Rehab vs. Turnkey

[Winston Eastman]

I'm new and interested in purchasing my first property as a long term rental in the next year. My plan is to get a conventional loan for 100k and purchase out of state. It seems like a turnkey property would make sense since I don't know if I would be able to to afford a rehab, but I have also heard it's better to do a rehab and build equity that way. Just wondering what some experienced people have to say about one or the other. 

TIA Cheers!

[Michael Smythe]

@Winston Eastman let's try to objectively (and Logically) look at this.

TURNKEY
Pros: 
1) Everything should be done, so no major repairs for near future
2) Can finance everything in one purchase loan
3) Can also buy with tenant in place

Cons:
1) Usually paying market price
2) Trusting that repairs were all done and done well, otherwise potential money pit
3) Any tenant in place may be misrepresented to make the sale

OWN REHAB
Pros: 
1) If done well, may have instant/forced equity
2) You will know exactly what repairs done and how well they were done
3) Can place your own tenant to your qualifications

Cons:
1) Rehab loans are expensive
2) Can run into rehab surprises affecting budget (watch any HGTV flip show!)
3) Finding trustworthy contractors can be VERY challenging

We've helped a lot of investors do it both ways, depending on their goals. PM us if we can help further.