Turnkey for First Rental Investment?

[Jeremy Baker]

So, I guess this isn't going to be our first investment since we have a vacation rental property in Maui, but this will be our first buy/ hold / rent property. We've been looking locally here in the Denver metro and quickly found that this is not the best market when it comes to price/ rent ratios.

I've been reading up on some of the forum posts and BP articles about turnkey rental properties. We've got friends/ family in Dallas, Austin, KC and Atlanta so we have already started asking them and their real estate sources to get a feel for those areas. We are real familiar w/ Atlanta since we lived there for 5 yrs before moving to Denver.

So as much as we would like to stay here in Denver, would an out of state turnkey be a wise move for a first investment? The more and more we read up on turnkeys the more we like these options. Thanks in advance for any input and advice!

[Jon Holdman]

Turnkeys are, in theory, fully fixed up properties that are ready to rent. Often with tenants and management in place.

Do your own due diligence. Verify everything turnkey seller tells.

I've looked at quite a few of these. While there may be acceptable deals out there many are overpriced, with overly optimisitic rent projections, and a shoddy rehab job. After the one year rent guarantee runs out the buyer, almost always distant, discovers they have bought a property at an above retail price that needs continual maintenance and doesn't rent for anywhere near what the seller claimed.

At best you'll give up some of your profit in exchange for not having to do any work. At worst you'll take a beating. Get on a plane or in the car and go see the property. Drive the area. Do your own research. Forget about what properties are worth in your own area and learn values where the property really is.