How would you like to sell your cow AND drink its milk? There are many people out there who love the idea of being able to live where they choose while owning a rental property in a desired location that’s profitable. Oh, I forgot to mention said property would be fixed up, have a property manager, AND good tenants that don’t plan on leaving any time soon. Sounds pretty great huh? Well this exact scenario has become a lot more attainable thanks to turnkey investment opportunities.
The flip side of fixer-uppers are the turnkey investments. They call it turnkey because they turn the key over to you at closing and the property is up, running, and has a vetted tenant in place. Generally, they also provide a property management company to operate the property.
“Turnkey” investment business’ have been popping up more and more recently. Companies are finding fixer uppers, rehabbing it, renting it, and selling it to you with a management agreement in place. There is a premium for these kinds of properties but if you can find one where you have some equity in off the bat as well as cash flow, it could be worth looking at.
Value
I want to circle back to what multiple SUCCESSFUL real estate investors have told me about investing in real estate. You MUST bring value to every deal you decide to take on. This could be as simple as kicking out bad tenants and bringing in good ones. Or a bit more demanding like fixing up the property, managing the renovation budget effectively, and selling/renting it after the remodel. This is not what a turnkey investment is.
You are paying a premium for this product. You are also relying on someone else’s work and standards of rehabbing. However, do keep in mind that they are wanting to manage it and no one wants to manage a product that could fall apart due to shitty workmanship.
With that said, it is crucial to be as educated as possible before investing in such a property. You want to make sure the turnkey investment company will maintain a good line of communication with you, especially considering you are putting your hard-earned money into a property you most likely do no live close to. It is important you understand exactly what you are paying for. While most turnkey investments are exactly that, turn the key over and its ready, you might want to make sure the renovation and rehabbing is completed prior to your ownership.
Education
Speaking of being educated, the best possible reason for a first-time investor to get involved with turn key investments is exactly that, education. People spend money on mentors and coaches or spend years with podcasts and classes. Buying a turn key rental could begin to give you the education you need.
Watch how the real estate agent finds fixer uppers and how they do the renovation. Ask them where they market the property for rent and what they do to vet tenants. Dig into the monthly financials the property manager sends you and see how and where the money is going.
Turnkey investing is an easy entry into single family rentals. If this is the path you want to venture down, make sure you find a reputable turn key company. Ultimately, you are investing in the company, not the product. Great communication and trust is a MUST.
Roofstock.com is a turnkey online platform that has been gaining a ton of steam. It allows investors the ability to buy a single-family property with a property manager in place ready to tenant the property. When I was going through a cold streak, investment speaking, I really looked into Roofstock.com. The prices for some of these properties combined with the monthly rental rates they suggested can be very appealing.
I ultimately decided not to engage Roofstock.com and continue with what I know. Investing in the Northern Colorado real estate market. Where I can buy, fix, and manage single family, duplexes, and larger multifamily with the skills and knowledge I have earned over the years.
Final Thoughts
Turnkey properties are just another avenue to explore if you are researching investing in real estate. There are many reasons and goals people invest and you just have decided what yours are. You could simply hate the stock market and like hard assets and have faith in the housing market. Thus, you place your hard-earned money in real estate. You could also purely believe in the market where you want to invest but don’t live. Turnkey investments could be great options if those are some of your goals. Again, if education is your purpose of investing in a turnkey property, that too is a great reason to look at this investment type.
I have never invested in a turnkey property and don’t have first hand experience with its returns. For the right person and the right reasons, turnkey property investing can be the perfect fit.
