Is This the Most Beginner-Friendly Way to Start Investing?

Most people get turnkey real estate investing all wrong. They either think it’s a completely hands-off investment like stocks or that all turnkey real estate companies offer the same product. Both of these assumptions can be dangerous when investing in what should be an easier, less stressful, and far more scalable type of real estate investment—turnkey rentals. If you invest in truly turnkey real estate, you’ll get all the benefits of regular rental properties with MANY of the headaches already dealt with. What do we mean? We’re bringing back repeat guest Chris Clothier, turnkey provider and investor for over twenty years, to explain exactly what turnkey real estate is and whether or not it’s right for you. Chris describes the danger of thinking that every “turnkey” company is actually turnkey and signs that the company you’re dealing with could be selling you a bad deal. Plus, who should buy turnkey in the first place? Is it only for beginners, or do experienced investors move their money into these properties, too? How much money do turnkey properties make? We’re sharing those stats and the two questions you MUST ask a turnkey company before you work with them! In This Episode We Cover: Turnkey real estate investing explained and why so many investors get this definition wrong How much turnkey rentals can make you in 2025 (actual return estimates) The two questions you MUST ask a turnkey provider to prove they’re legit Signs of a good turnkey real estate deal and why you should NOT buy properties under a certain price point Why turnkey real estate investing isn’t just for beginners And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! BiggerPockets Real Estate 26 - Building a Scalable Real Estate Business and Tenant Management Tips with Chris Clothier BiggerPockets Real Estate 122 - 5 Myths Holding Investors Back From Real Estate Greatness with Chris Clothier BiggerPockets Real Estate 224 - Building a Process to Buy 17 Deals a Week with Chris Clothier BiggerPockets Real Estate 380 - Profitable Landlording in a Crisis with Mike Butler, Chris Clothier, and Dave Poeppelmeier Grab Dave’s New Book, “Start with Strategy” Property Manager Finder Turnkey Real Estate Investing: Complete Guide Connect with Chris Connect with Dave (00:00) Intro (03:49) Turnkey Investing 101 (07:11) Who Should Buy Turnkey? (19:37) Signs of a Good Deal (22:53) 2 Questions You MUST Ask (28:00) Turnkey Rental Returns in 2025 Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1049 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  Do you want all the benefits of owning rental properties without having to do a lot of the work yourself? If so, turnkey investing could be right for you.

• 0:14Dave Meyer?

  Everyone, it's Dave. And if you've been around the BiggerPockets community for a while, you may have heard of a guy named Chris Clothier. He's been on this podcast a couple of times, or you might have seen him in the BiggerPockets forums where he's posted more than 10,000 times. Chris has done a lot of stuff in real estate. Right now, he operates a business called REI Nation where they buy properties, fix them up, find tenants, and then sell them to investors as sort of a nice, complete package for people who want to operate on the more passive side of the real estate investing spectrum. In addition to this business, Chris just happens to be one of the most savvy investors that I know, and has really seen everything and done most strategies, having been in real estate investing

• 0:59Dave Meyer?

  for over two decades. So today, I'm going to pick his brain about some topics that, sure, apply to turnkey investing, but also apply to anyone who wants to operate an efficient real estate investing business or portfolio. So let's bring on Chris. Chris, welcome back to the BiggerPockets podcast. It's good to see you.

• 1:18Speaker 01

  Yeah, you too. Thank you for having me.

• 1:19Dave Meyer?

  Oh, it's a pleasure. How many times have you been on the podcast? Do you know?

• 1:23Speaker 01

  Yeah, this will be number five.

• 1:25Dave Meyer?

  You might be one of the top returning guests then. Five. I don't know anyone else who's been on five times.

• 1:29Speaker 01

  No, but, but the crazy thing is, is it's been a while. It's so, I was on four times, but I've been, you know, I've been on BiggerPockets since 09. So I was on four times from the very early stages, and then as we kept evolving in business topics. But it's been since COVID. COVID was the last time that I was on here. So glad to be back.

• 1:50Dave Meyer?

  Yeah, well, I'm really excited to have you back because I, I really like these types of shows where we talk to someone who's been in real estate and been a part of the BiggerPockets community for such a long time, and has figured out a way to evolve and adapt to the many, many different real estate climates that we've seen since 2009.

• 2:10Dave Meyer?

  So let's maybe before we jump into that, can you just tell us a little bit about how you got started back in 2009? And just like an overview of what you've been up to up until the last couple of years, because that's where we're going to really dig in today.

• 2:23Speaker 01

  Yeah. So, you know, we had, we got started well before that. Um, I've been doing in real estate specifically on the business side since oh, three. And I got started by watching Carlton Sheets. I bought the Carlton Sheets, How To Be A Real Estate Investor Program from late night TV. Some people may not even know what that is at this point.

• 2:42Dave Meyer?

  Was it? Oh, wait, I, I'm just curious. What format was it? Is it books or VHS tapes? Or what, what were we talking about?

• 2:50Speaker 01

  It was nine DVDs and uh,

• 2:52Dave Meyer?

  Okay.

• 2:52Speaker 01

  Probably a dozen little workbooks printed out, you know, like softback workbooks printed out. It was plus another 12 CDs. You know, back when it probably cost three cents to produce it. It's just a box full of junk. It was, you know, like overwhelming. It was the pre days when, you know, you would pay a hundred dollars to get all of this education. It would take you months to actually get through. And a week later, it's a call of, you know, would you like to join our exclusive program? And we'll hold your hand kind of thing. But hey, it got me started and I, I still give it credit because I learned something.

• 3:27Dave Meyer?

  It sounds like you, you've come a long way in the last 20 years. And if you do want to hear about the rest of Chris's journey, make sure to go check out some of the other episodes he's been on and we'll put those in the show below. But today, Chris, I really want to focus on turnkey investing. This is an area you have a lot of expertise in, and I think it's really one of the good options for investors who want to get started or build their portfolio today. So maybe you can just explain to us what turnkey investing is in the first place.

• 3:54Speaker 01

  Sure. So to me, it describes the process of someone else, an individual or company has taken the risk. Of identifying and using their money to purchase a property. Then they've taken the risk of creating a scope of work and completing that scope of work on that property. They've taken the next step of residenting the property, putting a resident into that property. And now they offer you as an investor, a stabilized asset that at this point is performing. And this is the key for me. They offer you an option for in-place property management within their company.

• 4:37Speaker 01

  And the reason why for me that's so important is going forward. Real estate is real estate. There will, there will be issues. There will be move outs, there will be maintenance, there will be items that come up. Nothing changes with that. But the reason why that to me is the, the actual definition of turnkey is that there's one point of contact.

• 4:55Dave Meyer?

  Oh, I see.

• 4:56Speaker 01

  There is no, you know, kind of, it's a, it was the, it was the renovations fault. No, it was the management's fault. No, it's the renovations fault. And you as the investor, you're trying to make three different phone calls. The management company says, hey, it wasn't renovated very good. So it's not our fault you have maintenance. And the renovation team says, well, the, the management company did a bad job with their resident selection. So it's not our fault that, that there's a maintenance item already. And you as the investor are left, this doesn't feel very turnkey. This just feels like I bought a stabilized property and, and it's not performing very well. And nobody wants to take, you know, responsibility. Turnkey is meant in my world, it's meant to lessen the stress for the investor. Because there's one point of contact, there's one source of truth.

• 5:40Speaker 01

  So in the end, it's nothing more than just passive real estate. But all the heavy lifting is done for you on the front end.

• 5:48Dave Meyer?

  I think that the, the value of what turnkey, in the way that you describe it, offers is that when we talk about quote unquote, real estate investing, you are not just investing like it, you know, buying a stock, obviously, or buying cryptocurrency where it's passive. You're actually starting a business. And what has always intrigued me about turnkey investing is that it takes a lot of the harder business operations outside of your hands and lets you be more of actually just an investor. You're kind of just purchasing an asset like you would with a stock. There's still more you have to do than if you're just buying a stock. I don't want to oversimplify it, but like Chris said, you know, rather than having to find your own property, identify the right neighborhood.

• 6:31Dave Meyer?

  Find a property manager, find tenants, all those different things. You just work with a turnkey company that does that part for you and you get to sort of sit back and be more just of an asset owner rather than an active business person inside that business.

• 6:49Speaker 01

  Yeah, you're, you're building a balance sheet. You're building your rent roll. And in doing that, you're not having to make all the big decisions on which assets to put in. You do, but you should get a very neatly, finely packaged final product to decide on. So rather than making 100 decisions along the way, you make one decision on the back end.

• 7:11Dave Meyer?

  And does this, does turnkey, well, I know you, you have a company, you do this kind of stuff. So like, are your clients mostly new investors or people trying to scale it? What is the profile of an investor who benefits most from this approach to real estate?

• 7:27Speaker 01

  For us, it's a mix of two types of investors, but they, they do share one thing in common, and I'll get to that in the backside. The two kinds of investors, one, new investor. I do not have an investment portfolio, but I know this is the route I want to take. Most in that scenario, they're in hustle mode. They're trying to actively build their careers. They are building their families. They are, I would say, dreaming their life as they go. And they understand that, that real estate is important. They've got to have a piece of their future growth in real estate. So that's the first one. A new investor that, that doesn't have a lot of time built in the market. They don't have a lot of time built in how to, but they know they need it. The second investor, believe it or not, and this

• 8:10Speaker 01

  is, it's, I would say this is about 50/50, very experienced at real estate, very experienced at investing in general, and they are looking for a return on their time. That's why they are turning to turnkey. I'll give you a very particular scenario that happened two weeks ago. A group of investors, there was two of them, that were selling a portfolio of properties in California that were commercial, light industrial. And it wasn't time intensive for them. They had management companies in place, but they had hand-selected these properties well over 10 years ago for a particular use and purpose. Now, in the past decade, they have since built other companies that they're actively operating and running.

• 8:55Speaker 01

  And they turned to turnkey because I want to take these properties and I want to 1031 exchange them into a large portfolio of single families that have a lot of upside, have management in place. I don't have to do any legwork on the front end. They understood that their legwork was us. They needed to do their due diligence on us and how we were going to perform for them. Outside of that, they were strictly looking for, I'm taking these assets and selling them. I'm putting my money into these assets here and I need the best management company. It's just balance sheet. They're creating a new balance sheet. That's all it was.

• 9:28Dave Meyer?

  That makes a lot of sense to me. One, it's a great way to get started if you're busy and you haven't yet learned the ins and outs of operating the business and you could just like, it's not as easy as just clicking a button, but compared to doing everything yourself, it's, it's, it's a lot more on the passive end of the spectrum. And we'll get into this more, but I would assume lower risk too, because you have experienced people doing a lot of the, the work for you. But then I also imagine like myself, I try and diversify my own portfolio, but like that, like I do some properties where I'm actively involved. And then I invest in funds or syndications because they're more passive because I can't

• 10:08Dave Meyer?

  put a lot of time into every deal I do, but I want to scale faster than my time allows. And so I, I've always been sort of intrigued by turnkey because it would allow me to sort of scale my rental portfolio faster than I currently do, to be perfectly candid.

• 10:25Speaker 01

  Sure. And it, and it can, but even as you and I are sitting here talking, like a really big point of emphasis I want to make today is that the word turnkey, it's neither a noun or a verb. And unfortunately it's been used as both and it's become both. A noun, a, a turnkey property as if that is descriptive. It's no longer descriptive. It's, it's a word that everyone uses. And then also I invest turnkey, meaning I invest with, you know, little work, little anything as a verb. To me, they both have done a lot of harm to the industry itself. When I use the word like as a noun or verb, most turnkey investors. Are going to lose. Now, they may lose money or they may miss their objectives,

• 11:09Speaker 01

  but they're going to lose because they're, they are investing, buying the word. So there's a lot of misnomer. There's a lot of, hey, I'm just going to buy turnkey, totally passive. Everything's done for me. It's super easy. And it just really lowers the alert level of an investor. It lowers the, the attention they need to pay to what they're doing. And it allows a lot of, I don't want to use the word unscrupulous because it makes it sound like it's intentional, but it just allows a lot of error.

• 11:37Dave Meyer?

  Yeah.

• 11:37Speaker 01

  To enter into the equation.

• 11:39Dave Meyer?

  I guess that makes sense about the risk because like, obviously, I, my assumption when I said it was low risk is that you were doing your diligence of working with a qualified,

• 11:50Speaker 01

  Absolutely.

• 11:51Dave Meyer?

  High integrity operator, but obvious to your good point, it should be called out that not all turnkey operators are the same. Okay. Time for a break, but more with Chris Clothier when we come back on the BiggerPockets Podcast.

• 12:05Henry Washington?

  If you own rental properties, you know, the job does not stop at closing. There's tenant screening, rent collection, maintenance calls, and the paperwork that comes up with all of it. If you're managing more than one to two doors, that workload adds up fast. That's where Mind, BiggerPockets' preferred full-service property management partner, comes in. Mind is built specifically for real estate investors with experienced property management teams, local market expertise, and purpose-built technology. They support leasing, rent collection, maintenance coordination, and reporting. Whether you're managing one rental or scaling towards your 10th, Mind is built to grow with you. It frees up your time to focus on finding your next deal instead of fielding maintenance calls. And

• 12:48Henry Washington?

  it's not just about time. If you're a BiggerPockets Pro member, Mind will save you $500 for every home you onboard, up to $10,000 in your first year. Check mind.co to save time, money, and frustration. That's M Y N D dot C O.

• 13:05Dave Meyer?

  Trying to get started in real estate investing or wholesaling? The hardest part is finding and talking to motivated sellers before everyone else does. That's why new investors are using PropStream. PropStream gives you access to over 160 million properties nationwide, plus simple AI tools that help you find better deals faster. Use pre-built lead lists like pre-foreclosures, vacant homes, and cash buyers, then let the PropStream intelligence assistant help you analyze properties and estimate opportunities in seconds. And now with PropStream Connect, you can do more than just find leads. You can actually contact them. You get free skip tracing, including LLC and corporate contacts.

• 13:47Dave Meyer?

  You can launch dialer campaigns, use click to dial with AI prompts, automate follow-up marketing, and send postcards, all from one platform. No experience needed. You'll also get accurate comps, built-in calculators, and step-by-step training through PropStream Academy, so you know exactly what to do next. Start your free seven-day trial and get 50 free leads at www.propstream.com/bp. That's www.propstream.com/bp. You know that thing where you discover a feature you wish your software had? And it turns out it already exists, just on a different platform. Like, oh, you want rent payments processed in two days?

• 14:32Dave Meyer?

  Rent Ready does it. Oh, you want to block tenants from making partial payments mid eviction? Rent Ready does that, too. Oh, you want full accounting and tax-ready reports without paying for a second tier? Rent Ready does it. And oh, you want tenant screening that doesn't overcharge your applicants? Rent Ready also does this. Basically, if you've ever complained out loud about your property management software, Rent Ready probably already built the fix. It's $12 a month, you're welcome. Sign up right now for $50 off your first year of Rent Ready with promo code BPcash. BiggerPockets Pro members get it completely free. Sign in through your Pro account at rentready.com/biggerpockets. That's rent, R-T-O.

• 15:14Dave Meyer?

  Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your income legally, 100% IRS compliant. That's instant cash flow improvement. Cost Segregation Guys is the number one firm nationwide specializing in identifying these faster depreciating assets in your property. They've completed tens of thousands of studies across all 50 states from remote cabins to apartment complexes. So if you own investment property, this is a no brainer. So visit costsegregationguys.com/bp for your free proposal and find out how much you could

• 15:59Dave Meyer?

  save this tax season.

• 16:04Dave Meyer?

  Let's get back to my conversation with Chris Clover. This is resonating with me today because I spent the early part of this morning dealing with a contractor who was threatening to put a lien on one of my properties because my property manager didn't pay a bill. And I was like, of course I would have paid it, but you sent it to the property manager who somehow lost it. And like, this is just how real estate goes. Like, there's so much of the business is just coordinating between disparate parties who have no incentive to coordinate with each other. And you're sort of just quarterbacking the whole situation. And you get a hang of it, but it can be annoying for sure. And I can imagine that having basically just, it's sort of a customer service, right?

• 16:45Dave Meyer?

  Like you have a point of contact that you can call and they sort of deal with whatever situation arises, whether it's on the maintenance side, tenant side, asset management side.

• 16:55Speaker 01

  There's misconception and misdirection when it comes to turnkey. And the way that, that a lot of turnkey companies try and say they're incentivized to, to have, you know, their interests aligned is if you're happy, you'll buy more properties from me. And if you're not, you won't. But when it comes down to it, if they're not responsible for end to end, like a circular transaction, for instance, my company, we buy back a lot of properties from investors. Now, it could be year three, it could be year seven, it could be year 15, but we're there. We are able to purchase properties back when, when an investor's ready to exit out of an investment.

• 17:37Speaker 01

  But we can because we bought it, we renovated it, we sold it, we managed it, we know every detail about the property and it's an ease of transaction for the investor. So it's the ability to get in, make your investment, earn your return, exit easily and either move into a new investment thus or into something else. But that circular transaction doesn't exist with most companies that use the word turnkey to describe what they do.

• 18:02Dave Meyer?

  Yeah.

• 18:03Speaker 01

  So they take pieces of it and they say that for them, what turnkey means is I'm going to find it, you're going to buy it, I'll manage a renovation for you and introduce you to a management company. You might as well at that point hire an agent and make sure that you have a professional with a fiduciary responsibility.

• 18:21Dave Meyer?

  Yeah.

• 18:21Speaker 01

  Rather than just buying from an individual. There's no risk.

• 18:23Dave Meyer?

  Yeah, because when you're saying done well, right? You said that the turnkey company should be purchasing the property and doing the renovation while they're the owner of the property and then only selling it to an investor or passing it off to an investor once it's de-risked by having the renovation completed.

• 18:44Speaker 01

  Right. And the reason why I bring that up is that if somebody advertises turnkey, but all the risk is on you, what value are you truly getting? Perhaps you trust them, perhaps they're fantastic and they're going to be able to help you, but what value did you get other than you met somebody, you came to them because the word turnkey told you that it was less risk, less work, easier to do, but in the end, nothing's changed. It's just a real estate transaction. And the reality is that turnkey done well, it won't be instant equity that you get in the property. It'll be bought equity, especially if you're using financing, whatever you put down, you're probably going to pay closer to retail pricing on a property because the

• 19:26Speaker 01

  advantage, the purpose of it is I'm buying a properly renovated property that is going to be, should be less headache for me, should be managed well and should be a relatively simple, straightforward investment over the next few years where The company I hired is able to perform at a high level. You know, I'm saying a lot of jargon there, but that's the, that's what it's, that's what it's supposed to mean. Turnkey means that I'm not having to do a lot of work going into this. I make sure and vet the professional and they're going to deliver to me a smooth, relatively stress-free and consistent investment. Otherwise, why am I paying retail value?

• 20:07Dave Meyer?

  Yeah, you're, you're hitting on two of my, my favorite themes here, Chris. What is incentive alignment, which I want to come back to?

• 20:14Speaker 01

  Sure.

• 20:14Dave Meyer?

  But the second thing is about the risk reward relationship in real estate and all investing, right? I try and stress this a lot to people, but the more risk you want to take, the higher the potential reward. But when you work with a turnkey company, you are basically paying them to lower your risk, right? And so that means that you are, there is going to be in some ways, less opportunity for reward. And I'm not saying you won't make money, but as Chris just said, you're not going to be buying it at a super steep discount. Because Chris and his team, I'm going to ask you about this in a minute, but I assume need to make money somehow, right? They're not doing this out of the kindness of their hearts.

• 20:55Dave Meyer?

  But they're basically, or Chris and other reputable turnkey companies are taking on that risk for you. And so they're going to enjoy some of the benefit. That's what a good partnership is, right? Is both sides have mutual benefit. But I think I've heard people at turnkey say, oh, you're buying retail. It's not a good deal. Well, it depends the kind of investor you are, right? Like, if you want to go and do all the work yourself, you're probably not going to be attracted to a turnkey investment. If you're saying, hey, I'm trying to buy a property for the next five, 10, 15 years. I don't want to do a lot of work and I'm willing to pay retail and they're going to de-risk it for me. Then that can be a great deal for you. It just depends on your, your personal preferences.

• 21:36Speaker 01

  If your investment strategy, your high risk, high reward already is in oil and gas futures. Or you have crypto currencies that you're heavy into and you're diversifying into real estate. Because you can leverage your purchase. You can use a fraction of your money to own the whole investment.

• 21:56Dave Meyer?

  Yep.

• 21:56Speaker 01

  And then you gain, for each of us, it'll be different, but some form of tax advantage from that somewhere along the way. You know, more for others and less for, you know, some, but you know what I'm saying? There's some there. And ultimately, in the end, what you're doing at this point is I want less risk. I want a stable and high likelihood that when this investment's done, my up will be that, you know, let's say you put 25% down, my 25% has appreciated, but so has the bank's 75%. And along the way, a resident gave me every dollar I needed for the operation of that asset. That's it. I didn't make any cash flow in the end. I made a little bit

• 22:38Speaker 01

  here, a little bit there, but after seven years, they gave me all the money I needed for my costs. The value went up. They paid my note down and I got all my money plus a, a standard eight to 10 to 15% return or whatever it ends up being. But, but, but guess what? I got that return on the bank's money too.

• 22:56Dave Meyer?

  Yep.

• 22:56Speaker 01

  And I can't do that with my oil and gas futures where I took big risk, but I, maybe I rewarded, maybe I didn't. I can't do that on my other investments. And the crazy thing for me is that each of us as investors, we get to decide why we're buying a piece of real estate and we get to decide what our expectation of performance or return is. And so if my expectation is number one rule, I'm not going to lose money. And number two, I'm going to be able to leverage myself intelligently into a better return. Cash flow, you know, be damned. It doesn't matter.

• 23:32Dave Meyer?

  You raise up a really important point here, Chris, which is that even within turnkey, there's just a huge spectrums of type of deals and, and prospective returns. Right now in 2024, can you tell me a little bit about what a good deal looks like to you? And I know this is individualized to anyone, but if you were just advising, let's, let's start with a new investor who was doing, buying their first deal, like what should they look for in terms of price point, buy box and type of return?

• 24:00Speaker 01

  For me, I would not invest anywhere that I was in the bottom quartile of the market.

• 24:08Speaker 01

  I would invest as close to median value as possible.

• 24:13Dave Meyer?

  Why is that?

• 24:14Speaker 01

  Because every piece of data you can look at will point to the majority of renters in any market are going to be in that middle section. There's fewer that can afford the lower end and almost none that are looking for the upper end. So a majority of the renters in a market are going to be renting homes that are at median value and just below. So median value minus about 10%, you know, in that area right there. So one, you're buying a property with the highest probability of finding a qualified renter.

• 24:48Dave Meyer?

  That's such a good tip. It's the most demand, right?

• 24:50Speaker 01

  Yes. And but the demand also exists in the resale. So you're also buying in the most affordable part of a market where your exit strategies will be the, probably the widest that they're going to be because not only would it be owner occupants that that's also the median price is where they're going to be, the majority, but also investors. So investors that want a stabilized, proven product that you've owned for three to five years and you you're exiting for whatever reason, they're going to exist there and they're going to be looking for, hey, this is just the right spot for me to be.

• 25:26Dave Meyer?

  That's a great tip. I just wanted to reiterate that for everyone before you move on, Chris. Like, just so everyone understands, if you're talking about a market, let's say that the median home price is 400,000. Chris is saying that if you buy something in the, you use 10%, 360 to 440,000 range, that's from, you know, around the median, you're going to always have a high chance of renters because they get, most people, just statistically, most people are going to want and be able to afford that type of apartment as a renter. And the same thing is also true when you go to sell the property, either to a prospective home buyer is going to use it

• 26:06Dave Meyer?

  as their primary residence, or to another investor. And that is such a good tip because I think a lot of people say like, hey, I can, I found this great market, it's growing, but then they try and buy at the bottom of that market because it's what they can afford, which can work, but you're taking on that risk, like you said, of not having a product that is going to be very attractive to your prospective tenants and then in the future to someone that you're going to want to offload this property to. All right, time for one last break and then we'll be back with the BiggerPockets podcast. For my wife's birthday, I wanted to make her a new website for her landscape design business.

• 26:47Dave Meyer?

  So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming and still the site wasn't coming out the way I wanted it to. Then I tried Hostinger and everything was super simple. I asked Hostinger's AI to build a clean site for her business and it had a working version up in minutes. No coding or designer needed. Plus, its AI agent helps with SEO, website copy and email marketing after launch. You get domain, website, email, all in one account. And right now you can get Black Friday and Cyber Monday pricing through December 14th. So snag Hostinger's services at their lowest prices before the sale ends.

• 27:31Dave Meyer?

  Create your website today for just $1.99. Go to Hostinger.com/real estate and use code REALESTATE for an additional 10% off Black Friday and Cyber Monday pricing.

• 27:42Henry Washington?

  Buy smart, drive for less and trade for more. That's Toyota affordability. And it all starts with a great deal from your local Toyota dealer. Make a smart buy on an all-wheel drive Camry, Corolla Cross, or get a Corolla sedan packed with the latest features, advanced tech and head turning style. Take a test drive in two of Toyota's most popular SUVs. The spacious, family-friendly Grand Highlander and adventure-ready RAV4. And with so many hybrid and plug-in hybrid models available across the lineup, plus efficient all-electrics like the BZ, BZ Woodland and all-wheel drive CHR, you can drive your way and skip the pump. And long after you leave the lot, your Toyota keeps delivering with legendary resale value, built on a reputation for quality and reliability.

• 28:27Henry Washington?

  So when it's time for your next Toyota, you could trade in for more from a great deal today to a great value tomorrow. A Toyota is right for you. Shop Toyota.com for deals and details or stop by your local Toyota dealer today. Toyota, let's go places. There is a trip on my list I cannot stop thinking about. Japan in early spring. The city is supposedly so obsessed with food that locals have a word for eating until you drop. I want to wander the cherry blossoms around Osaka Castle until my feet give out, which at my age is about 20 minutes. Then stroll the neon lit canal in Dotenburi as the sun goes down. And in the night with okonomiyaki sizzling on the griddle at a tiny counter. Here's the part I keep running the numbers on.

• 29:12Henry Washington?

  While I'm over there, my place back home would just sit empty. Instead, I could list my space on Airbnb and put a little extra cash toward the trip. With the Co-host Network, I could hire a vetted local with hosting experience to create my listing, manage my reservations, message guests, handle onsite support, and even help me with the design and styling. I get takoyaki straight off the grill. My home stays cared for and I bring in some extra income to put towards my next bucket list vacation. Find a co-host on Airbnb.com/host.

• 29:45Dave Meyer?

  Investing in real estate has always been smart, but it hasn't always been simple. Now it's both, thanks to the Fundrise Flagship Fund. The Fundrise Flagship Fund launched more than five years ago with a mission of delivering low fee access to blue chip private market real estate. Today, the Fundrise Flagship Fund has grown to manage more than $1 billion of real estate on behalf of hundreds of thousands of investors, making it one of the largest funds of its kind. For those who believe real estate has an important role to play in their portfolio strategy, the Fundrise Flagship Fund has positioned itself as both a simple and a smart option. Whether you're starting with $10 or $10,000,

• 30:27Dave Meyer?

  the Fundrise Flagship Fund makes adding real estate's unique potential for both passive income and consistent growth. Just visit fundrise.com/pockets to make your first investment today. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the fund's prospectus at fundrise.com/flagship. This is a paid advertisement.

• 30:53Henry Washington?

  BiggerPockets Real Estate is brought to you by MOD. MOD prescribes a once or twice daily modophonal drink that can keep you energized, focused, and alert throughout the day. Here's the mechanism. Energy drinks with caffeine temporarily block eudeneine, the chemical that makes you tired. It builds up and when the caffeine wears off, it all crashes down on you at once. Modafinil works differently. It engages multiple pathways in your brain. Dopamine, norepinephrine, histamine, and orexin to achieve steady energy and alertness for 10 to 12 hours. Modafinil was invented in the 1970s and since it's been used in the highest performers on the planet, soldiers, pilots, and astronauts aboard the space station use modafinil in

• 31:34Henry Washington?

  high-stakes situations where full concentration and alertness are paramount. It's now available at mod.com to qualifying patients. Visit mod.com, that's M-O-D dot com, for free consultation and get 10% off your first order plus free shipping with promo code B P R E. That's promo code B P R E at mod.com. See their website for important safety information and we thank MOD for sponsoring the pod.

• 32:06Dave Meyer?

  All right, we're back with Chris Clovio.

• 32:08Speaker 01

  Well, I tell people, there's two questions that you have to ask in turnkey real estate. The first one is how and the second one is why. And what I mean by that is, okay, I'm going to buy this property from you and I'm talking true turnkey, meaning it's, it's everything's in-house. You can hire their management company to manage this asset for you. So there's again, one point of contact, one source of truth. How are you going to make this property perform? And why do you think it'll perform the way you're telling me? And those are the two most important things. And I say that because of this, a management company makes their money, no matter how they want to say it, they make their money on turnovers. Your property has to go vacant in order for them to make money because a majority of the income comes from the lease-up fees.

• 32:51Speaker 01

  Everything else, the 8%, 10%, 12%, whatever our company keeps of the monthly rent, it's a pittance compared to the lease up. Again, I'm in the, I'm in the middle of it. We manage 8,000 homes. So I know exactly how the math works. When you buy from a fully integrated turnkey company, and you said you were going to ask me this question, and I'm going to tell you.

• 33:09Dave Meyer?

  Yeah.

• 33:10Speaker 01

  If they, if they know how to make money, meaning they are successful, that you want your turnkey company to be profitable, the last thing you want is for them not to be profitable, because then they're gone. So if they know how to be profitable, they subsidize income through home sales. So they're able to buy at a discount, get work done, and leave enough of a spread where they can sell the property without gouging the investor.

• 33:36Dave Meyer?

  Right.

• 33:36Speaker 01

  And so they can make money, but still deliver a serviceable product that the investor will not lose on.

• 33:42Dave Meyer?

  It's sort of like flipping, right? You're, you're buying at a discount, you're renovating, and then you're selling it to an investor at a fair price. And that's how the turnkey company makes money and is still able to provide the investor with a good enough deal that they too can earn a fair profit.

• 33:58Speaker 01

  You nailed it. It has to be, like, I don't like the verbiage of win-win for everybody, but the, the reality is that if the investor wins, you win. Like, if you priced it properly where you're not, you can cover your overhead, you can make a living, you can hire your team and, and innovate and grow, and they win as well, they're coming back to buy more. That part of the, the equation is true. But here's the deal. If they own the management company, then they no longer have to rely on turnovers. So how can really high quality, and it's not just, there are multiple high-quality turnkey companies, how can they provide the best services? Well, it's all going to be in the management and renovation. Those are the only two places

• 34:41Speaker 01

  in real estate that they can make a difference and make a property perform better. If you renovate a property properly on the front end, you save costs, especially in the first seven to 10 years of ownership. And then if you are really good at the management, you can increase occupancy and length of occupancy.

• 35:01Speaker 01

  And hold down maintenance costs, especially in those first, like I said, seven to 10 years. Those are the only two different traders you can really force into real estate to try and make it perform better for that first period of time that and I I use the term seven to 10 years. That poorly renovated properties, expenses are going to come earlier, doesn't really matter, it's coming. And poorly managed properties will suffer more turnover and higher costs. And that happens in all real estate. That doesn't matter if it's turnkey or you do it yourself, doesn't matter. Those two things drive up costs. And so if you get a good turnkey company that's fully integrated, that has all of those services in-house.

• 35:43Speaker 01

  How are you going to make this property for like, what do you do different? That will make this have a longer occupancy or fewer expenses. If they just say, well, we're just really good at it. Ask more questions, but if they can point to this is precisely how we do this. And they have a track record to back it up. That's going to be the difference maker in turnkey because otherwise, as we said earlier, turnkey is meant as a protection of your money. You should never lose in real estate, period. But when you're buying turnkey and you're so passive, you buy from a company that there's a high, high probability you're not going to lose. Now, how can I force a return? They're really good at what they do. That's it.

• 36:24Dave Meyer?

  Thank you. Well, you beat me to it. I was going to ask you about how to create mutual incentive between investor and company. Cause I think a lot about that, that, you know, I deal with this with my property managers all the time. Their incentive is to to turn properties over. I've figured out how to give them retention bonuses instead to incentivize them to to keep people. And a lot more turn operators are doing this now, but this is just, it's such a good point, regardless of your turnkey or not, just figuring out the ways that you and a company both win together.

• 36:59Dave Meyer?

  I know it's such a cliche thing, but it really is true that, you know, if whether it's you're working with a contractor or a property manager, like find a way that you both benefit from the same thing. Is going to help you go so far in in this industry.

• 37:14Speaker 01

  I agree.

• 37:14Dave Meyer?

  Chris, we we do have to wrap up soon, but I wanted to ask you to finish your thought because you started telling us about what a good deal looks like, especially we're ending 2024. We're heading into 2025. You told us a little bit about what the buy box should look like, but what is like the, what does a return look? What does a good return look like in 2025? Someone wants to get into turnkey.

• 37:35Speaker 01

  So given the state of the market, the state of borrowing costs and where we are, uh, if you can get a consistent and reliable cash on cash of six and a half to eight. Eight, I mean, you're hitting home runs. There's nothing wrong with five and a half today on a highly reliable property.

• 37:56Dave Meyer?

  That is pretty good, man. That's higher than I thought you were going to say.

• 37:59Speaker 01

  Well, those are no brainers and every bit lower that you go, you know, it has to come with success. It has to become some level of advantage for you. And so, you know, you go up in price point, those returns come down. But going up in price point, your advantages for every percent of appreciation, it's more dollars. And so it's going to come down as you go up in price point. The other thing that I think success looks like today is if you're with a company that is successful at length of occupancy, at being able to extend and hold down your move out. So they're just really good at what they do. Doesn't mean you're getting rent increases, but you're not suffering move outs. That's what you're looking for.

• 38:41Dave Meyer?

  Vacancy crushes you. Yep.

• 38:42Speaker 01

  Yes.

• 38:42Dave Meyer?

  It's the worst. Once you're in this business long enough, you you stop caring about rent increases. You care about vacancy.

• 38:48Speaker 01

  100%. Um, it's reliable, consistent revenue.

• 38:53Dave Meyer?

  And it's better for the tenant. It's better. That's another win win situation. That's just a better situation for everyone.

• 38:58Speaker 01

  Yeah. So as an investor, what does successful turnkey look like? One, it's median priced homes. You're you're investing there and you're investing with somebody that can that can demonstrate to you that they can keep your property occupied. Those are the two big things. Properties don't stay occupied if they're not well renovated and they're not well managed. Those are the two things passive turnkey investors need to focus on. I need to be buying in the right price points. And if I don't have enough capital, wait. You're not going to miss out. Believe me. Anybody that says you have to buy this today, you'll make, no, wrong, wrong. Move away from that person. Like you do not have to be in a hurry.

• 39:31Dave Meyer?

  That's great advice. Yeah, I think that especially now, like the market is, you know, weird right now, but you could take your time. Things aren't moving as quickly as they were a couple of years ago, you know, and you should, whether it's turnkey or not, be comfortable and with whatever deal that you want to do, you know, as Chris said, the main goal is not to lose money. And real estate is pretty forgiving, but one of the few ways you can lose money is if you you rush into a deal before you really understand what you're buying.

• 39:57Speaker 01

  Yeah. Work with companies directly. There are no shortcuts to this. There's nobody out there that has the magic crystal ball. The reality is that if you're going to buy far from where you are, you need either a really, really good agent and somebody that's that has a fiduciary responsibility to perform for you, or you need a high quality turnkey company. What you don't need is a consultant to tell you those two answers.

• 40:24Dave Meyer?

  Yep.

• 40:24Speaker 01

  And I say that because again, it just goes back to the whole thing of turnkey. It's spun off into all these cottage industries today and there's turnkey for everything, but what you don't need is a turnkey coach to hold your hand and tell you how to buy turnkey.

• 40:37Dave Meyer?

  Yeah, it's kind of like the opposite of what it's meant to be, right? Like that's, if you need a coach to tell you to buy turnkey, it's not turnkey.

• 40:44Speaker 01

  Yeah. If you look up and you say, how is this person making money and they're making money off of me instead of making money with me, then

• 40:51Dave Meyer?

  That's a good way to say it.

• 40:52Speaker 01

  You don't need that. You don't need that person.

• 40:56Dave Meyer?

  Well, Chris, this is great. Thank you so much for joining us. Your fifth time on the BiggerPockets Podcast. Congrats and thank you so much for for being such a great member of the BiggerPockets community for so long. If you want to learn more from Chris, just go to biggerpockets.com and you can see literally tens of thousands of things that he's contributed to our community for free. Chris, thanks again, man.

• 41:16Speaker 01

  Hey, thank you for having me. See you soon.

• 41:18Dave Meyer?

  And thank you all so much for listening to this episode of the BiggerPockets Podcast. We'll see you next time.

• 41:25Speaker 03

  Life is all about making decisions. Sometimes you make questionable ones. Like buying a new TV that's too big for the wall because the electronics store employee was a little too good at their job. Then, sometimes you make great ones. Like protecting your home and auto with Progressive. You get customized coverage options so you can be sure you have the right coverage. Get your quote today at progressive.com. Progressive Casualty Insurance Company affiliates and other insurers. Not available in all states.