It is called turnkey investment property because all you must do is unlock the door. A turnkey property is one that is fully renovated and ready to rent. There are generally no fixes or repairs to be made. Once your renter signs the contract, they can move in straight away. Let us take a look at some of the pros and cons of investing in turnkey property.
Pros of turnkey properties
- The property requires no or minimal repairs and is ready to rent.
- There should not be significant repair costs during the first years as the property has been recently renovated, translating to good cash flow prospect.
- The turnkey concept provides the opportunity to easily and quickly invest in areas or states far from you.
- Can help you diversify your real estate properties and weather economic ups and downs by buying properties in different markets.
- For investors who are incredibly busy, turnkey properties can save you time. There is no months-long rehab. Your property is ready to generate income.
Cons of turnkey properties
- It can be hard to find good deals that will maximize your cap rate. Someone has already rehabbed the property and seeks to capitalize on their investment.
- Either you or a management company will have to manage the property.
- Unlike flipping houses, you need to evaluate the long-term economic health of the local market since you are making a long-term investment.
- Turnkey properties can come already rented. Check to ensure they have been properly vetted.
- Many investors work with turnkey companies who handle many of the details. Make sure you trust them. A lot could go wrong.
Turnkey real estate investing is not for everyone. There are inherent risks, including working with a turnkey company. But there is also a lot to gain. If all turns out splendidly, you could be poised to make solid passive income without doing too much work.