Many investors don’t want to involve a middle man that takes a piece of the action. However, if you are looking for true passive income, a turnkey rental property is probably the answer to what you are looking for.
Buying a turnkey rental enables you to invest easily in any part of the country. Being able to invest anywhere means being able to invest in the most profitable locations and we all know the three rules of real estate are location, location, location.
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How Turnkey Rentals Work
As an investor, you need to understand that it’s pointless worrying about how much the other guy is profiting. The only profit you need to be concerned with is your bottom line. Yes, the turnkey company you work with will make money. What you need to be concerned about is if your turnkey investment is providing you with an acceptable return. That means carefully selecting a turnkey provider based on quality services and your profit margin.
A typical turnkey company either has an inventory of houses ready to go or will search out and help you purchase a house based on understanding your investment goals and after making sure you understand the local market. If the property requires rehabbing, the company will make all of the arrangements using their trusted contractors. Next, they find a well-qualified tenant to sign a lease and make the required deposits. Finally, they manage the property by collecting the rent and taking care of maintenance and repairs. All you do is collect the monthly rent. You may be surprised to learn that often the qualified tenant is paying the bulk of the rent with section eight vouchers.
Why Section Eight Renters Make Sense
Section eight is a program run by he U.S. Department of Housing and Urban Development (HUD) to help low-income families into affordable and safe rentals. Many landlords fear section eight tenants will trash the property. This is generally not true. Section eight tenants are qualified by government run agencies. More section eight tenants are elderly and disabled than young troublemakers.
Waiting lists for section eight vouchers are long, motivating tenants to follow the rules they agree to in writing. If they don’t follow the rules, they become disqualify from the program for life. Of course, no illegal activity is allowed and beyond that, only the people listed on the lease are allowed to live at the property. When section eight tenants violate the rules, it’s easier to remove them than it is to evict most tenants.
A huge advantage for landlords is that the section eight program pays up to 110% of the fair market rent. Also, because the government is paying most or all of the rent, your rent check will arrive on time each month. Section eight can be a good program for turnkey landlords.
Author bio: Brian Kline has been investing in real estate for more than 30 years and writing about real estate investing for seven years.