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Updated over 8 years ago on . Most recent reply
What's wrong with turnkey?
Hello, I'm very new to BP but have been doing a lot of reading of previous posts, particularly about turnkey properties.
I live overseas, and am considering investing in a US property. From what I can tell, turnkey seem like a decent way to go for someone like me provided that I do some due diligence on the house/area, have an inspection done and appoint a good manager. But I'm wondering about some of the downsides that other posters have mentioned...
A few people have said that buying turnkey usually means buying at market value. I'm trying to figure out why this would be a bad thing. If I invested in shares instead of property, I'd be buying at market value, so why would this be different. Have I missed something?
The other point that has been made a few times is that turnkey usually doesn't offer much in the way of capital appreciation. Is that so bad if the annual yield is good? If I hold a property for 5 years with no capital appreciation but it's been cash flow positive for that time, isn't that OK?
Thanks!
Most Popular Reply
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And why would buying a property at market value not be a good investment? When you buy a stock you buy at market value and look at annual returns inclusive of dividends and long term appreciation. For turn key real estate, the different components of return - cash flow, tax benefit, debt paydown and long term appreciation still hold true. The going in with equity part does not apply because someone has done the hard work in getting it to a shape where you can buy. I do not see this necessarily as a bad thing.