FAQ
Here are some of the more frequently asked questions we come across. Please feel free to ask if you would like any further clarification. An informed investor is a savvy investor.
Turnkey rental real estate refers to a performing rental property that has been renovated to a rental standard, has a qualified tenant in place and has professional property management.
Turnkey properties may be financed and occasionally contain built-in equity. This is a perfect option for an investor who has some resources but not necessarily enough to purchase the property with all cash.
Short for Capitalization Rate. Cap Rate (also referred to as Return on Investment) is the amount you will earn on a rental property and can be used to compare one property against another. . To calculate, take the monthly rent and deduct all monthly expenses (taxes, insurance, property management fee), we also recommend you deduct a contingency amount for future vacancies (we suggest 7% of rent) and future repair/maintenance expenses (we suggest 5% of rent). You are then left with the Net Operating Income (NOI). Multiply this figure by 12 to get an annual figure, and divide by the selling price of the property (do not include closing costs or any other fees in your calculation). The resulting figure is your Cap Rate.
Cash-on-cash return reflects your true return on your net cash outlay. To calculate, take the monthly rent and deduct the direct monthly expenses (taxes, insurance, PM fee, contingencies for vacancy (7%) and repair/maintenance (5%) and your monthly mortgage payment. This will give you your monthly net income. Multiply this figure by 12 to get an annual figure. Divide this by your net cash out of pocket – this is made up of three elements: 1. down-payment 2. closing costs 3. fees associated with your financing. Once you divide your annual net income by your total cash-out-of-pocket, the resulting percentage will be your true cash-on-cash return.
CapEx stands for Capital Expense. This refers to the major expenses associated with owning a property and generally includes: roof, HVAC (Heating, Ventilation, Air Conditioning) system, hot water heater, electrical system, plumbing system.
For a classic turnkey property, this depends primarily on the status of renovations and whether you are leveraging your purchase. At Portfolio Properties USA, ALL of our properties have been fully renovated. If you are leveraging your purchase, it typically takes 30 days for the lender to complete their process. If buying with cash, you can close within approximately 3 weeks. The total time from contract to close can be anywhere between 3-6 weeks.
No. We have professionally renovated your property to a rental standard prior to your selection and reservation. Additionally, we have tenanted the property with a qualified tenant and the property has professional property management.
All of our properties have been fully renovated, tenanted and have reliable, professional property management in place prior to your reservation.
If borrowing conventionally, you are limited to 10 mortgages (sometimes referred to by lenders as “golden tickets”) and if you are married, your spouse may also get 10 mortgages. After that, there are other options you may take to continue acquiring properties. Please contact us if you would like further details.