Many people are looking to invest in the real estate market, and for good reason. Holding investments in real estate has been known to turn solid profits, though not always in a relatively short period of time. It has been commonly used as a long-term investment, and turnkey properties can fall into this category.
What exactly are turnkey properties? Simply put, they are homes that can be purchased in a fully renovated condition, ready to rent to the next tenant without the purchase of any additional rehab materials or labor. These can be appealing to investors for many reasons, convenience being the top of the list. Without the additional work of renovating the place, these properties can be rented out immediately upon purchase by the investor, saving time and headaches.
More importantly, what immediate reasons make it such a great idea to invest in turnkey properties right now, without hesitation?
The State Of Real Estate
Awareness of the current market is paramount when it comes to making the decision to invest in a property. Currently, homes all over the country are selling for higher than the asking price. This is resulting in bidding wars that are very good for the seller.
However, for a buyer, this could spell out disaster. That being said, many potential homebuyers are sitting this one out, waiting until next year for the market to lean towards their favor. This could be a very advantageous time to invest in a turnkey property, as these future buyers need a nice, renovated place to rent in the meantime. These are responsible tenants who have already saved for down payments and are simply looking to rent until the right time comes for them to purchase.
Return On Investment
Investing in a turnkey property is absolutely cheaper than building a property out from scratch. Without all the additional costs and time associated with purchasing a fixer-upper, more can be spent on finding the proper renter.
Turnkey properties also make it much easier to secure bank financing than if you were buying for a permanent residence or as a commercial property. The readily available funds can make the buying process quick and straightforward, allowing the investor to secure the property and start making a return faster.
Once the property has been rented for a while, the investor may decide to sell the property. Not only did the renter pay the landlord’s mortgage in the meantime, but now the home can be sold for hopefully more than it was purchased. As the value of homes has been steadily increasing over the course of the past several years, profits will surely follow in the footsteps of this trend.
Instead of risking money on a quick flip, with a fairly high chance of needing more repairs than expected, going the turnkey route is a great way to secure a property with additional peace of mind. With the intention of sitting on it for a bit, allowing the home’s value to increase over time, it takes away the fast pace involved with turning a less than ideal property into something worth living in.
This day and age, there are more property management companies than ever before to choose from. As opposed to using a property management company to oversee an entire buildout or renovation, a turnkey property only requires them for ongoing management once rented. Typically, these companies charge 10% of the rental amount as their management fee.
It is easier than ever to find a quality property management company, by looking up their reviews and comparing them online. Most companies would be more than happy to assist with a turnkey property, as they have already been updated and will have newer appliances, requiring less repairs and maintenance.
Tenants themselves will be easier for the management company to handle, as there will be far less hassles involved with a completely renovated property. As a matter of fact, many times, there is already a renter in the home when it is purchased by the investor. This cuts down on the amount of time and money spent searching for and securing a new tenant.
Hiring a property manager will ultimately assist in far more than simply managing the tenants. They can also provide financial reporting and statements that will give the investor insight into revenue, expenses, and overall income.
In the end, it is each investor’s decision on what type of home they would like to put their money into. Are they looking for something to rent out quickly, and keep for a few years? Or is it better for them to attempt a quick flip? Turnkey properties, especially if purchased before they hit the market, could even fall into both categories! Timing is the essence of life, so keep those eyes peeled for new developing information in the industry, and don’t pass on a turnkey property if it presents itself right now.
Looking for turnkey rental properties for sale? At Deals In Detroit, we are here to help you find the best Detroit turnkey investment properties in the state that help you build your investment portfolio. Purchasing a property in Detroit sets you up for a successful residual income for now and years to come.