Are you thinking about buying your first investment property? Or are you just a really busy residential real estate investor looking to expand your real estate investment portfolio? Maybe you want a new way of making money in real estate? If you’ve answered yes to any of these questions, then a turnkey property might just be the best real estate investment strategy for you!
By the end of this post, you’ll not only be convinced turnkey property investments can be the best investment properties, but you’ll also have a few tips in your pocket about how to succeed in real estate investing with turnkey property investments.
Great for Beginner Real Estate Investors
As a new residential real estate investor, you’re probably eager to learn everything you can about real estate investing. Turnkey property investments are one of the best real estate investment strategies for learning all there is to know about residential real estate investing. The reason for this is simple: the turnkey company has already chosen an investment property in a location where it will likely be rented, it has made all the repairs and renovations for you, and it has tenants lined up and sometimes already renting the investment property. A lot of the time, turnkey property investment companies provide professional property management as well.
With someone having done all of this for you, your job as the real estate investor is to make sure that all the decisions the turnkey property investment company has made have been the right ones. This means carrying out an investment property analysis. In this way, you’re learning a lot of the basics of real estate investing, but you’re not taking on any of these risks until you decide to invest in the property.
More Free Time
Because the company is doing all the hard work, you won’t have to invest so much time into the turnkey property once you’ve made the purchase. If you’re a seasoned residential real estate investor, this means you can put more time into other real estate investments like fix and flips or a rental property close to home which you choose to manage. Some real estate investors choose a turnkey property because they can also keep their day job while making money in real estate.
A Passive Income
No work after the purchase of a turnkey property means you’ll be enjoying the passive income. With professional property management taking care of any of the tenants’ needs or repairs on the investment property, you won’t have to deal with any of the day to day responsibilities of a rental property. Yet, you’ll still be enjoying the rental income.
This passive income is also received pretty much immediately after you purchase the turnkey property because tenants are already in place. If the turnkey property becomes vacant, the property management will be responsible for finding tenants as quickly as they can.
The Choice of Any Real Estate Market
With typical residential real estate investing, real estate investors are limited to their local real estate market. They have to be close by to manage any needed repairs, market the investment property, and find tenants. What if your local real estate market is too expensive or is suffering? A turnkey property means you can invest anywhere that suits you. You can look for real estate markets with higher rental income, better cash flow properties, and higher return on investments.
Good Return on Investment
Real estate investors find that they can get up to 10-15% of a return on investment with a turnkey property. Of course, this depends on the individual turnkey property as well as the steps the residential real estate investor took to choose it. Most would agree, though, that 10-15% of a return on investment is pretty great.
With all of these reasons, how can any real estate investor deny that a turnkey property is a great real estate investment? Whether you’re buying your first investment property or just don’t want to deal with the hassle of a rental property, a turnkey property is one of the best real estate investment strategies.
Does this mean you can invest in any turnkey property and it will always be a complete success, making you money in real estate? Of course not. Every kind of investment property requires some good decision making on the part of the real estate investor. Here are a few tips on how to find a great turnkey property.
Research, Research, Research
Yes, a turnkey property means little work after the purchase. But you’ll notice every time we mentioned that there is no work, it’s AFTER the purchase. That’s because before you invest, you absolutely have to know what you’re getting into.
Turnkey Property Investment Company
Real estate investors should always know who they are doing business with. Research the company as well as the property management it uses. Interview the company in person and get referrals from past clients. Make sure they have the experience to manage your turnkey property from finding tenants to handling any expenses.
The Ownership Arrangement
Some turnkey property investment companies prefer to keep their name on the title of the house. This means you’ll be sharing ownership. This has the advantage of allowing the company to make decisions for the investment property without bothering the real estate investor for every small thing. However, a lot of real estate investors prefer total ownership, while setting aside an account for the property manager to use for repairs and such. Be aware of what the investment company offers and decide what matches up with your investment goals.
Investment Property Analysis
The turnkey property has to have a good value to be able to produce cash flow and give a good return on investment. The turnkey property has to withstand an investment property analysis. Visit the investment property and study the neighborhood. Repairs are done by the company, but you’ll still want to inspect the property. Check all the aspects of the home like the roof, plumbing, furnace, or anything “under the surface” that may not have been repaired.
Plan a Budget for a Turnkey Property
A turnkey property will have extra expenses that you have to plan for in your budget. The investment company will require an extra fee upfront, beyond the price of the investment property. The professional property management will need monthly fees. For any rental property, you should have a budget set aside for unexpected expenses like vacancy or damages.
Investing in real estate doesn’t always have to be a hands-on venture that takes up all of your time. A turnkey property can be the best real estate investment strategy for any real estate investor. Beginner and experienced real estate investors alike should consider adding a turnkey property or two to their real estate investment portfolio.
Still not convinced? Maybe a traditional rental property is more your speed? Or an Airbnb rental? Head on over to Mashvisor and find an investment property that suits you.