It’s 2021 and the real estate business is booming. If you’ve searched around, either online or in person, for a means to rent homes or apartments out to others, you’ve probably come across the idea of the “turnkey property.” Turnkey properties are those properties that are ready to be rented out the moment you sign the lease.
The only remaining step to move in is to “turn the key” and enter into the property. These properties have sparked debate in the real estate community and have a significant number of pros and cons. If you’re thinking about buying a turnkey property to rent out, consider these few points before finalizing your decision.
Turnkey Pros
The nicest thing about turnkey properties is that they’ll be in move-in or rent-ready condition when you sign for them. This means that renovations and money poured into fixing the home or apartment should minimal, and your tenants should be ready to move in soon.
The process of finding and signing a tenant is usually much easier for turnkey properties because of the condition of the property. In addition, it could be several years to a decade before you need to make any costly repairs or renovations, especially if you do your due diligence and ensure everything is in proper working order before you acquire your property.
Turnkey Cons
Not everything about turnkey properties is sunny and peachy. To begin, these properties are often more expensive than traditional rental homes or apartments. This cost is offset by the minimal costs of renovations and upgrades, but it’s still a point to consider.
The higher costs of turnkey properties usually mean that you won’t be able to find any bargains for the property you find and end up buying. There are “no deals” in the world of turnkey properties because the work has been done for you. If you pride yourself on fixing up properties and want to find one which will have a huge benefit to being fixed up, a turnkey property may not be for you.
A Traditional Turnkey
There are many types of companies that will send you turnkey properties, but they’re not all created equally. However, there is a common, or traditional, process for these properties. Traditional turnkey companies will buy a home and fix up the essentials before even considering putting it on the market.
For example, they’ll upgrade the kitchen and many utility systems such as the HVAC, electrical, plumbing, flooring, and major appliances throughout the house. You can purchase these homes for about one hundred and fifty thousand dollars and rent them out for about one thousand to twelve hundred dollars per month.
Nontraditional Turnkeys
There are other companies that are similar to traditional turnkey companies, but they’ll only focus on acquisition, selling, and rehabbing the properties they acquire. They’ll rely on other, third-party companies such as Roofstock to find buyers. These houses will usually be slightly cheaper, around the one hundred-thousand-dollar range.
The buying process, through companies like Roofstock for example, is usually quite simple and streamlined. Either process works but you’ll want to do some research and learn which type of companies will work best for you. As always, the location of your purchases makes a huge difference in the appreciation and resale value of the property you choose to buy.
Should You Invest in a Turnkey?
There are many factors you should consider while deciding to invest in a turnkey or buy a more run-down rental property. If you enjoy fixing up rental properties yourself, putting in the legwork, and watching your investment mature before your eyes, you should probably stick to a more traditional rental property investment.
However, if you don’t want to put in the extra work, and want your money to work for you immediately, there’s a stronger incentive to buy an apartment that is already in working condition. There’s usually more money to be made in older and run-down properties because of the labor involved, but this is not always the case.
Location, Location, Location
Buying a turnkey property needs more consideration than just the money invested as well. The golden rule of any business is to focus on the location, and the same is true for any real estate purchase you’ll make.
The best markets for turnkey properties, if that’s the route you choose to take, will be landlord-friendly and show significant appreciation in their properties over the next several decades. The areas will also contain properties that are affordable to purchase, as an area that is too expensive may price you out. The key is to find areas that are affordable now but you believe will grow and appreciate over the next several years.
Choose Wisely
Once you’re absolutely sure you want to invest in a turnkey property and have found your ideal location, the only consideration left to make is the property you’ll be investing in. You may choose to look online at a list of turnkey properties, as Google usually has a bounty of such information readily available, but you can also choose to physically search around for properties.
Either way, you’ll want to research thoroughly, looking at ratings, feedback, reviews, and any appraisal matching. Finally, you’ll probably want to find a company that already has a tenant lined up. This way, you can start generating revenue early and often.
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.