When you start thinking of investing in real estate, two scenarios come to mind. One is property flipping, or buying a home in need of repair and updating, doing the work, and putting the house back on the market as soon as possible. While it’s possible to end up with a great return by flipping, it’s also risky, especially for new investors who can easily get in over their heads in no time.
The other type of real estate investment that you might think of is to purchase a home with the intention of holding onto it for a long period of time and establish it as a rental property.
Traditionally, these property owners have managed these rentals themselves, spending weekends making repairs or weekdays interviewing potential tenants. If you enjoy this hands-on approach and have the skills to be successful, you can make it work quite well. However, more and more rental property owners are purchasing turnkey rental properties in order to minimize the time-consuming chores of rental management.
What Is a Turnkey Rental Property?
The term “turnkey” comes from the idea that the property is ready to rent the moment your purchase is complete. All you have to do is put the key in the lock and turn it. A more detailed definition includes the fact that a turnkey property is ready because it has been rehabbed and refurbished with such items as new flooring, roof, or furnace, along with some stylish updates, such as countertops.
More often than not, turnkey rental properties are marketed by property management companies with experience in this particular niche of the real estate market. They buy up properties in good areas for rentals, get them in good shape, and find tenants, so there is little left for a new investor to deal with besides signing the papers. The management company can continue to maintain your property for you, using their experience and expertise to minimize the headaches of rental property ownership.
Reasons to Invest in a Turnkey Property
Every investor will have their own set of reasons why this type of investment works, but there are five basic reasons common to most experiences.
1.Purchasing a turnkey rental property from a company with a good reputation makes the process less confusing and stressful. While it is advisable for you to do some research on rentals in your target area, working with an experienced company will minimized the chances you’ll buy the wrong property for your goals.
2.A newly-purchased turnkey property will often provide cash flow from sitting tenants the moment the purchase is complete. If the home is vacant, the management company will likely be able to find new quality tenants more quickly than you could on your own.
3.Working with a turnkey rental property company allows you to purchase a property in a city where you don’t live with confidence, knowing it is being maintained.
4.Turnkey properties tend to provide a good return on your investment, with many owners getting a return of 10 to 15 percent.
5.Buying a turnkey property is a great way to begin investing in real estate. You’ll have the guidance of experienced professionals as you learn the ups and downs of the business.
Turnkey rental property ownership is growing in popularity for investors of all ages. It’s not right for everyone, but it is an excellent way to explore the real estate rental business.