What are the benefits of investing in turnkey properties?

Question

Recently, I have been getting calls from investors asking the same question over and over, "What are the benefits of investing in turnkey properties?"

So, I thought I would create a post for all to see!!

Investing in turnkey properties has become a viable alternative method for property investing especially when you have limited time and capital to spend. One of the things that scare some people away from real estate investing is the time commitment. A lot of people feel that owning investment property is like having a second full-time job but it doesn't have to be that way. There are some turnkey real estate investment firms out there that offer a 100% passive solution for real estate investors.

The benefits of turnkey properties are numerous, especially when you invest within emerging markets. These turnkey properties already reside in strong neighborhoods, so you immediately have a positive property investment in place.

Turnkey properties can save you considerable time and money. Here are some of the benefits of investing in turnkey properties.

1.) Economy of Scale Pricing:

When researching turnkey properties, you'll find out that many turnkey real estate investment firms are very skilled in creating an economy of scale pricing. These savvy companies keep prices lower because they're adept at making a profit on the properties they buy. Because they also have multiple income streams coming in from the properties they invest in, they reduce the amount of expenses they have in their investments. Also, when you invest in turnkey properties with a strong turnkey real estate investment firm, you can often procure a more desirable property within your budget than you would have if you went out on your own.

2.) Don't do-it-yourself:

One investment burden you may be able to alleviate with a turnkey property if you find the right investment firm is renovations. Some of the companies who provide turnkey opportunities purchase the property and renovate it up front, which saves you as the investor from having to find renovation contractors or do the work yourself. Some companies also have a standardized system in place and will automatically make renovations such as changing the carpet to hardwood or having a standard paint color throughout the property. This ultimately cuts down on maintenance repair issues from the start and turn-over costs in the long run.

3.) Help is available:

As mentioned before, there are smart and savvy turnkey real estate investment firms out there that can help you invest in turnkey properties. With their diverse industry knowledge, they're already aware of emerging markets and the best properties. They can even key you in on ideal economic destinations you may not have considered, such as Northeast Ohio.

4.) Making your investment a success:

When you invest in turnkey properties, you're not the only one banking on its probability. The turnkey real estate investment firm you work with also wants to see you succeed. Your success is their continued success, so they'll always be there to help you with advice and guidance.

5.) Instant cash-flow:

Another benefit of a turnkey property is the instant rental cash flow it creates. If you work with a 100% turnkey real estate investment firm they, more often than not, already have a tenant in place before you even purchase the property and it is cash-flowing from day one.

6.) In-house Property Management:

Besides placing and finding tenants, a 100% turnkey real estate investment firm will offer and assist with property management. This is huge for some investors because property management makes or breaks the investment. Many investors want property managers with boots on the ground and who have a personal interest in the property and area. This also allows you to purchase out of state, which is another huge benefit of turnkey properties. Plus, being able to purchase out of state can be an easy and effective way to diversify your portfolio.

When you acquire turnkey properties for a steady source of income, you're systematically building a diversified portfolio that harnesses the benefits of income-producing properties. Financial independence originates with a long-term view, a plan for diversification and a goal that some investments must offer sustaining cash flow from day one.

***Please note: not all turnkey real estate investment firms offer all of the services discussed above and that is why the most important thing when looking into turnkey properties is the transparency of the real estate investment firm or property manager. There are so many providers and management companies out there today that doing your due-diligence on them is just as important, if not more important, than doing due-diligence on the property/investment.

If I missed any of the benefits please feel free to add to this. Also, I would love to hear everyone's thoughts, do you agree, disagree, hate it, love it, etc....

John Barr · Answer

@Matthew FritzI agree with all points that you make here in this post. They key is to do your research on the reputation of the turnkey provider. You need to make sure that you do get GREAT property management. Because like you said that alone can make or break the investment.I was just in three properties today that we are looking to make offers on and the seller lives in California and the properties are in Texas. She said that all of the properties have been recently painted and new flooring installed. The only problem is that the Property manager neglected to tell her that the foundations were in need of repair in all three of the properties. The seller basically wasted the money for the flooring and paint because we are going to have to redo them if we purcahse the houses.

Sue G. · Answer

James Wachob, Memphis Investment Properties did the rehab. I did not like the house when it was done. It did not look like a house I would rent. I asked to back out. Jason Hartman's Market specialist, Oliver stepped in. He said it was an excellent rehab and it would be a great rental. Of coarse he has pushed Memphis day one. According to him, it is the easiest market for beginners. Now that I have a house no one wants to live in, he just shrugs and says, "people are unpredictable". It will be four months in Feb.I am paying out of pocket every month for this so called "investment". What a Great money making strategy.

Tom Ott · Answer

That seems odd to me. Didn't they renovate it PRIOR to you investing in it? True Turnkey companies should even close until there is a tenant! Closing on a vacant property and then sitting and waiting is not really a Turnkey investment. A Turnkey investment should be cash flowing from day one, that is what makes it a Turnkey.Best of luck to you in the future with your investments!

Sue G. · Answer

I am relatively new to the turn key market.I currently own two tk homes; one in Jackson Miss and one in Memphis. I bought the Memphis home 3 months ago and it is still not renting. That one has been a disappointment thus far, mainly because it is costing me $, and putting me behind now as far as buying more rental properties. Not what I intended.I bought both homes threw Jason Hartman's co, who I give high marks. He has integrity and only does business with like minded people. I would suggest going and looking at the property before you buy it. I wish I had done that with the Memphis home. There were NO pictures when the property was listed. That was my first clue and my biggest mistake. I looked it up on Google Street view and it looked like a good home and a decent looking area. it took me several weeks to get pictures of the home and when I did, I could see it had been destroyed by the last tenants. They did a full rehab and and according to Jason Hartman's strategist, Oliver, it was a great rehab. Despite the great rehab, the property sat for 5 weeks with no renters. So now I am on the section 8 route. I am patiently waiting for the Memphis Housing Authority to do their inspection of the property so they can put a section 8 tenant in there. According to the property management, the Memphis Housing Authority does not do anything fast and the process could take months.