What is a turnkey rental provider?

[Ben McMahon]

I see a fair bit of "Turnkey Rental providers". I haven't really looked into it that much, but I was wondering what that involves? My core book of business is in the shenandoah valley in VA. Servicing Winchester, Warrenton, Harrisonburg, Front Royal, etc.

I currently have a PM company, a construction crew, and a brokerage.  Sometimes we flip houses for me, and sometimes we partner with other investors. Sometimes we sell, and sometimes we turn them into rentals.  I think I am actually a turnkey provider at times even though I never really thought about it.  Can someone enlighten me?

Do the rentals I provide need to be currently owned by my company?  

Normally what happens is that someone comes to me and says they want to invest in real estate.  Than I ask them what they want to do.  Some say "flip a house"  some say, "buy rental properties".  So I help them buy a property ( or sell them mine), and walk them through the whole process of looking at the property as an investment, etc etc etc.....  I usually handle the rehab, although not always and we generally either sell it for them again, or manage it.  So what am I ?

[Todd Krzeminski]

@Ben McMahon

I have 3 turnkey rentals I own in the midwest. From what I've seen, there's a lot of variation in how different turnkeys operate. But from what you describe, you're not far off.

Typically, when an investor wants to buy a turnkey property, he/she starts by finding a market and a provider they want to work with. They may never see the property they're buying because they might live states or countries away. There's really a lot of trust that has to be built with the provider because they might not get eyes on it.

In most cases, the investor is completely hands off. The acquisition and rehab is done before it's advertised to the investors. So in that case -- yes the property is owned by the provider for that time period. The turnkey provider usually has a list of inventory available for the investors to choose from, and it's always the buy and hold model, not flips.

After purchase, Property Management may or may not be handled in house by the provider. The properties I have were not managed by the provider, but they gave me recommendations. But you might continue the relationship with the provider acting as a sort of counselor -- someone to turn to for advice when you run into issues with the house, tenants, PM, etc., and also who you return to when you're ready to buy your next.

I probably wouldn't characterize what you're doing as turnkey. It sounds like you are really tailoring your process to the needs of the investor, which certainly isn't a bad thing. Some people might call it turnkey, but it sounds like it might still be less hands-off than would qualify. In fact, what you provide might be something I'd be interested in, because it sounds like it might be a good way to transition from turnkey to doing it all myself, which is where I want to get to. When buying turnkeys, you're pretty blinded to the process.

There's a lot of demand for turnkey rentals, because there are a lot of investors (like me) that work a full time job and don't have the time to go through the process themselves.