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HOW TO GET THE MOST RETURN FROM A TURNKEY RENTAL INVESTMENT
By Nancy Conrad, Vineyard Funding Capital Group LLC
INCREASERETURNSONYOURTURNKEYPROPERTIES
The Scenario
John is an investor who has wisely secured
his retirement by buying turnkey rental
properties in his self directed IRA.
These are managed by a rental company
that takes care of all the problems and lets
him know when expenses come up.
He receives a 10% return on his investment
every month like clockwork.
It’s a great deal because his investments are
secured by real estate.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The Scenario
But John can do even better by becoming
the bank.
USINGTHE50-50DEAL
The Scenario
Let’s look at two different ways to increase
the balance in John’s IRA so he can retire
with more money.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The Scenario
One of John’s properties is a 2
bedroom/1 bath rental unit with
800 square feet and a full
basement in Pontiac, Michigan.
It rents for it out for $800 a month.
After taxes, insurance, and
management fees, John deposits
$628 monthly.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The Scenario
John’s Deal looks like this:
Purchase: $62,830
Rent: $800
Net: $628
ROI: 10%
That’s a fine deal for John.
USINGTHE50-50DEAL
Scenario 1: Seller Finance
He could buy more of these
properties and get a great cash flow
to pay him throughout his
retirement years.
USING THE 30/20 DEAL WITH A PARTIAL
Seller Finance Scenario
But it would take him 10 years of
accumulating rent to buy another
property.
What if we could speed that up?
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 30/20 deal
John decides to sell the house for $75,000
with financing to tenant/buyers.
They agree to pay John 20 percent down
and pay him the remainder for 30 years
(30/20)
John gets $15,000 and charges 7.5%
interest for 360 payments on a balance of
$60,000.
John receives a payment of every month
and never has to worry about “tenants,
toilets, and taxes.”
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 30/20 deal
So, John now receives a payment of
$419.52 on his remaining investment. It’s a
little less than what he got previously,
right? Maybe.
What kind of return is that?
Initial Investment: $62,830
Down Payment: -$15,000
TOTAL IN THE DEAL: $47,830
ROI: 9.99%
Not bad – he’s still getting around 10%
$419.52
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 30/20 deal
But here’s where it gets even more
interesting.
Let’s say John sells some of those $419.52
payments to another investor who also
wants 10%.
What will that look like?
$419.52
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 30/20 deal
Along comes Kathy, another self directed
IRA investor, who is looking for a good
return.
She offers to buy 10 years of those
payments for a lump sum that pays her 10%
on her investment.
She offers to buy those payments for
$35,000.
$35,000
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 30/20 deal
If John’s tenant/buyer hasn’t sold the
property, he’ll end up with the loan after 10
years, and they will still owe him
$52,076.64.
And John’s position looks like this:
Initial Investment: $62,830
Down Payment: -$15,000
Kathy’s Partial Purchase -$35,000
TOTAL IN THE DEAL: $12,830
Continuing ROI: 39.22%
39.22% ROI
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 30-20 Scenario
That gives John $50,000 to reinvest in other
things…so he can grow his IRA a LOT faster.
USING THE 50/50 DEAL
But what if John sold the property
to another self directed IRA investor
and financed it for that investor
over 10 years?
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 50-50 Scenario
Let’s go back to Kathy…
She wants to own some turnkey rentals too.
Rents go up, home values go up, and she
likes that.
She offers to pay John HALF now and the
other half over 10 years.
Besides, she’s got more time to accumulate
value in her portfolio, and this fits her plan.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 50-50 Scenario
With the 50/50 deal, John’s
position looks like this:
Purchase: $62,830
Sell to Kathy: $75,000
Down Payment: $37,500
Total Investment $25,330
Payments: $445.13
ROI: 17.30%
He gets GREAT cashflow
AND…
a chunk of money to reinvest
elsewhere.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 50-50 Scenario
John can take his money and put it
into another investment.
And do it all over again.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 50-50 Scenario
Here’s how it looks for Kathy:
Purchase: $75,000
Down Payment: $37,500
Rental Income $800
Expense: $172
Mortgage to John: $445.13
Net: $182.00
Kathy is looking to grow her IRA in a safe
and dependable way paid by someone else:
her renter.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 50-50 Scenario
She can sell the property at any time, or
lease option it to a new tenant/buyer.
As long as she keeps paying John, she can
control a cash-flowing property inside her
IRA.
INCREASERETURNSONYOURTURNKEYPROPERTIES
The 50-50 Scenario/ The 30-20 Scenario With A Partial
Everybody wins in both situations.
John grows his IRA cash flow
roughly twice as fast.
And Kathy, who may not have as
much capital as John, can grow her
IRA without having to personally
make deposits.
INCREASERETURNSONYOURTURNKEYPROPERTIES
SUMMARY
With careful and persistent
application of these two scenarios
anyone can grow their IRA real estate
investment portfolio more quickly, no
matter what side of the equation
they’re on.
HERE’S TO YOUR SMARTER AND
MORE FRUITFUL RETIREMENT!
HOW TO GET THE MOST RETURN FROM A TURNKEY RENTAL INVESTMENT
By Nancy Conrad, Vineyard Funding Capital Group LLC
Questions? Send them to
Nancy Conrad, Asset Manager
Vineyard Funding Capital Group LLC
nconrad@vineyardfund.com
PO Box 18476
Phoenix, AZ 85005
480-442-4586

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How To Get The Most Return From A Turnkey Rental Investment