Real estate investing is among the most lucrative ventures out there, but it could require a lot of work from you before it starts becoming profitable. Fortunately, real estate investors seeking a hands-off approach have the option to purchase turnkey properties, and here are reasons why you would benefit from a turnkey real estate investment, too.
Key Highlights
- Turnkey rental properties are fully renovated, rent-ready homes often sold with tenants and property management already in place.
- These properties typically come at a premium but offer immediate cash flow and minimal initial work.
- Investors should still perform due diligence to verify renovation quality, lease agreements, and property management reliability.
- They are ideal for passive investors or out-of-state buyers looking for hands-off real estate income.
- Some turnkey real estate deals come with tenants and property managers, so you need to review your options to find which one fits your investment goals.
Immediate Cash Flow
The textbook definition of turnkey properties is newly built or fully renovated homes, meaning you can turn them into rental properties right away. This is crucial if you want to start generating rental income immediately.
Turnkey properties are your best option if you want to capitalize on current market conditions and avoid the risk of strong rental demand declining as you prepare your investment property for rent. Always watch market trends to ensure immediate rental income.
Saved Time
Real estate deals sometimes take a while to come through, and if your turnkey property is not move-in ready, then that's another delay on your hands. Turnkey investments are an attractive option to real estate investors because rent-ready homes require little to no work, apart from managing the business if you have no property manager.
If you're busy with other matters, repairing and renovating a rental property is the last thing you need. If you have a timeframe for your investment strategy, then you can expect your plan to be on track.
Fewer Responsibilities
With turnkey real estate being new or renovated, you or your property manager will find fewer issues once it's turned into a rental property. Even if you do hire property managers to oversee your rental, few to no maintenance issues will lead to better tenant satisfaction.
Day-to-day operations can already be a handful, such as marketing, rent collection, tenant screening, and more, and not having to tend to repairs and maintenance makes turnkey rental properties more efficient for property management.
Low Risk
Many investors take a lot of risks in real estate investing, even with thorough due diligence. Since they are fully renovated or new, buyers with a low risk tolerance won't have to worry about much except tenant retention and regular maintenance of the turnkey property.
That's not to say that you shouldn't research the real estate market before acquiring turnkey real estate. It just means that out of all the factors you need to consider, you can place issues that come with old buildings out of mind.
Passive Income
Turnkey investments don't need a hands-on approach, so you can hire property managers as soon as you purchase the property and not have to spend time rehabilitating or renovating the premises. With some deals, property management services are already on the table as well.
Furthermore, it allows you to diversify your property portfolio by making turnkey real estate investments in other areas, reducing market-specific risks, and protecting your overall rental income.
Are There Downsides to Turnkey Real Estate?
Just as there are with all manners of real estate investing, turnkey properties still have disadvantages you need to consider to make an informed decision.
- Turnkey properties will be more expensive compared to other listings in the property market, given that the owners placed a lot of work and money into building it or making it look new.
- Acquiring turnkey real estate does not guarantee tenant placement. Even professional property management companies cannot attract tenants if the local market dynamics are not in a property owner's favor.
- Turnkey rental properties offer a place that's in rent-ready condition, so if you want a more hands-on involvement by furnishing it yourself, you won't be able to do much, if at all. Plus, you can't guarantee the quality of the turnkey real estate investment's renovations.
- You'll have to compete with other potential investors in emerging markets, so the price of turnkey real estate may be significantly higher. Turnkey companies will charge you for the convenience and renovation costs.
- You'll have less control over your rent price. Since the property already has the furnishings and certain amenities, you'll need to take those into account. In a competitive rental market, you might need to set a higher price for maintenance and return on investment.
Turnkey Rental Property FAQs
Who should invest in turnkey properties?
- Turnkey properties are ideal for passive investors, first-time landlords, and those who want hassle-free income with minimal involvement.
Are turnkey properties more expensive than traditional rentals?
- Yes, they typically come with a premium due to the completed renovations and included services, but they also offer immediate rental income.
Do turnkey properties come with tenants?
- Often, yes. Many turnkey properties already have paying tenants, which allows for instant cash flow.
Is property management included in turnkey investments?
- Most turnkey providers offer or partner with property management services, but it’s important to confirm the details before buying.
Can I invest in turnkey properties out of state?
- Yes. Turnkey investing is popular for out-of-state investors who want to tap into high-performing rental markets without living there.
What risks are associated with turnkey rentals?
- Risks include overpaying, poor renovation quality, unreliable property management, and misleading cash flow projections. With a strategic approach and guidance from real estate professionals, you can find the right property for you.
We Can Help Your Real Estate Investment Thrive
Turnkey property investing may take a few tasks off your hands, but you still need to successfully manage your rental to generate steady income. That's where companies like Blue Line Property Management can help with our expertise and resources.
When property owners don't have the time or want to earn passive income, we make sure that the rental home is in good condition and that the tenants are happy. We aim to make the rental property as profitable as possible to maximize returns.
Call us today, and learn about the many benefits of professional property management!
