Passive investing using the turnkey approach definitely sounds enticing when you're getting started. I mean, there's no work needed to be done ("turnkey"), it's completely passive (i.e. management in place), and you just collect cash flow right? For all the reality checks that @Joe Kim pointed out, I'm glad I decided to pass on this approach a couple years ago when I first started. So much of an investor's success is determined by how you buy it. With TK, you buy at retail if not higher with some operators. Second, at that high purchase price, it really limits your exit strategy options. Most TK buyers will say that they'll just hold it long term, so they're aren't considering exit strategies. Though consider if something happens. How well can you sell that property that you overpaid for? Will it sell for a loss or is your hope to sell it to another out of state TK buyer? To me, these just don't sound like good exits.
I still think one can be successful investing out of state though. I own a couple rentals this way, but I just didn't go the TK route. I bought mine at a discount and have decent equity in mine because of the rehab we put into them. As a rental though, having good management in place is key. You give up a lot of control by relying on someone else to manage, so as long as they're trustworthy and good at what they do, you can be successful out of state IMO.
