5 Ways To Protect Yourself from Dangerous Turnkey Rental Property Comp

In today’s society, there are sharks in just about every industry. Regardless of what business you’re in or what you’re trying to accomplish, you must lookout for malicious people who are just out for their own profit.

The real estate industry is no different.

In fact, with so many out of state, first-time investors, the real estate investment industry has become an easy target for these distrustful companies to weasel their way in and take advantage of unsuspecting investors; especially when it comes to peddling turnkey investments.

But, they’re not all bad apples in the real estate industry. In fact, there are many fantastic turnkey investment companies that can be a great asset to an out of state investor.

So how do you avoid these dangerous turnkey rental property companies?

Here are five red flags to look for when deciding whether a company is the right fit for you or not.

1. Inexperience

When it comes to investing in turnkey properties, even at a steal of a price, you’re still going to be spending a pretty penny. So, for this reason, you’re going to want to trust the person you’re investing with. In general, you’re going to want to see a solid portfolio—you don’t want to go off verbal confirmation. An experienced company is more likely to be able to back up their words, whereas an inexperienced company is still learning—and with your investment!

2. Solidarity

Property management is a full-time job. It is more than a full-time job. It’s a 24-7, 365 job. It’s for this reason that you want to avoid hiring a one-man operation. Having a company with a fully supportive team means your concerns, property, and tenants will be well-managed quickly without anyone getting burned out or overwhelmed. It takes a village—so hire one.

3. Systems

Today’s world is filled with technology, so make sure you’re hiring a company that has a substantial amount of it. Software helps a company to manage everything from maintenance records to rental payment collection.

4. Fraud

One big thing to look for when evaluating turnkey property investment companies is whether or not they’ve been charged with fraud. A quick background check or a search with the Better Business Bureau will help you to weed out any scam artists that have made their way into the business of selling turnkey houses. Google is a great tool, as well. Add the word “reviews” to the end of the business name and you’ll find out quickly how many clients—if any—have held a grudge.

5. Over-Market Pricing

This is where a lot of out of state investors end up losing their tail end. As many investors do not even come into the area in which they are purchasing a property, less-than-honest investment companies offer their properties at an above-market rate. Many investors are caught unaware, finding themselves out-priced of the rental market. Always do your research—regardless of whether you are working with another company or not, double check their figures. Know the area’s market rate long before you begin shopping and this will help you to avoid any complications from purchasing a property at an above-market price.

While there may be some sharks lurking in the real estate investment industry pool, keep in mind that there are three-times as many reputable companies who are going to be an incredible asset to your investment portfolio. Don’t go it alone, just be cautious who you trust your money to. A little research before signing any contract will alleviate a lot of headaches in the future.