The Easiest Way to Invest in Real Estate
U.S. housing prices keep setting record highs, are up 33% since the start of the pandemic, and have nearly doubled where they were in 2011. The lack of affordable housing has led many families who would be buyers to instead rent, and they often prefer single-family homes to apartments. This has led to strong rent growth for single-family homes in the past few years. Occupancy rates have stayed steady above 95%, even though nearly 1 million single-family homes were completed in 2023, the second-highest rate since 2008.
It is no surprise that Americans consistently rank real estate as the best long-term investment, but it can be a difficult asset class to access. For many potential investors, properties are too expensive in their home market, and it is difficult to buy a house in a different city or state. It can be time-consuming to research different markets and find suitable investment properties. Managing a property and dealing with tenants can be a headache, and no one wants to get a late-night call to fix a toilet. Even if they want to purchase an investment property, busy professionals simply don’t have the time to start the process or manage the properties themselves. This is why many investors are looking to turnkey real estate investing to get exposure to the asset class without having to do all the work.
What is Turnkey Real Estate Investing?
Turnkey properties are completely rent-ready and often recently renovated - you “turn the key” and it’s good to go. A fully turnkey operation also includes property management, creating truly passive income. Investors can essentially outsource all of the time and effort to a third party operator and still reap the benefits of owning property. It also makes it feasible for investors to buy properties that are not in the market where they live, as sourcing out-of-market properties and managing renovations and placing tenants would be exceptionally difficult for an individual investor on their own.
Of course, there are always risks to owning property, such as non-paying tenants, unexpected maintenance expenses and capital expenditures, and downturns in the market. There are also risks specific to turnkey investing, as investors are putting the responsibility for their property in someone else’s hands. Low-quality renovations can lead to greater costs down the line and negatively affect the property value. Incompetent property management can hurt from the start by not screening tenants properly and may overcharge for maintenance or ignore potential problems. That is why it is essential to find a trustworthy operator with a strong track record. Investors need to look at the historical performance of an operator and their property management team, or whatever property management company they work with. A turnkey real estate investment will only be successful with a strong, reliable operator.
Who is Doorvest?
Doorvest is a full-service real estate investing platform that was founded in 2020 by Andrew Luong and Justin Kasad, who worked together to build a portfolio of a dozen rental homes. They knew from their experience how difficult it can be for first-time investors to buy a property. Doorvest was founded with the goal to help anyone build a real estate portfolio. The company raised a $39 million Series A in 2021 and has raised over $90 million in equity and debt funding since their inception. They recently acquired Getaway, a proptech company that helps investors get financing for investment properties.
So far, Doorvest has helped hundreds of people acquire their first property, with 27% returning to purchase additional homes. The company manages a $130 million portfolio of houses and has seen customer demand increase 15x since its founding. It was named the Best Real Estate Investment Platform at the 2021 Fintech Breakthrough Awards.
Fractional Shares v. Whole Homes
With Doorvest, investors purchase whole homes, not just shares of homes. This allows investors to get the full benefit of property ownership, like tax advantages, with mortgage interest and depreciation both deductible for investment homes. Because purchases are made with financing, investors also get the benefits of leverage, where all property appreciation is captured. For example, if you purchase a $200,000 property with a 25% down payment of $50,000, and the property goes up in value by 25% to $250,000, you have made a 100% return of the initial $50,000 investment. Additionally, by owning the full property, investors are the ultimate decision maker and are not beholden to other shareholders or a platform. You can sell when you want and for the price you want. On the other hand, owning only one property is riskier than owning shares of several properties, and does not allow the same kind of diversification.
Why Invest with Doorvest?
The goal of turnkey real estate investing is to minimize the work and allow for truly passive income. Doorvest manages the entire process of owning a home, from the initial acquisition, to the day-to-day property management, to eventually deciding to sell. They work diligently to source properties and select only the best properties that meet their criteria to feature on their marketplace. They have conducted in-depth market analyses to identify markets and neighborhoods with strong economic fundamentals and potential. Currently, they operate in markets in Texas, Georgia, Ohio, Oklahoma and Florida that meet their criteria.
Next, their proprietary underwriting process identifies homes with strong investment potential, and they create detailed financial models for each property. Once identified, the property undergoes a detailed inspection to assess its condition and determine the extent of renovations. During the renovation process, they make sure all the work is done to the highest standards, and ensure everything is repaired or replaced.
Next, they help investors secure financing and close on properties, then handle any necessary renovations to get the property rent-ready. Their property management team finds tenants and then manages the day-to-day operations of the property, leveraging their experience and connections to ensure it runs smoothly. Of course, there are often unexpected issues with properties, and Doorvest helps investors avoid common pitfalls and keep peace of mind with their Rent and Renovation Guarantees, and their DV Boost feature, which helps to stabilize returns.
How does it work?
As an investor, you start by signing up for a free account which allows you to browse the Doorvest marketplace for available properties. You then have the ability to look at the financial projections and read market insights to choose the property that best fits your criteria. You can also work directly with Doorvest to help them source exactly the property you’re looking for. Doorvest will then help you acquire financing and guide you through the closing process, then they take over property management duties, letting you earn passive income and property appreciation. All of that can be tracked on their user-friendly platform which gives you real-time updates with full transparency.
Invest in Real Estate without having to fix a toilet
Doorvest allows investors to get the benefits of real estate investing without the hassle of being a landlord. By allowing investors to leverage their expertise and let them do the work for you, Doorvest is helping to knock down the barriers of entry, and opening up this asset class to everyday investors.
