Turnkey investments offer a number of advantages over other types of investments, including other real estate strategies. With a turnkey property, you’re investing in a piece of real estate that has been rehabbed and, depending on the provider you’re working with, is already tenanted and has property management secured. Most importantly, the property is immediately cashflowing, so you’re getting a return on your investment from the minute you take ownership.
Sounds like a win-win, right? Absolutely! There are a few things to keep in mind before embarking on this strategy, though. Going into anything unprepared can be dangerous, and the more you know about turnkey investing, the better off you’ll be once you get started. Here are 5 things to know before you buy your property:
- This strategy works best for buy-and-hold investors. A turnkey property certainly isn’t a fix-and-flip; all the rehab and updating has already been done by the turnkey provider, so it’s move-in ready. Rather, this is an asset that makes the most sense as a buy-and-hold investment, where the property owner plans to hang onto it for at least a few years. With regular cashflow and (hopefully) long-term appreciation, you’ll get the best return on your turnkey investment if you keep it for an extended length of time.
- Your turnkey provider is on your side. When you work with a reputable turnkey provider, you have a real estate investment expert who’s on your side. They’re there to guide you, answer your questions, and offer advice. They know their market inside out, and they can match you with a property from their inventory that will best meet your needs. Don’t be afraid to ask questions about their qualifications and experience, as well as voice any concerns you have.
- You’ll most likely pay market value. One of the things that scares some investors away from turnkey properties is that they can’t be had for a “steal.” With a turnkey property, you’ll likely pay full market value, which actually makes perfect sense when you consider that it’s fully renovated and tenanted. Think of all the time and expense that goes into one of those “bargain” properties…there’s the rehab work, which can easily run into the tens of thousands, the marketing to tenants, tenant screening, property management, and more. With turnkey, all that has already been done, so you have to ask yourself…which is the better bargain? https://www.mashvisor.com/blog/turnkey-real-estate-investment-properties/
- It’s completely fine if you live in a different market. One of the best things about using a turnkey investment strategy is that it can all be done remotely. Because your turnkey provider is local to the market you’re investing in, you have someone there who has in-depth knowledge and can provide services such as rent collection and property maintenance. As the investor, all you really need is access to a phone/internet so you can manage and make decisions about your investment as necessary.
This truly is a passive form of investing. And here’s the main thing to know about turnkey investing: it’s truly a passive way to invest. With the provider handling much of the legwork, there’s not a ton for you to do as the property owner. Of course, you should always perform your due diligence in researching your chosen market, potential properties, and even the turnkey provider themselves. However, once you’ve done this, it’s simply a matter of making a few decisions as they come up – and enjoying that nice cashflow, of course!