Cleveland turnkey vs "true turnkey" investment property

[Allison Mueller]

I see that the term "turnkey" is being widely used these days by seller and agents alike in their marketing.  So I thought I'd take some time to point of the difference between "turnkey" and what we are now having to call "true turnkey"...

Through my discussion with many of my fellow BP investors, I realize that when online research is being conducted it is extremely difficult to decipher what TRULY makes an investment property "turnkey".  Unfortunately these findings are often never realized until the surprise expenses pile on, or once an inspection has completed and costs already incurred.

*There is a major difference between a rent ready property and a "true" turnkey property.  Cosmetically a property may have new paint and flooring, but we are talking Cleveland here and many of the best investable areas are 1950-ish construction - so what's under the hood is extremely important to know!

"True" Turnkey signs to look for:

1. Plumbing - have the plumbing and plumbing lines been repaired or replaced?
2. Windows - does the property have old windows? (this is very important because tenants notice this immediately, as Cleveland winters are frigid and tenants typically pay their own utilities (heat)!  - You will want to make sure that the properties windows are either in good shape or new.
3. Flooring - has the flooring been updated with water-tight flooring?  (Cheap flooring fixes can result in hidden dangers)
4. Mechanicals - have they been updated?  Water heaters typically have a life span of 10 years and furnaces approximately 25-30 years. TRUE turnkey should make sure you have atleast 5 years left on the water heater and 10 years left on the havoc - (make sure the vac has been cleaned and certified if it is not new!)
5. Basements/Waterproofing - Cleveland properties typically have basements.  Age and condition are always important as waterproofing can be a very large maintenance ticket! - TRUE turnkey will either have waterproofed as needed, replaced or cleaned the gutters, and properly routed all water dispensing channels.  Dry-locking basement walls for unfinished basements should be standard for "true" turnkey.
6. Concrete - again many of the best price-to-rent ratios in Cleveland are found in suburbs which have POS inspections.  These typically require needed concrete repairs/replacements to be addressed - make sure the repairs were done professionally and don't look like a city repairing a pothole!!
7. Landscaping - landscaping is typically a budget expense add-on which most rental property flippers will avoid. True-turnkey will have addressed landscaping....after all, the front of the house is the first thing a potential tenant will see...and if they move into the property and the outside has not been taken care of, I would feat they would be less concerned on how they will take care of the inside!

Feel free to send me a message if you'd like to discuss more about the difference between turnkey and true-turnkey. 

Good luck to everyone!

[Tom Ott]

Originally posted by @Allison Mueller:

I see that the term "turnkey" is being widely used these days by seller and agents alike in their marketing.  So I thought I'd take some time to point of the difference between "turnkey" and what we are now having to call "true turnkey"...

Through my discussion with many of my fellow BP investors, I realize that when online research is being conducted it is extremely difficult to decipher what TRULY makes an investment property "turnkey".  Unfortunately these findings are often never realized until the surprise expenses pile on, or once an inspection has completed and costs already incurred.

*There is a major difference between a rent ready property and a "true" turnkey property.  Cosmetically a property may have new paint and flooring, but we are talking Cleveland here and many of the best investable areas are 1950-ish construction - so what's under the hood is extremely important to know!

"True" Turnkey signs to look for:

1. Plumbing - have the plumbing and plumbing lines been repaired or replaced?
2. Windows - does the property have old windows? (this is very important because tenants notice this immediately, as Cleveland winters are frigid and tenants typically pay their own utilities (heat)!  - You will want to make sure that the properties windows are either in good shape or new.
3. Flooring - has the flooring been updated with water-tight flooring?  (Cheap flooring fixes can result in hidden dangers)
4. Mechanicals - have they been updated?  Water heaters typically have a life span of 10 years and furnaces approximately 25-30 years. TRUE turnkey should make sure you have atleast 5 years left on the water heater and 10 years left on the havoc - (make sure the vac has been cleaned and certified if it is not new!)
5. Basements/Waterproofing - Cleveland properties typically have basements.  Age and condition are always important as waterproofing can be a very large maintenance ticket! - TRUE turnkey will either have waterproofed as needed, replaced or cleaned the gutters, and properly routed all water dispensing channels.  Dry-locking basement walls for unfinished basements should be standard for "true" turnkey.
6. Concrete - again many of the best price-to-rent ratios in Cleveland are found in suburbs which have POS inspections.  These typically require needed concrete repairs/replacements to be addressed - make sure the repairs were done professionally and don't look like a city repairing a pothole!!
7. Landscaping - landscaping is typically a budget expense add-on which most rental property flippers will avoid. True-turnkey will have addressed landscaping....after all, the front of the house is the first thing a potential tenant will see...and if they move into the property and the outside has not been taken care of, I would feat they would be less concerned on how they will take care of the inside!

Feel free to send me a message if you'd like to discuss more about the difference between turnkey and true-turnkey. 

Good luck to everyone!

I agree! For years I have seen people call a property a "turnkey" when all it has is a fresh coat of paint on the walls. Often times it is just a listing they have on the MLS! A property on the MLS that looks nice is not a True Turnkey.

A True Turnkey investment should, ideally, be owned by the Turnkey Provider, completely renovated by the provider, AND there should be a tenant in place at the closing with the Turnkey Provider staying on as the property manager! 

Some just throw the word around and not understand it is an investment strategy and not just an adjective. 

I always suggest people look at:

What to Ask When Working With a Turnkey Provider

and

The Best Types of Markets for Profitable Turnkey Properties

and

How to Find the Right Turnkey Real Estate Investment Company for You