What is turn-key investing? How can you scale your real estate business with it? In this podcast, Monick Halm interviews Deborah Razo, a true real estate investor goddess, about her inspiring journey into real estate and how she helps investors find turn-key properties in Memphis, TN. Deborah is the Founder of Women’s Real Estate Network and is currently focusing her energy on partnering with investors who are seeking financial freedom through the acquisition of real estate assets. Today, she shows us the basics of finding the best properties in your target market and increasing margins to get more renters.

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Listen to the podcast here:

Turn-Key Investing In Memphis – Interview With Deborah Razo

I’m here with a special guest, Deborah Razo. Welcome, Deborah.

Thank you, Monick.

It’s good to have you here. Deborah is an entrepreneur, a real estate investor and a coach. She’s the Founder of the Women’s Real Estate Network or WREN. She’s an independent spirit. She started her first business in 1990. After owning several businesses, she realized that her path to financial freedom is through real estate investing. Her mission is to teach others to seek growth and want to live life fully, which I resonate with because that’s my vision too. In 2009, she began her journey with Tony Robbins and is already a Robbins trainer. She traveled globally to provide on-site coaching to attendees.

In addition to her degree from UCLA, she’s expanded her investing education with a series of intensive workshops. It felt like a natural transition to her shifting gears from doing a design firm to having a booming rehab business, which is part of what she’s doing in her real estate investing. We’re going to have her share her story about how she got started in real estate investing. In particular, one thing that she’s doing, which will be of great interest to a lot of you is turnkey investing, especially in the Memphis market where she’s focused. Welcome, Deborah. I’m happy to have you.

Thank you for having me. I’m glad to be part of your Goddess tribe.

You are indeed a bad-ass real estate investor goddess. You’re in it too and you’re sharing your wisdom with all of us.

That’s what wisdom is for, to be shared.

Let’s start with your story. How did you get started in real estate investing?

That’s an interesting story. I’ve been an entrepreneur for years. I’ve always been blessed that I’ve loved the businesses that I’ve started and I’ve been engaged in. Like many people, sometimes life throws you some curveballs. Years ago, life threw me a curveball and I was in a bad car accident. I talked to a lot of people and sometimes it’s the divorce, it’s the death of a loved one or illness that gives you the opportunity to think about how you want to live your life. I got that opportunity. I was in a bad car accident. I know this is crazy, but I broke my neck. I was down and physically healing for about a year. During that year, I had a lot of time to think about my life. Even though my life was great, blessed and I loved what I did, I found myself a slave to my clients and my employees. I am not having the time to spend with people, to travel and to take time out to be with people.

During that recovery time, I realized how important relationships are and how that’s the meaning of things, for me. I thought, “I need to figure out a different way to make income so that I have more time flexibility.” I started researching all different types of ways to make passive income royalties and real estate and all kinds of things. When I started educating myself in real estate, I realized I found it. I love it. It’s the one thing I get. A lot of people have tried to get me into the stock market and I can’t. I’m not that interested. I don’t track the stock. You’ve got to be interested in what you’re investing in. I get real estate. I get how you buy it, how you can force equity into it by making it better and how you can provide it to tenants and rent it. I like that. It’s got my attention. I’m like, “Maybe this is it.” Like you, I did a bunch of intensive workshops with Kiyosaki, with the real estate guys. I immersed myself in it.

My actual first investment property was a turnkey property in Memphis. I started developing, what the real estate guys taught me, my own investment philosophy. I strongly encourage that if you haven’t figured out what your investment philosophy is, you’ve got to start thinking about that because everybody, as individuals, has different outcomes. When I began, I wanted to flip properties so I could get some capital in my hands and then reinvest that capital in buy and hold turnkey properties. That’s what I did at the beginning. Since then, my knowledge base has grown and my investment philosophy has changed over the years. That was where it began. It has given me the flexibility that I want so that I can spend it with family, spend time with friends, and that I’m more location independent. It’s giving me the lifestyle that I want and that’s my outcome. It’s that vehicle for the outcome.

I love what you said that you’ve got to be interested in what you’re investing in. That’s crucial and important. A lot of people, especially women, if they are intrusive once they understand the other thing you said, which is important. Everyone needs to start with education. You went to the workshops. You immersed yourself in learning before you invested. Those are two truly important keys that you have interest and passion. You learn and you educate yourself before you put in some money and then you make smart investments. I love that. You talked about how your first investment was a turnkey property in Memphis. For people who don’t know, tell us what is a turnkey investment?

In a turnkey investment, there are what’s called turnkey providers. They’re mostly in areas where investment opportunities flourish and you can make cashflow. I’ll describe all those terms. You go into a market and there is a person there that’s already picking up houses that are distressed. They’re picking them up at a lower than average cost. They’re putting some renovation time into it and a renter into it. They know the numbers, what they’re going to sell it to you at, and they know that you can cashflow it. Cashflow means that your income from the property is going to pay for your expenses, which would be your property insurance, your property taxes and then your debt service if there is one. At the end of the month, it still puts a little bit of cash in your pocket. There are all these kinds of providers in different areas where investment is prolific. Memphis is one of those areas because there’s a high rate of renters in Memphis. There are good jobs in Memphis. You have to look at the economy of an entire city because you want jobs. You want your tenants working because you want them paying rent. You need to look at the economics of a city.

There are different cities that offer different economics. For example, I live in California and it is a huge appreciation state. If the market is down, you can buy property here. It can appreciate a great deal over a period of time. In that thing, it’s not a huge cashflow state because the rents sometimes barely cover the mortgages. In Memphis, that market is not a huge appreciation state. In fact, if it’s high or if it’s low, it’s usually 5% to 7%. You need to go into the market knowing, “I might not be getting appreciation on this property but I’m going to be getting a stream of income. I’m going to be getting cashflow for year after year. It’s a long-term stream of income coming towards me.” It’s important to understand the markets that you’re getting into. Understand if there are jobs for renters, “Am I going to get appreciation? Am I not? Is it going to cashflow for me? What are those numbers?” It’s important in your investment philosophy. Why are you investing there? What is it you hope to get out of it? Those are good ideas. Does that cover the turnkey question?

That’s it. The turnkey provider does the work. They find the house. They fix it up. They put in a tenant. They’re managing it too. They’re doing the property management.

Many turnkey providers provide property management. If they don’t provide it themselves, they have an association with a property manager right there. You’re buying into a whole system is what you’re doing. I’m partial because this was the way I started, but it’s a wonderful way to start. I bought my first two properties with turnkey providers. I learned those first 6, 9, 12 months about the ups and downs of it. What happens when a tenant doesn’t pay? What happens when the water heater breaks? How do I manage the managers? How does that work?

During that time, I was lucky enough to find a mentor that taught me how to flip properties. I then decided I wanted to go in and increase my margins. I used those flipping skills to get rentals rent ready and increase those margins. It’s little things building on top of little things. As you grow, your knowledge base grows too. I purposely show different property managers on that next property because I wanted a different experience. I wanted to find out how other people ran their properties so that I could have something to compare with. That’s what we have to do.

What I’m hearing about the turnkey investments, it doesn’t mean that there’s no management, no work involved on your part. You still have to manage your manager. I got a newsletter from you about how being a property manager and being a supermom is similar. I thought that was brilliant because you do have to make sure that your property manager is doing their chores and behaving well. It is a fairly passive type of investment. It’s great for people who don’t have a lot of time to invest. It still requires a little bit of looking over your investment. Like any good investor, you’re checking out your investments and making sure they’re working.

Like any good mom, you’re watching over your kids. You’re letting them grow on their own. You’re establishing guidelines for everybody to live within. It’s like a property manager. That’s why we wrote that article. I wanted women to be able to identify with something that they already do and apply it someplace else. We manage households all the time. We manage children. Granted a property manager isn’t like a child, but what is the same is that you have to give them leeway and then guide them to how you want things done. You have to be firm about how you want things done, like parenting.

That’s a great analogy.

Turn-Key Investing: Turnkey providers are in the areas where investment opportunities flourish and you can actually make cashflow.

As I’ve been real estate investing, I’ve been realizing, we as women, how many qualities we have that we need to reapply. Women are great shoppers. Let’s face it. We know a deal when we see one. If we’ve been shopping for shoes and we see that shoe that we like and it’s on a discount, we know it and we buy it. We know when we’re getting a deal. Somehow, when it comes to bigger investments, we lose some momentum or confidence. If something happens, we don’t go through with things. It’s interesting to watch women grow and start to exercise that muscle of going, “I know that’s a deal. I can feel it in my gut. I need to purchase that, put an offer in on it and see if it could be mine.” It’s interesting how those analogies work for us.

I’ve noticed that too. When women have that confidence and they’ve built it up, they can go in and purchase. I read that women are more successful in investing than men. They tend to have better returns.

It’s the truth. We’re also collaborative. I don’t care who you talk to, but real estate is a team sport. Women are collaborative. If we don’t know how to get something done, we’ll find somebody to help us. We’ll find somebody who knows somebody. We’re a collaborative group of people. That helps us in fostering that real estate portfolio. You need a team. You need good people to surround yourself with and a team to be able to support you and ask questions. It works well for women. I did read that statistic too about women making better returns. That’s cool. Get out there, women and ladies.

This is such good stuff. I want to circle back to the turnkey investing. I know it’s market-specific. Let’s put this on Memphis since that’s where your expertise lies. What returns can people look to get if they do a turnkey investment in Memphis?

It depends on what kind of property you want to buy into. I’ll explain that a little bit. In the real estate world, we talk about A, B and C type properties. I classify them this way. If you’re going to buy an A-property, that’s like shopping at Nordstrom. You’re going to buy the highest property and you’re going to want all the services with it. If you’re going to buy a B-property, that’s like shopping at Target. It’s good and solid. You’re going to get what you want. It’s going to be great. If you’re going to buy a C-property, that’s probably like shopping at Walmart. It might work for a while. Who knows how that’s going to work out? It’s funny because those different types of properties attract different types of renters. On an A-type property, you might get a 7% return. You might get it on a regular basis with a steady renter. On a C-type of property, you might get more towards 12% or 15% return. It’s a more volatile renter. It might be somebody who’s living paycheck to paycheck. There might be late rents and possible damage and evictions. It’s that risk to return ratio. How much risk are you willing to do? How much work are you willing to do for what type of return? That’s something that I had to learn along the way too.

The first property that I bought into, all I was seeing was the returns. I bought a C-property and I was like, “I want to make that high 15% return.” My second property was a B-property. It was great for me to be able to see the differences. I’m getting a lot more turnovers on the C-property. Is my return paying off? In the end, I still have to paint again and get these things rent-ready again. That’s taking out of my little pool of money that I made. You have to look at what you’re going into. If it’s A, B or C, it’s somewhere between 6% to 7%. In this market, probably 12% is their highest you’re going to get. Those are great returns. Who’s getting those returns in other places? That’s a good investment if you can get those returns. That’s pretty much what you’re getting.

We’re talking about real estate being a team sport. How do you find the team? How do you find the turnkey provider? How do you find the property manager? You said that the turnkey provider will often have property managers they work with. How should people go about finding a turnkey provider?

I found mine in a couple of different ways. Now that I think about it, it was the same way. I started listening to podcasts. I was listening to The Real Estate Guys. I was listening to Jason Hartman. I was listening to people who are already affiliated with turnkey providers, had turnkey providers on their shows that were advertising, and would once in a while sponsor a field trip to that city. That’s what I did. I took a field trip. During my field trip, not only did we look at the city as a whole. We looked at the market as a whole. We were given maps to show where our A, B and C properties are located. We were also given the opportunity to meet three different turnkey providers who opened up to us and showed us their properties. It was a no pitch type of bus trip.

Obviously, you could exchange information and do business with whoever you wanted to do business with after you left. Honestly, I didn’t do business with anybody because I didn’t feel like I was ready yet. I was running numbers and learning that whole side of things. I did business with one of those people about 4 to 6 months later. I stayed in touch with them. I kept watching their website. I would run the numbers on the properties that they were posting to see if my numbers came out the same as their numbers, which I strongly suggest people do. Everybody calculates the Return On Investment or ROI differently. Decide on how you want to calculate it and use your formulas. If you’re using their formulas, they might not be calculating something in that you might have to determine, whether it’s your debt service or anything like that. I strongly suggest that you figure out how to run your own numbers and run those. Use other people’s properties and keep running them until you start to understand and know when it is you’re getting a deal. That’s what we’re looking for.

You want to make your money work best for you. What advice do you have for women who are starting out? What would you tell a woman who is starting to look into that?

I have a couple of pieces of advice. I can’t drill it down to one. Here’s what I’m going to say, start educating with podcasts and reading. Do things that don’t cost a lot of money. Start networking in your local market. Go to cashflow games. Go to real estate meetups. Start listening to people and networking with other people and find out what other people are doing. That’s the first thing to do, but don’t spend too long there. This is what I mean by that. I see a lot of people who start to get educated and don’t get into action.

My vehicle for getting into action and the one that I strongly suggest is to get a mentor. If you have somebody who’s done this before you, you’re not laying all the groundwork yourself. You’re getting somebody who knows all the terms and knows the ins and outs and can help guide you along the way. I’ll give you an example of that. I wanted to flip houses and I found a local mentor who was willing to flip with me. I had to find and fund the deal and he got part of the process. I learned everything along the way. Your learning curve is faster when you surround yourself with people who already know how to do this. That’s my second piece of advice. First, get educated. Second, get into action. If you can, find a mentor who’s going to be doing what you want to do and show you how to do it. Those are my pieces of advice.

That’s how I got started. That’s awesome advice. Thank you. How can people find out more about you? You offered things that would be of service.

You can go to DeborahRazo.com. You can check that out. My personal mission is to help people who want to expand their life and want to live life fully. I do that through coaching, mentoring, all kinds of different things. You can go to WRENInspires.com, which is the Women’s Real Estate Network. What we’re doing at WREN is we’re starting local clubs, so that women can come out and listen to other women who are rocking it. I started this club in Los Angeles. Real estate is a male-dominated business and I’ve been in male-dominated businesses before. I’ve got no problem with that. What I was not seeing or finding were those women who were rocking it.

Once I did, I started seeing like, “Not only is she a developer but she’s got kids, the same life that I have, a partner, an aging mother or whatever it is, and she’s balancing it all.” I could foster a conversation with her and see how she is doing this. It was inspirational to me. That’s the thing that we offer at WREN. We have a Los Angeles chapter and a Seattle chapter up and going. We’re looking to expand across the nation. You can go to WRENInspires.com or you can email me at [email protected] and contact us. If you have a location that you want to start a WREN group at, please throw us an email and let us know. We’re looking for infinite heart and real estate badasses all over the country. That’s what we’re up to.

It’s a wonderful compliment to real estate. You need to check it out. That’s great information and great women like Deborah. Thank you so much. I want to hear a quick trinity from you. Do you have a brag, gratitude and desire for me?

I’m finishing up a rehab. I’m finishing up a flip. It’s coming out cool. I want to keep it but I can’t. It’s a block from the beach and it’s turning out to be this cool little beach house. I’m happy because it was a hoarder’s house when I started. There’s my little brag.

What is something you’re grateful for?

I’m grateful that I’m surrounding myself with people who are of like-minded nature, who value relationships, value doing business and value having fun while you’re doing it. I can’t be more thankful for that.

How about your desire?

Turn-Key Investing: Getting a mentor can be your vehicle for getting into action with your real estate investments.

It’s going to be something that we touched on. I’m blessed that I have so much going on. One of my desires is that I keep focused on taking care of me. I have quality problems like you, “I have too much to do that I love to do in too little time.” I start to suffer. I took some time out to do a few meditation poses. I hadn’t done it in a month. It makes a difference. I’ve got to remember to put the oxygen mask on me first and serve everyone else that was serving. That’s my desire.

More self-care. So shall it be or so much better than you can imagine. That’s a beautiful trinity and interview. There were many nuggets of wisdom there. I appreciate having you here. Thank you, Deborah.

Thank you so much for having me on.

It was my pleasure for sure. Goddesses, as always, keep it juicy and pleasurable. Meet us back here, same time next episode. Keep investing.

Important Links:

• Deborah Razo
• Women’s Real Estate Network
• The Real Estate Guys
• Jason Hartman
• DeborahRazo.com
• WRENInspires.com
• [email protected]

About Deborah Razo

Always an independent spirit, Deborah started her first business in 1990. After owning and partnering in several successful small businesses, she realized that her path to financial freedom was through real estate investing. In addition to her business degree and graduate certificate in Entrepreneurial Management from UCLA’s Anderson School of Management, Deborah expanded her investing education in 2011 with a series of intensive workshops with Robert Kiyosaki, The Real Estate Guys, Jason Hartman and more. She found that she has a flare for fixing and flipping properties, from purchase, rehabbing, marketing and sale processes to tools and techniques for locating properties and analyzing market values to capitalize on opportunities for profit. With an expertise in renovation and team management, Deborah began purchasing foreclosures in the Memphis area and now owns single family there and multifamily in Tuscon, AZ.

Deborah is also a Sr. Leader for the Tony Robbins organization learning the skills to help others overcome challenges, create lasting change in their lives and step into levels of success beyond anything they thought possible.