Pros and cons of turnkey properties?

[Michael Cox]

Im closing on my first property next Friday (housing hack / using the basement for a STR). I'm looking to get my second property at the end of Q2 2021, and have been exploring turnkey properties.

I’ve done the general research on the pros and cons, but was curious if any one has any experiences, stories, insights and/or lessons learned?

[Grace Wang]

Pros of turnkey: 

• - up to date with current design trends (comparable to apartment new builds)
• - easier to rent out and attracts more potential tenants
• - no work necessary AKA less time lost with rehab work

Cons of turnkey

• - may require some "breaking in". you might need to bring in contractors to fix things here & there
• - you don't know what's under the beautiful face of the property. flips can sometimes have terrible bones
• - quality of craftsmanship is subpar

My first house hack needed a ton of work. Tenants had been living there for the past 10 years, but I bought the place seeing the bare bones of the property. Knowing the problems from day 1, I was able to fix it up to my standards. The tenants have rarely had complaints of something not working since updating the place.

My second house hack was turn key, and as I've broken it in, I've discovered how shady the flip was. Ha! I've spent $15K so far on fixing the flip and i'm expecting more issues to come up as tenants move in, and as we get through all seasons of the year. I bought this place in a rush, partially because location, but also the Denver market has been crazy competitive so I didn't want to lose out on my ability to get under contract by a certain date... rushing is not recommended. This isn't to say ALL turnkey properties are like this -- just do better due diligence than me and you'll be fine.

Lessons learned: You'll spend money on the property no matter what condition you bought it in, but hey! that's the real estate game. I like to keep remembering that I'm in it for the long-haul; purchasing real estate will be very forgiving, and you're usually able to come out on top even if you slip up at times.