​The Definitive Guide to Investing in a Turnkey Property

I’m just going to say this upfront: turnkey investing is the easiest way to invest in real estate. Using this strategy, you have an experienced professional who’s by your side every step of the way, from finding the property that’s perfect for you to closing the deal to long-term management.

Truly, it doesn’t get any simpler than this.

BUT...there are still actions that you, as the investor, must take to ensure that the process runs smoothly and to your satisfaction. Because even though you’ve got a knowledgeable pro on your team, you’re still the one in charge, and it’s your cash that’s on the line.

Use the guide below to get started in turnkey investing the RIGHT way.

1. Decide which market you want to buy in. The first step is to review several housing markets to see which one you’d like to invest in. A lot of new investors think they have to invest in the market they live in, and this simply isn’t true. In fact, that’s one of the best things about turnkey: it’s super easy to invest out-of-state! Get online and see which markets are performing best, have a good inventory of properties, and are projected for continued growth.
2. Find a reputable turnkey company to work with in your chosen market. This step is really important. I’ll be the first to admit that there are some shady turnkey providers out there, so it’s imperative that you partner with an experienced and reputable company who isn’t going to screw you over. Ask questions, get references, and do some research on the company you’re considering before signing any paperwork.
3. Secure financing. Either before or after you hook up with a turnkey provider, you’re going to need to get your financing in order. If you’re paying cash, you can just skip to the next step. However, if you need to borrow to buy the property, you’ll need to find a lender and get pre-approved.
4. With your turnkey provider, research properties to find the one that’s right for you. After talking with you about your needs and investment goals, your provider should be able to narrow down their available inventory to a few properties that they think are right for you. Review these properties to see if they meet your expectations, and if you’re able to, visit them in person with the turnkey provider to really get a feel for the investment.
5. Get your chosen property under contract. Once you’ve selected a property to buy, get it under contract so you can get the ball rolling on the purchase process. Remember, this part can take awhile, so be patient while you, the turnkey provider, and the underwriters move through the process.
6. Review property management terms. This is also a good time to go over your plans for property management. Many turnkey providers offer in-house management, which is really convenient for most investors. Discuss what’s covered in the agreement and what isn’t, as well as what their fees are. If you’re working with a provider who doesn’t offer property management, find a trustworthy company or individual to do the job for you.
7. Order the inspection and appraisal. It’s always a good idea to get an independent inspection and appraisal so you can be certain there are no underlying or “invisible” issues. If the property is still being rehabbed, wait to order the inspection until the work is complete.
8. Review tenant selection. With turnkey, many properties are already tenanted, which is great because that means you can start making money on the investment right away. Provided you’re working with a good turnkey group, the tenants have already been thoroughly screened as well, which is another huge plus. Go over the lease to familiarize yourself with the terms and ask any questions you have.
9. Close on the property. If the inspection and appraisal check out, it’s time to close! By this point, most of the necessary paperwork should be in the hands of the underwriters, title company, and anyone else involved in the closing. Your job now is to sign everything so you can take ownership of the property.
10. Enjoy that cashflow! Congrats! You’re now an official investor! One of the beautiful things about turnkey is that you can immediately begin to see cashflow, so kick back and enjoy it! Just don’t kick back too far...there’s still work to be done and decisions to be made throughout your ownership of the property, and it’s critical that you stay on top of things so you can continue with that sweet, sweet cashflow.