Discussion about Turnkey Providers and Benefit of Using One
Partnering with a turnkey property provider is an excellent option for investors seeking passive income or minimal involvement with rental properties while reaping the benefits of cash flow. Key factors for a successful turnkey property experience include:
- Understanding what qualifies as a turnkey property investment,
- Properly vetting your partner options
- Locating properties in markets with great opportunities
What is a turnkey property?
A turnkey property is essentially a property that is rental-ready the day it is purchased. Some people define “turnkey” as a house that merely needs no repairs and is ready to rent. More experienced turnkey property providers operate under higher standards: renovating plumbing, roofing, HVAC, foundations and electrical systems as needed, provide screening and tenant placement, and TEAMING with a reputable property management company, in order to consider it to be a “turnkey property.”
Why is turnkey properties an attractive investment path?
For a real estate investor, buying a turnkey property implies less personal involvement in day-to-day operations. Instead, turnkey companies manage what the investor would otherwise have to do on his/her own. The hands-off nature of turnkey properties is what makes turnkey properties an attractive option when making long-distance investments decisions.
Upfront vetting of your partner options carefully avoids chaos later
Caution is emphasized when a turnkey investment opportunity appears to produce cash flow with little to no effort on the part of the turnkey property provider. Conducting due diligence around your choice of partners and turnkey properties will help investors avoid risky and potentially devastating outcomes.
A successful turnkey property partner will approach all transactions with the mindset of a professional investor. Great effort is exerted to identify the investing profile of all clients. Recommendations are made by thoroughly researching local markets and setting realistic goals about the risks and returns involved with each and every investment opportunity. The same degree of attention is given to teaming with a reputable property management company that will service the property, reporting, etc., going forward. When searching for a turnkey property company, look for an experienced team that has a solid track record, and that has dealt with and resolved problems that existing investors have encountered. When you conduct a thorough investigation of your options and settle on a reputable partner you can have more confidence they are familiar with the local market and will sell properties at a fair market value.
If you are new to turnkey property investments, it is important to understand the biggest tradeoff lies in the premiums that come with its no-fuss nature: fees that make purchase prices higher and calculated returns lower than investing in a normal property. These may take the form of commissions on purchasing or selling the home, property management fees, percentage deductions from monthly rental income, and fees to search for, screen, and place tenants in the property. These expenses may seem discouraging, but as far as turnkey properties go, investing in a good turnkey property partner and property management team is almost as important as investing in the property itself.
Partner with an experienced, trustworthy investor will help you build your portfolio.
Turnkey property investments are popular and can be both profitable and timesaving, but only when the investor has done his/her part of the work: by becoming familiar with local markets, partnering with a credible turnkey company, and setting realistic expectations and goals. The right partner will help you identify your investment profile and locate properties that support your objectives.
Resources for additional information about turnkey properties: