1AVLQY36pKhBXgx40a33xa62LtgM17DBs

To scale to the next level: simplepassivecashflow.com/syndication

High level on investing: simplepassivecashflow.com/start

Don’t buy your primary residence and rent: SimplePassiveCashflow.com/home

Don’t use a SDIRA use a QRP: SimplePassiveCashflow.com/qrp

Are there any other questions or topics you need me to dive into?

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