Sep 20, 2018
Investing in turnkey properties is not the typical way you hear of successful investors getting into real estate investing. But for Lane Kawaoka, it was what fit his circumstance at the time. More importantly, turnkey property investing enabled Lane to get his hands dirty with the real work of investing, to understand the terminology, activities, and deal structures that investors often employ, and build a portfolio of single-family properties that could financially open the door to bigger and better opportunities. Lane’s a down-to-earth guy who has a lot of insight into how turnkey properties work out as a good deal for some and a marginal opportunity for others. In this episode, he shares how to find a good turnkey opportunity and more.
Though Lane Kawaoka built his income through turnkey properties, he didn’t start there. Lane was trained as an engineer and took his first job out of college with a company that asked him to travel a great deal of the time. Since he was a single guy it didn’t bother him that much. What did bother him was that he was paying his mortgage every month and only living in his home part of the time. Could he leverage the property to cover his mortgage? He gave it a shot and was soon actually making a profit on the deal. That unexpected benefit is what got Lane thinking about real estate investing on a more serious level and propelled him to where he is today - helping deal sponsors for multifamily properties pull together investors.
Every successful real estate investor will tell you that the success of your efforts will depend on the relationships you establish with others in the industry. And while attending your local REI meetings might be a start, it’s typically not where you’re going to make the types of relationships you need. Lane suggests you do your homework and choose a real estate investing conference to attend - preferably one that has an entry fee. That fact alone is going to separate the real operators from the wannabes and will put you on similar footing with everyone at the event (since you paid to get in as well). You’ll come away knowing more about the ins and outs of real estate investing but more importantly, you’ll come away with the benefit of new friendships with other investors you established at the conference. Face to face always builds better relationships.
Lane has had great success buying and benefiting from turnkey properties. But one of the greatest advantages of it is that he used the properties to build his monthly cash flow so he could get into bigger deals. While it worked for Lane, it may not be the right path for you. How can you know which real estate investing model to pursue? Lane says there are 3 ingredients to the recipe you should consider:
#1 - How much time do you have?
#2 - How much money do you have?
#3 - How much knowledge or how extensive of a network do you have?
Your answers to those questions will make all the difference in what real estate investing approaches fit you and your situation. Listen to hear Lane explain it. He provides insight into how turnkey properties, passive investing, and others fit with various answers to the questions.
Lane eventually decided that he’d like to divest himself of the single-family properties he purchased as turn-key properties and move into multi-family syndications. The path he followed to make it happen has turned out to be extremely beneficial. Lane discovered he had a knack for talking with potential investors and getting them to commit to real estate deals, so he approached sponsors of multi-family syndications and asked if he could come along as a limited partner and help raise funds for their deals. How does he benefit? He gets a ring-side seat to all the action, learns a ton as each deal comes together, and gets to say he is an experienced multi-family syndicator as he attempts to structure multi-family deals of his own. Lane’s approach is very creative and very smart. Listen to how he recommends others can take the same approach, on this episode.