There are a number of opportunities for investment in the real estate market. Many people are discovering that owning properties is a much better investment than investing in stocks. Getting started in real estate investment can be a great option for people looking to start investing.
However, there are many ways to invest in properties, making it a bit confusing for those who are new to it. Each person’s opportunities for investing will depend on aspects such as their capital, location, capabilities, and their interests. One of the best ways to invest in the real estate market is with turnkey real estate investing.
What is Turnkey Real Estate Investing?
Turnkey real estate is a means of investment that allows for direct ownership of a real estate asset that is move-in ready, which provides monthly passive income and long-term appreciation. Investing in turnkey real estate is a great option for those who are new to investing in rental properties, as well as for more experienced investors that are looking for simple properties to buy quickly that will help them grow their portfolio.
As a move-in-ready investment, turnkey real estate properties are often already occupied by tenants at the time of purchase. These tend to be long-term investment opportunities, so buyers looking for a fast, short-term, highly profitable investment might steer clear of turnkey investments.
Buying a Turnkey Rental Property
Before investing in a turnkey real estate property, you will want to understand the basics of turnkey investing and your potential level of investment. As an investment, real estate is less subject to long-term market violability than liquid assets, while holding periods are typically longer. To ensure that your investment will provide the passive income that you are hoping for, you need to calculate the property’s income potential through possible holding scenarios and consider how recurring monthly net cash flow and slow appreciation will affect the property’s value.
Visit The Property
Even though the property you’re purchasing is turnkey, it’s important to take the time to get to know it. Determining whether or not the property is a good value is imperative. Oftentimes new investors will assume that any turnkey property is going to be high-quality and a great investment, merely because the property is move-in ready. However, that is not always the case. Before purchasing any property, you need to take the time to do your due diligence, visiting the property in person and deciding on its value. Check out the home itself, the neighborhood the property is in, and have a professional property inspection done to gain awareness of the overall condition.
Financing Your Turnkey Property Investment
Investing in a turnkey property doesn’t have to mean you’re paying cash upfront. In fact, investors can finance their properties, just like regular homeowners can. When obtaining a loan for your investment property, keep in mind that the better your credit is, the better your loan will be. Your loan will depend on your unique circumstances, however, here are the most common investment loans:
● 30-year fixed
● 20-year fixed
● 15-year fixed
● 5/1 ARM
● 7/1 ARM
● 10/1 ARM
● 30-year Veterans Affairs (VA)
● 30-year Federal Housing Administration (FHA)
● 30-year fixed jumbo
● 15-year fixed jumbo
Your level of turnkey investment will depend partially on the loan you are able to receive and the amount that you are financed for. Longer loans will have lower monthly payments with higher interest, and vice versa. Choosing the best loan for your property and the unique situation is essential.
Your Level of Investment
Getting into real estate investment is a great opportunity for qualified individuals. Purchasing properties for rentals provide a steady stream of passive income and can be highly rewarding. Many new investors choose to purchase turnkey rental properties, because they are easier to manage, ready for move-in, and are often already set up with renters, making the transition to new ownership simple.
Before you purchase a turnkey property, you’ll want to determine your level of investment. Do your due diligence and learn the ins and outs of the property you are considering.
Choose a loan option that best suits your needs. When you have a more realistic outlook on your abilities with your property, you’ll be ready to make a successful investment.