Turnkey investing offers a unique opportunity for those interested in making money off real estate, but admittedly, it’s not for everyone. The biggest argument against using a turnkey strategy is that the buyer ends up paying market value for a property, and they’re not able to force appreciation on the home. This forced appreciation is a proven way to make money on a property – buy it for cheap, fix it up, sell it for more. Boom. Money in your pocket. https://www.biggerpockets.com/renewsblog/types-of-investors-turnkeys/
With turnkey, though, there’s nothing for you to do, because the turnkey provider has already done all the work for you. Hence the reason you’re paying market value for the property. Obviously, this is an issue for some investors who really grab onto that forced appreciation philosophy and believe it’s the best way to get a big return on investment.
But these folks make up just one segment of the investing population. There are lots of people who don’t give a rats about forced appreciation and are more interested in the regular cashflow that a nice, tenanted (i.e., turnkey) property can provide.
So who are these people? Well, anyone, really. Anyone can benefit from a turnkey investment, but there are a few groups who seem to enjoy the perks the most.
Turnkey investing is ideal for new investors who are unfamiliar with all the ins and outs of real estate investing. There’s a LOT to learn before you get started, and an experienced turnkey provider is an excellent source of knowledge on all facets of investment, from the local market to property management after purchase. Jumping into an investment on your own without that background knowledge is not only stressful, it’s also very risky. Having an expert on your side to educate and guide you can drastically reduce that stress and mitigate the risk.
Another group that can greatly benefit from a turnkey strategy is remote investors. If you plan to invest in a market other than the one you call home, it can be difficult to manage it without an on-site, local presence. A local turnkey group can provide that. They also have a detailed and unique understanding of the market and the neighborhoods that are ripe for investment, which is something remote investors don’t typically have a good grasp on. Finally, since many turnkey providers offer in-house property management as well, it makes even more sense for a remote investor to go this route. Someone has to manage the property after purchase, and since the investor isn’t there to do it, using the turnkey company’s services is a natural fit.
Side Gig Investors
Lots of the investors I work with aren’t full-time investors. They have regular jobs, families, and busy schedules that don’t allow them to devote a lot of time to their real estate investments. So again, it just makes more sense to let a turnkey provider handle most aspects of their investment while they spend their time in other ways, but still enjoy the cashflow from the property. From the get-go, the turnkey provider is taking on the brunt of the work, starting with finding the right property for their investor client. From there, all the investor is responsible for is deciding on a property, providing funds, reviewing terms and contracts, and signing paperwork. For investors who are short on time, this is the perfect solution as it requires the smallest commitment of time possible – but again, they are still reaping the financial benefits as the property owner.