Would it cost me less to buy, renovate and sell then a turnkey?

Member since 2020 · 295 posts · 56 votes

if I buy, renovate and then rent or sell the property wouldn't it cost me the same to just simply buy a turnkey property and rent or sell it? I need to know please

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John UnderwoodPro Member

Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes

You almost always find a fixer upper cheaper with renovation costs than a turnkey house.

People pay a premium for turnkey.

Add a motivated seller to the mix on a fixer upper and you can really make some money.

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Brian Ploszay
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
6y
Yes, if you are experienced and local. Turn keys are often marked up.
1 Reply
JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
6y
Generally, no. The turnkey home has a profit margin built into the price. The exception might be if you have to overpay for everything in the rehab, the turnkey provider gets better pricing and the difference is their profit.
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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
You almost always find a fixer upper cheaper with renovation costs than a turnkey house.
People pay a premium for turnkey.
Add a motivated seller to the mix on a fixer upper and you can really make some money.
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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @John Underwood:
You almost always find a fixer upper cheaper with renovation costs than a turnkey house.
People pay a premium for turnkey.
Add a motivated seller to the mix on a fixer upper and you can really make some money.

okay! thanks for your mate
what do you mean by premium?

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John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
6y
Originally posted by @Jasraj Singh:
Originally posted by @John Underwood:
You almost always find a fixer upper cheaper with renovation costs than a turnkey house.
People pay a premium for turnkey.
Add a motivated seller to the mix on a fixer upper and you can really make some money.

okay! thanks for your mate
what do you mean by premium?

Premium = Top dollar

1 Reply
Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @John Underwood:
Originally posted by @Jasraj Singh:
Originally posted by @John Underwood:
You almost always find a fixer upper cheaper with renovation costs than a turnkey house.
People pay a premium for turnkey.
Add a motivated seller to the mix on a fixer upper and you can really make some money.

okay! thanks for your mate
what do you mean by premium?

Premium = Top dollar

thank you!
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Turn key companies buy well below market, renovate, and then sell for a profit plus their commissions for handling the sale.
Finding your own property and handling renovations could save you 20% or more, if you know what you're doing.
Turn key is great for people that want to invest in real estate without putting any effort/thought into it.
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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Nathan Gesner:
Turn key companies buy well below market, renovate, and then sell for a profit plus their commissions for handling the sale.
Finding your own property and handling renovations could save you 20% or more, if you know what you're doing.
Turn key is great for people that want to invest in real estate without putting any effort/thought into it.

thanks a lot for your advice!
but don't you think that the contractor, labour, plumbers, electrician etc will also cost a lot??
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Originally posted by @Jasraj Singh:
but don't you think that the contractor, labour, plumbers, electrician etc will also cost a lot??
As I said, you can save a lot IF YOU KNOW WHAT YOU ARE DOING. If you are not comfortable renovating a property, turn-key may be the better option.

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Kenneth GarrettPro Member
Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
6y
@Jasraj Singh
The concept of the BRRRR method or a flip is to buy at a discount, rehab the unit/building and force the appreciation. A turnkey has already been done and the provider is making a profit on top of it. The difference on a rental is a turnkey will generally cash flow approximately $150 a month. By taking on the effort of the rehab you potentially could cash flow $300-$500 per month with a loan on the property. It's all a strategy. If you don't have the time or you feel it will be too stressful then Turnkey is probably for you.
1 Reply
Chad Stark
Rental Property Investor · Member since 2019 · 36 posts · 29 votes
6y
I let the turnkey handle everything. I am not a project manager and I prefer to be hands off with investments. Especially if you are out of state, I don't see that going over well. My turnkey property was rehabbed, had a tenant in place and property management.
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Mike D'ArrigoPro Member
Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
6y
@Jasraj Singh that's a common misperception. Most turn key companies have economies of scale that an inexperienced individual doesn't. First of all, turn key companies buy further upstream at better prices, often times at auctions. They are not buying on the MLS. That's where the profit is built in. Secondly, the get substantial discounts on material and things like HVAC systems and roofs. They also have much better control over their labor costs by having crews that they fully employ and control. It sounds good on paper, but it is no guarantee that you can do it yourself cheaper or have any equity built in at the end. It's very risky also.
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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Kenneth Garrett:
@Jasraj Singh
The concept of the BRRRR method or a flip is to buy at a discount, rehab the unit/building and force the appreciation. A turnkey has already been done and the provider is making a profit on top of it. The difference on a rental is a turnkey will generally cash flow approximately $150 a month. By taking on the effort of the rehab you potentially could cash flow $300-$500 per month with a loan on the property. It's all a strategy. If you don't have the time or you feel it will be too stressful then Turnkey is probably for you.

Thanks for your advice brother! but I think there are some properties that need a lot of repairs and fixing up so wouldn't the price as much as a turnkey?
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Andre TaylorPro Member
Rental Property Investor · Chicago, IL · Member since 2017 · 219 posts · 180 votes
6y
You are better off buying something and doing the renovation work yourself. If you are experienced and have a team in place you can come in get a deal for really cheap , renovate it and have some nice equity in there. Plus the biggest thing is that you done the work and you know the quality that went into it. Now all turnkeys are what they seem; plus you buy those at premium pricing.
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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Chad Stark:
I let the turnkey handle everything. I am not a project manager and I prefer to be hands off with investments. Especially if you are out of state, I don't see that going over well. My turnkey property was rehabbed, had a tenant in place and property management.

Thanks for your advice. Most of the time the property I think will appreciate are in really expensive areas and then its a little difficult to find one which is affordable and which I think will appreciate.
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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Andre Taylor:
You are better off buying something and doing the renovation work yourself. If you are experienced and have a team in place you can come in get a deal for really cheap , renovate it and have some nice equity in there. Plus the biggest thing is that you done the work and you know the quality that went into it. Now all turnkeys are what they seem; plus you buy those at premium pricing.

thanks brother! but what do you mean by renovating yourself like I need some labour and painters to help?
do you mean not hiring a contractor?

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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Mike D'Arrigo:
@Jasraj Singh that's a common misperception. Most turn key companies have economies of scale that an inexperienced individual doesn't. First of all, turn key companies buy further upstream at better prices, often times at auctions. They are not buying on the MLS. That's where the profit is built in. Secondly, the get substantial discounts on material and things like HVAC systems and roofs. They also have much better control over their labor costs by having crews that they fully employ and control. It sounds good on paper, but it is no guarantee that you can do it yourself cheaper or have any equity built in at the end. It's very risky also.

right! thanks but can you tell me how do buy on the MLS?
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Andre TaylorPro Member
Rental Property Investor · Chicago, IL · Member since 2017 · 219 posts · 180 votes
6y
I mean like if you GC the project yourself.. hire the contractors and oversee the renovation or even hire a GC. I mean if you find the right deal where your purchase and Reno cost gives you a lot of meat on the bone that is a win. As lot of the other investors said buying turnkey you are buying premium and there won't be that much equity in them.
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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Andre Taylor:
I mean like if you GC the project yourself.. hire the contractors and oversee the renovation or even hire a GC. I mean if you find the right deal where your purchase and Reno cost gives you a lot of meat on the bone that is a win. As lot of the other investors said buying turnkey you are buying premium and there won't be that much equity in them.

right! so you mean buying a property which doesn't need much renovation and then add value right?
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Andre TaylorPro Member
Rental Property Investor · Chicago, IL · Member since 2017 · 219 posts · 180 votes
6y
Exactly!! For instance a bought a 4 Plex... for $80K. I knew the ARV was anywhere between $220k-$230K. I put $90k into it and got appraised for $230k so I was able to pull my money back out to pay the rehab loan off and now I have an updated property that I can get premium rent for plus I still have equity into it if I ever choose to sell it.
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Jasraj Singh
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Member since 2020 · 295 posts · 56 votes
6y
Originally posted by @Andre Taylor:
Exactly!! For instance a bought a 4 Plex... for $80K. I knew the ARV was anywhere between $220k-$230K. I put $90k into it and got appraised for $230k so I was able to pull my money back out to pay the rehab loan off and now I have an updated property that I can get premium rent for plus I still have equity into it if I ever choose to sell it.

brilliant! loved it! that's a lot of value added! can you tell me how do you pull out the equity from a house from a refinance?
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Andre TaylorPro Member
Rental Property Investor · Chicago, IL · Member since 2017 · 219 posts · 180 votes
6y
@Jasraj Singh go to your lender and tell them you want to do a Cash out Refinance and its better to go through a local bank
1 Reply
Ian WalshBusiness Member
Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
6y
Usually the deal on a TK property will be less profitable because the TK company already built in their margin. You added an extra hand to the pot.
1 Reply
Account Closed
Contractor · San Diego, CA · Member since 2018 · 432 posts · 221 votes
6y
@Jasraj Singh there’s no answer for this, because you’re not being specific, which shows you probably need to take action, buy something run down, try to fix it up and see if you lose your shirt on it. Sometimes you have to lose your shirt to move forward with educated decisions, otherwise your relying on other’s experience, rather than your own feel for how long it will take you to fix and flip.
3 Reply
Matt M.
Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
6y
If you buy right, and rehab yourself, you’ll be way ahead of the game. Turnkeys are usually at market value or more. Why pay more?!
Sure it’s easy, and you’ll have zero equity and little to no cash flow, if that’s what you are looking for. To me, that’s not an investment.
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