Turnkey Real Estate: What Does It Offer, And Is It Right For You?

by | BiggerPockets.com

Are you pressed for time?

Do you want to make money before you get out of bed?

How does financial freedom and living life on your terms sound?

You want to invest in real estate, but you don’t really have the time to manage your properties. It’s quite common, and while some of you will be ok with investing in stocks, a lot of you will be looking to invest in something more stable.

To many of you who don’t want to go through that hard work of managing all the details that can come with real estate, turnkey real estate investing presents a good opportunity to diversify your assets and get more cash flow right from the beginning. Typically, investing in real estate means you have to take care of your invested property, and you have to ensure all needed repairs are done each time a piece of equipment fails or there are other issues with the property. You also have to look for prospective renters. There is a lot of running around to be done after you buy an investment property.

This is where turnkey real estate comes in. A turnkey real estate company allows you to buy a property without the headaches attached with its maintenance and rentals. This simply means that while you own a property, someone else will help you buy that property, manage that property, find renters for you, decide on the rental rate, and also advise you when the time is right to sell that property. The renter for your property is already there and the property repairs are already done even before you make the final payment and close on the property.

Related: Turnkey Real Estate Investing: Can You Really Have Your Cake and Eat It Too?

How to Invest in Real Estate While Working a Full-Time Job

Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.

Click Here For Your Free eBook!

Why Invest in Turnkey Real Estate?

Investors attracted towards turnkey properties often find a lot of reasons to invest in such properties. Here are some solid reasons for investing in turnkey properties:

Ease of Investment

Investing in a property, especially when it’s located in a distant location, is not always easy. The issues that come up with finding a good team, a reliable real estate agent, a trustworthy contractor and a good property manager not only take up your time, but can also consume a substantial amount of money.

However, a turnkey real estate investment allows you to invest in a good real estate market, whether near or distant, without your in-depth involvement and the need of your physical presence at that location. Nowadays, a lot of people rely on turnkey properties to invest in out of state locations where cash flow tends to be higher. For example, a lot of investors living on the East and West Coast of the US, along with other markets across the world, approach turnkey property companies in the Midwest, as cash flows are pretty decent here.

Market Knowledge

A good turnkey company knows the heart of the market in which they’re operating. They know the local laws, the pros and cons of investing in that area, the social changes that may affect the economy and the property rates of that area.

Basically, a good turnkey company knows the ins and outs of a market, which an outsider seldom knows. But that’s not only important when you’re investing in a distant location. Even in your own backyard, if you don’t have the proper experience or a good support team, you might run into issues.

Professional Approach

A good turnkey company’s staff displays a professional attitude that can go a long way. They’ll answer your call each time you ring them to ask a question, and they’ll be prompt in carrying out the repairs of your property. They’ll be agile in finding you a tenant and signing the lease with them, and they’ll also be proactive in sending you updates about your property. On the contrary, when you invest on your own, you’re solely responsible in carrying out all these tasks.


Quick Results

Since a turnkey provider company is in the property business, they’re pretty good at getting you tenants fast. Through their different marketing approaches supported by their experience, they can attract a lot of sellers to their business. Also, their experience of many years in this business allows them to make wise decisions on your behalf. Without a turnkey provider company, you might find it difficult to find a suitable tenant without the proper network at your fingertips.

Instant Cash Flow

One of the most obvious reasons for investing in a turnkey property is the immediate cash flow that starts coming your way after you buy the property. You don’t have to wait. Your property is renovated and has a tenant in it from day one, so all you have to do is sit back, relax and collect the monthly rent.

Stable Investment

Any other form of investment, be it shares or mutual funds, is subject to a lot of market risks. Sure, you can get knowledgeable people to manage your portfolio for you, but the risk is always higher. Turnkey properties are a stable form of investment without putting a lot of hard work into investing and maintaining the property. In my opinion, bricks and mortar will always be a more stable investment than paper.

4 Tips for Those Interested in Investing in Turnkey Properties

For a busy investor, a remote investor or an investor who’s just starting out, turnkey real estate sounds like a dream investment. But still, potential investors must keep certain key points in mind before going ahead with the investment.

Perform Thorough Research

The first condition is quite obvious. Thorough research about the turnkey provider you’re going to be working with is absolutely key. These days, there are many companies that do turnkey. There are so many that it can be hard to distinguish between the good and the bad ones. Take your time to find out which ones are reputed turnkey companies that are known for delivering good results.

You can start off by narrowing down on your preferred location and then look for existing turnkey provider companies in that area. Then, simply call these companies and ask them pertinent questions about their business model and operations. Also consider the reputation and the background of the company. Make your expectations very clear with the company to avoid any issues later on.

Be Willing to Entrust Responsibility

If you are the type of investor who wants to have absolute control over your investment and be a part of every decision, you should think twice before investing in turnkey real estate. Most turnkey provider companies provide holistic services to their investor clients, be it repair work of the house or managing the tenants for the house. This often leaves very little decision making for the investor. If you like being involved in every detail of the investment process, turnkey investment is not a good option for you. I jokingly stress to our investors that if they think they know to all, then they should also do it all for themselves.

Remember to Inspect the Property

Since it’s a turnkey property, the service provider will get the repair work done before your final payment. Do not rely on the pictures of repairs that the company shows you. Either go personally and inspect the repairs or hire an building inspector to look over the property thoroughly on your behalf. Keep in mind, though, that inspectors are paid to find faults no matter how miscellaneous they might be. Consult with your trusted turnkey provider after the inspection on what really needs to be fixed and what can just be left alone.


Look for After-Sale Support

Avoid investing through turnkey investment companies who have minimal or no investor support programs once the deal closes. Apart from the property manager who handles your property, it is also the responsibility of the seller company to address the issues of that property. A good turnkey company will have policies to manage your account after you’ve bought the property. Prompt communication is key to this approach. Someone who doesn’t respond in a timely manner from the start definitely won’t respond in a timely matter later down the road.

Related: Turnkey Investing 101: What to Avoid & How to Know if It’s Right for You

So Who Should Be Investing in Turnkey Real Estate?

Thirty-five-year-old neurologist Frank says, “Turnkey investing is a much more passive form of real estate investing for busy professionals or investors who simply don’t want to put in that much work themselves, but still would like to own rental property. Turnkey investments definitely make investing easier for busy people. If you work 80+ hours per week like I do and prefer the convenience and peace of mind, you’ll find turnkey real estate a pretty good fit.”

Beyond that though, there’s another type of investor who might benefit quite a bit from turnkey. Due to its hands-off nature, turnkey investments are also good for investors who can’t find lucrative properties in their state and hence need to invest in long distance properties. These investors often have to rely on professional investment companies to manage their properties. A long distance property managed by professionals allows decent cash flow with minimum work — and, of course, minimal travel.

When investing in turnkey real estate, a lot of your success will come down to the team you entrust with your hard earned funds, rather than the actual location itself.

Never forget that TEAM WORK makes the DREAM WORK.

Find the right people and you’ll be on your way.

Do you invest in turnkey real estate — and if not, would you consider it? Why or why not?

Leave a comment, and let’s talk!

About Author

Engelo Rumora

Engelo Rumora, a.k.a.”the Real Estate Dingo,” quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He runs runs Ohio Cashflow, a turnkey real estate investment company in the country (Inc 5000 2017 & 2018) and is currently in the process of launching a real estate brokerage called List’n Sell Realty. He is also known for giving houses away to people in need and his crazy videos on YouTube. His mission in life is to be remembered as someone that gave it his all and gave it all away.


  1. Colin Smith

    Great article, thanks for sharing! I would even add one more point. There are a lot of people out there who simply are too lazy to take the time educate themselves on how to analyze a deal properly and how to manage tenants properly. They know they can do well with their investments in real estate but they don’t want to take the time to do it properly. It’s these people who could also really benefit from a turn-key company.

        • Katie Rogers

          “…someone else will help you buy that property, manage that property, find renters for you, decide on the rental rate, and also advise you when the time is right to sell that property. The renter for your property is already there and the property repairs are already done even before you make the final payment and close on the property….On the contrary, when you invest on your own, you’re solely responsible in carrying out all these tasks.”

          It is kinda like self-publishing. If you self publish, you keep all the profit. If you use a publisher, you’ll be lucky to get 5-10% of the profit.

    • Marco Santarelli

      Dax — in addition to Engelo’s comment above about the area and provider, I will add:

      * the local housing market in general
      * the type of property (SFD, duplex, fourplex)
      * the rent-to-value ratio of the property

      Your returns with a turnkey property will be good if you’re in the right market and neighborhoods. The only way to increase that return is to do it yourself (i.e. acquisition, rehab, etc.).

      Continued success!

        • Marco Santarelli

          Katie – that’s not a simple question to answer without providing more information. It’s like asking, “what is the typical color of a new car?”

          If we talk in specifics then it gets better answers. For example:

          A single-family 3-bedroom property in Kansas City in an “A” neighborhood, and great school district going for $120,000 will generate a cap rate around 9.0% and a cash-on-cash return around 13% (with 20% down).

          This is an actual example property from our website BTW.

        • Katie Rogers

          Okay, but in your example, is that 13% cash on cash return gross, or is it what the owner actually gets? I think people want specific examples of the difference in return from doing the work themselves, or going with a turnkey company?

        • Marco Santarelli

          That’s a specific example. By definition, the cash-on-cash return is your total cash invested divided by the annual NET cash-flow.

          Therefore it is the *actual return* you get as the investor/owner.

          There are other metrics too, but this is one of my favorite along with the Total ROI. I’ve written several articles on this subject (on my website) as well as a podcast (episode #005).

        • Katie Rogers

          So are you saying that in your Kansas City example, the actual owner would clear 13% AFTER the turnkey company takes its cut? Is that an annualized return on a rental? A property manager usually charges 10%. If the owner does not hire a property manager, are you saying the owner’s return would likely be 23%, year in and year out?

          Here is another question. Why would a turnkey company bother? Why not just keep these well-performing assets for yourself? The investment seminars tell people to aim for a 20% return when they do all the work themselves, and often they cannot get nearly that. Investor partners receiving preferred interest usually get around 8-10%.

          Asking for a typical return is not such a hard question. You must have some idea of a typical return. You can probably provide the range of cap rates within your offerings. In fact, when running the numbers, investors will turn down properties that do not meet some minimum standard of return. As a turn key company, you are probably choosing the properties you offer in a similar way.

          I looked at the sold property at http://www.ohiocashflow.com/#!product/prd13/3901575031/401-mayfair-blvd.%2C-toledo%2C-oh. The kitchen seems to have no stove, refrigerator, washing machine or dryer. Is that common for rentals in that area? (P.S. There is a math error. 8400 – (1000 +500 + 840) = 6060 annual cash flow before allowing for vacancies and repairs, not 6300, probably the actual annual cash flow is closer to $5220, so probably the cap rate is closer to 11.6%, maybe less which is still fine.)

          What is a turnkey company really? Does a turn key company flip a house, and then stick around to manage it as a rental for the new owner? I am just trying to understand.

        • Katie Rogers

          Okay, I will study a little more. Well now at least I can go to the right website. Norada was not mentioned in this article or any of the comments until now, so I was at the wrong website.

        • Katie Rogers

          Alrighty, I looked at a sampling of your listings. The advertised cap rate is not fully net as you claim. It accounts only for property tax, insurance and management. It does not account for ” vacancy allowance, maintenance factor, debt service, etc.”

          Of course, you take a cut somewhere. We do not need to quibble about words. It seems you buy distressed properties , rehab them and then sell them at a profit to your clients. At this point you are a flipper. Then you manage that same property for the client who bought it for 10% of the rents. Do I have it right?

          I actually cannot play your podcasts on my Linux system, and there does not seem to be a way for me to download them from your site as MP3s or MP4s.

        • Marco Santarelli

          1. Please click the “Orange Button” below the photos. That will give you the complete and detailed cash-flow breakdown. (What you’re reading are the quick hard numbers.)

          2. Partially — we make a small profit after the property, This comes from the increased value front he renovations done to the property (i.e. distressed to like-new condition). That’s probably what you thought, but to make sure we’re on the same page, we don’t charge you a fee or sent you a bill.

          We don’t manage the properties ourselves — we work with 2 to 3 professional full-service property management companies in each market. The manage the properties and we introduce you to them.

          3. I will add the mp3 download link for you! 🙂

          Hope that helps. All questions are welcome.

        • Ben Leybovich

          Hah – you’re putting these guys feet to the water, Katie…tough customer 🙂

          SInce you’re asking and nobody is really answering:

          If you start out with an annualized 12% Pro-Forma CCR, as is often advertised on a property in Ohio, Indiana, Michigan, Tennessee, etc. which can be bought for $50,000, then discount it for CapEx and economic vacancy, which these Pro Forams are typically do not do, you will realize that the result is at best 8% annualized CCR…

          Further, if you add a component time and movement of capital and underwrite the opportunity to IRR, this 8% CCR looks like at most 6% IRR.

          And if you are really honest with yourself, and discount the IRR to NPV using only inflationary 2% discount, then you realize that what started out looking like 12% CCR is in reality (adjusted to today’s buying power of money) a 4% return…

          Now – you need to understand that the reason for this is two-fold:

          1. The TK operator is taking your equity off the table. Equity drives returns… Which, I might add they deserve, since they did all of the prospecting and work…if you see it their way…
          2. Management in the SFR segment is too expensive and unsustainable, and it compresses your returns even further.

          Hopefully this paints somewhat of a picture for you, Katie. In the end, if you are looking to store money, TK will break you even and perhaps give you a few percentage points. If you are looking to build, there are no short-cuts to becoming an investor 🙂

        • Dax Middlebrooks

          Katie: Thanks for continuing to drive this discussion to closure.

          Ben: Thanks for the answer we were looking for. I fully expected the return on TK to be lower, I just wanted a ballpark of how much lower that would be.

  2. jeff berlin

    thanks angelo. I just watched a webcast of you on flip nerd. You have a great attitude – thanks so much for the link. i’m off to read it now. Enjoy Ohio. I used to live there (in Columbus or as they like to call it C-bus). I’m now in LA, the weather is much better here, but I have to say Ohio has its merits.

    • Engelo Rumora

      Thanks Jeff,

      I hope you enjoyed my interview on Flip Nerd. I have done quite a few interview over the years and always try to deliver as much content as possible without selling lol

      Have a great day.

      ps. Columbus is my favorite city in Ohio 🙂

  3. jeff berlin

    Quick question to Engelo. Sorry for the misspell in the last reply. Is there such a thing as turnkey in multi-family investment properites . Im looking for apartment buildings out of state. are most turnkey’s for single family homes? thanks

    • Engelo Rumora

      Thanks Jeff,

      I believe there are but I don’t know of a specific company that offers turnkey solely for multifamily properties.

      *Cough Cough* This is not a pitch lol

      Our company is slowly looking at doing more commercial deals that will be offered as turnkey but the property management will be outsourced to a professional PM company that just looks after commercial assets.

      You will find many other turnkey companies offering duplexes, triplex and even bigger multifamily complexes but they also offer SFH.

      Thanks and have a great day

  4. jeff berlin

    thanks so much for the info. if you know of any commercial deals – or if you happen to run across something – keep me in mind. Very interested in getting a deal with some good cash flow. can’t find in here in LA. if you saw the last “deal” here I just received for a property in SilverLake – just outside of the downtown area that’s “not listed in MLS/loopnet” you would die. its offered at a published 3.4% cap rate. you run the numbers and it was really about a 2.2 with a -600/month cashflow. amazing.

    • Engelo Rumora

      No problem at all.

      Yep, very similar situation back home in Australia.

      Folks get excited about 5% cap rates lol

      I personally wouldn’t get out of bed for anything less than 15% lol

      Also, thanks for your private message.

      Have a great day.

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