Landlording & Rental Properties

Choosing Between Turnkey & DIY Rentals? This is a MUST-Read Before You Decide!

Expertise: Flipping Houses, Landlording & Rental Properties, Personal Development, Real Estate Investing Basics
44 Articles Written
closeup of human hand with key dropping key into another person's open palm in front of a house

One thing I notice about frustrated people is they tend to look at the world in similar ways. I've often observed them seeing the world from an "all or nothing" perspective—like everything is black or white. In reality, most of the world falls somewhere along the line of a long spectrum. This is also true in real estate. Let me explain.

Billy is interested in buying rental property. Billy asks a real estate agent to show him some properties that might work for this purpose. Billy's real estate agent doesn't know much about investing but wants to help. Billy looks through the list of available properties and realizes prices are too high to make sense. Billy concludes that there are just no good deals out there and walks away bitter.

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Mary wants to invest in real estate. Mary puts the word out and finds a friend who wants to sell her their property for 65 cents on the dollar. The property needs a new roof and won't qualify for conventional financing and therefore can't be sold on the open market. Mary is excited. She calls several banks asking about a loan for residential real estate. Mary is unable to get a loan to purchase the property because the roof problem disqualifies it. Mary determines real estate is a rip off and decides to invest her money in bitcoin.

John has a crush on Sue. John tells Sue and asks if she will be his girlfriend. Sue tells John she doesn’t really know him very well and only sees him as a friend. John gets his feelings hurt, determines all girls are the same, and gives up his romantic pursuit of Sue to focus on leveling up in World of Warcraft or finding more Pokemon in Pokemon Go.

(OK, this last example wasn’t real estate, but it still applies.)

I see examples like these all the time. People make the mistake of assuming things are one way or the other.

Either the MLS will provide a deal, or there are no deals. Either the bank will give me a loan, or I just can't get one. Either Sue wants me right now, or I'll always be in the friend zone.

When you look at life in a way that only gives you two options, both extremes, you’re likely to be disappointed. Not much of life is going to work out exactly how you want it to, especially on the first try. If you want to succeed, it usually involves trying over and over and over until you find the method that works for your personality, in your market, in the current economy, for your financial situation.

Finding that perfect formula takes time!


The Real Estate Spectrum

When it comes to real estate, I’ve found it is rarely an “either/or” situation. Just like other things in your life, real estate operates on a spectrum. Finding where you fit on that spectrum will help you narrow down what type of deals you should be chasing. Narrowing down the deals you’re chasing will help you be much more efficient with your time, money, and effort. Being more efficient will lead to greater success. Finding greater success will lead to growing your wealth faster. Growing your wealth will lead to all the perks you likely entered this environment to find in the first place.

When it comes to what type of property to buy, there is a spectrum that ranges from:

  • Finding a property and doing every piece of work yourself, to
  • Buying something that someone else has already done all the work on.

On one end of the spectrum, you can expect to save the most money. If you find your own deal, you can cut out the agent’s commission or wholesaler‘s assignment fee. If you do all the rehab work yourself, you can save on paying the contractor's labor cost. If you find your own tenant and manage it yourself, you can save on paying the property manager's fees. If you find private financing, you can avoid paying closing costs. Pure work, no help, no leverage—to save money.

Related: The One Piece of Advice You NEED to Read Before Buying a Turnkey Property

On the other end of the spectrum, you have the opposite. Buying a completely turnkey property where someone else has done all the work, right down to putting a tenant inside. You don't have to use any of your own time, effort, or energy. Pure convenience—at a price.

I want to propose these are two completely opposite ways of doing things at different polar ends of a spectrum. You don’t have to think “choose number one or two.” You should be thinking more like, “Where along this spectrum works best for me?” Once you can figure that out, you’ll know where to throw your energy. Once you do that, you’ll see results start rolling in much, much faster.

I also want to point out that if you’re on an extreme end of either spectrum, you’re likely going to be very slow to build wealth.


The Cheapskate Side

When I bought my first property, I fell into the cheapskate end of the spectrum. My dad was a handyman, so I had him to do the repairs. I cleaned the carpets and the house myself. I did zero upgrades other than what was absolutely necessary. I skipped hiring a property manager to save $112 a month.

I didn't pay to have a credit check run on my tenant because it cost $45.

Now, I did take out a traditional loan, and I bought the house through a traditional real estate agent. But for the most part, I was pretty cheap. And pretty stupid. I could have worked an overtime shift, made $350, and paid someone $100 to clean the house instead of me. I just didn't think like that back then.

People who are drawn to this end of the spectrum are great at pinching pennies. It’s a commendable quality. You just need to know how to use it wisely. I’ve written a previous post where I spelled out all the dumb mistakes I made. Being so cheap was one of them.

Make no bones about it, I’m not the only one who thought this way. Many people fall into this trap. Like missing the forest for the trees, many people miss out on great opportunities because they can’t do the work themselves and haven’t learned how to hire someone else to do it.

Those on the far end of this spectrum are the ones doing their own rehab work even if they don’t have an aptitude for it, managing their own properties even if they don’t have the patience, nerves, or mouthpiece for it, and looking for their own deals because they don’t want to cut out a slice of the pie for someone else. They rarely make progress, and when they do, it is very, very slow.

They are great at saving money. They are slow to grow wealth.


The Convenient Side

On the other end of the spectrum, you have people who want to do zero work. There are many reasons why this may be so.

  • Some lack confidence they can do the job.
  • Some are uneducated and ignorant and therefore trust these matters to someone more experienced.
  • Some are timid and don’t want to risk failing, so they refuse to try.
  • Some are downright lazy and just won’t put the effort into learning something new.

Whatever the reason may be, all these people end up paying someone else to do the work, and it hurts their profit.

Those on this end of the spectrum may do a ton of "deals," but they actually learn very little. When you ask them about their business, they tend to focus on metrics like how many houses they own, what their ROI is, or what their total passive income is. When you ask specifics like how much equity they have in the properties, what their typical LTV is, how they manage their business, or how they determine which repairs to make, they likely don't have much to say.

The people on the far end of this spectrum are usually “turnkey” investors. They buy a property someone else has already done the work on, and while there always exceptions to the rule, they typically give away most of the equity to the person who did the work.

These people don’t bite off more than they can chew but don’t have much meat left on the bone when it’s put on their plate. They are great at avoiding work. They are also slow to grow wealth.

Understanding Your Options

Now, there is no “right” way to invest. There is only the way that makes the most sense for you individually. In order to determine that, you need to know where on the spectrum of “convenience versus work” scale you fall so you can know what will be the most efficient way for you to build wealth.

I’d like to take a minute to help clarify this issue. Once you understand it, you’ll be in a better situation to see things more clearly and determine what the best course of action for you will be.

(Please note, there are no absolutes in these examples. You may find great turnkey providers who sell at crazy low prices. You may find people who do all the work themselves and still lose money. My point is, in general, that’s not the way it works.)


Costco vs. the Convenience Store

I like to use the analogy of Costco versus the convenience store.

Let’s say, it’s a hot summer day. You are cruising around in your car, and the desire for an ice cold Coke overwhelms you. You want one. You need one. You’re going to get one.

Where are you going to get it? The answer to that question depends on what you value, where you are geographically, and what you have access to.

Say, for example, you are right down the street from your house. You have access to ice cold Cokes in your own fridge. You know this because you bought them at Costco and put them there last week. You value your money and always look for a deal. If that’s the case, you’re going to turn your car around, go home, and grab a Coke. It makes the most sense for someone in your situation.

Now let’s say you are 15 miles from home and don’t have any Cokes in the fridge there anyway. You have plenty of cash to spend and aren’t worried about a couple bucks. Right across the street is a 7-11. Further down the street is a Costco. You know that Cokes are cheaper at Costco because you can buy them in bulk, and they aren’t kept cold. Costco is clearly the better deal. It is not, however, nearly as convenient.

So you head to the convenience store (aptly named), buy yourself the ice cold Coke, and continue on your way.

Now, in these examples, both people did what made the most sense to them based on their personal values, proximity to the vendor, and available options. The Coke at the convenience store is likely four times as expensive as the Coke at the Costco. You are paying top dollar because you don’t have to do any of the work. If you buy the Coke at Costco, you have to walk inside the store, carry the heavy crate to the counter, take it home, wait for it to get cold, then finally drink it. That’s a lot of work and a lot of waiting, and it isn’t as practical as paying a few bucks more for a Coke that is ready and waiting for you to consume.

The better deal is clearly Costco, but the more convenient deal is absolutely the convenience store. It’s the same concept in real estate, but with much more to lose than a couple bucks.

This analogy is the best way I can think to describe how the real estate investing spectrum works. On one end of the spectrum, you have Costco buyers. These are people who spend lots of time buying a product in bulk to get the cheapest cost per unit, then rehab the property themselves, find the tenants themselves, and enjoy the finished product. This is the best way to find a good deal and the financially smarter way to invest in real estate, all things considered.

On the other end of the spectrum, you have the turnkey buyers. These are the people who don’t spend any time looking for distressed properties or negotiating terms to buy them. They only buy properties that have already been rehabbed and already have tenants in place. They pay top dollar (in general) for the convenience of purchasing an ice cold Coke they can drink right away.

row of several small wooden house models all are white but one blurred trees in background

How to Determine What Is Best for You

Now, I am NOT trying to spark a debate on if turnkey is “better” or if doing your own work is. That’s the wrong question to ask. It’s assuming you must make an “either/or” decision, and I’m here to say you don’t!

My point is to spell out just what you’re choosing when you choose a turnkey provider to invest in—and just what you’re choosing when you do all the work yourself. In addition to that, I want to encourage the majority of you to find some form of a hybrid of these two methods. If you can do so, you can find the part of the spectrum that makes the most sense for you. Once you do that, you’ll see your business take off like you never thought possible.

In my opinion, turnkey has a strong place in real estate investing. The problem is, many newbies don’t understand where that place is! I hear so many brand new people tell me they are looking for their first deal and are considering several different turnkey providers. I wonder if they realize how slow that is going to grow their wealth and how little they will learn from this method.

Related: 3 Crucial Areas to Vet When Choosing an Out-of-State Turnkey Provider

When you buy turnkey, you are paying full price for convenience—just like that 7-11 Coke. This method is perfect, and, in fact, custom tailored to the wealthy individual who is making money hands over fist and does not have the time to put into learning real estate investing. For that person, their time is better spent at work earning more money than it is in the investing arena trying to make it grow.

If I ran a multi-million-dollar hedge fund that required all my time, you can bet I would not be looking for flip opportunities or trying to buy undervalued properties. I would be looking to maximize my income, and I would pay someone else to find me something to invest in. My time is best spent earning, not investing. There would be no reason for me to learn the business of RE investing because I wouldn’t need it to build wealth. I would have a skillset that offers me that opportunity at my job.

When you hear “turnkey,” these are situations ideally suited for doctors, lawyers, investment brokers, and other high paying positions that are time-demanding and financially rewarding. If you’re hear reading BiggerPockets, odds aren’t that great you fit into that category. This is a website where the little guy can learn how to compete with the big guys. If that’s your goal, you need to learn how the business works. You need to be buying at Costco, refrigerating your own Cokes, then either selling them to others or drinking them yourself. You can’t afford to be wasting money at convenience store prices.

In addition to the very wealthy, the other investor who benefits the most from turnkey products is the person who may not make a ton of money but has acknowledged this just isn't for them, and they have zero interest in learning RE investing. If you're not excited about the stuff we talk about in the blogs, don't like listening to the podcasts, and would rather spend your time learning something else, turnkey may be for you. It makes sense for you to pay someone to get you the finished product—especially if you’re not interested in learning the business yourself.

Odds are, if you’re on, you are interested in learning this business. That’s why I’m here writing to you.

How I Determined What Is Best for Me

For me, in my investing business, I’ve found an area of the spectrum that works wonderfully. It’s the perfect combination of managing the work myself while paying others to actually perform it. I’m going to share it with you so you can get an idea what it looks like when you find your sweet spot.

I buy properties significantly below market value, through either a wholesaler or a real estate agent. This is something I’m glad to pay someone else to help me with.

I manage the projects myself through relationships I have built with different contractors and handymen. This is something I’m glad to pay them to help me with.

I add value to the properties through creative methods like adding new bedrooms, adding bathrooms, adding square footage, removing walls, or doing upgrades for prices less than the value they add to the house. I’m able to do this because I’ve put in a lot of work to find contractors that provide extremely good prices because of the volume of work I bring them and the value I add to their business.

I use property managers to find me tenants. In addition to that, I use them as advisers regarding which areas to buy in, which upgrades to make, which contractors to get bids from, and how to execute an eviction should I need to. I also use them to find handymen for repairs and to spread the word I’m looking to buy more properties. This is something I’m glad to pay them to help me with.

As you can see, I’ve found a system that works for me. I’m able to maintain almost all the equity in properties I acquire by buying them below market value. Sometimes I actually add more equity through value-add decisions, all possible because of my relationships with others.

I’m able to leverage the skills, experience, and contacts of the people I use who take care of the different aspects (management, rehab, etc.) of my business. I also have the bonus of them taking care of those projects so I don’t have to. This is the perfect hybrid for me because it allows me to free up more time to find deals and also save equity by overseeing this system myself, not paying full price to a turnkey provider who has done all this themselves.

Pensive African man sitting in the office at the table making notes in a notebook

The Secret to Finding Your Sweet Spot

Now, I’m not writing this to dissuade you from buying turnkey. There are many turnkey providers on this website; some are very influential and run honest businesses. I’m not intending to insult their businesses or cast them in a negative light. I’m just trying to clarify they are providing a big service. A lot goes into getting a property turnkey-ready. The price you pay for that service is built into the purchase price.

I believe I’ve found a spot on the spectrum that is perfect for me. Now that I’ve found it, I’m able to pour more energy, time, and money into it. Soon, I’ll be purchasing four to seven houses a month. This is very efficient. The efficiency will grow my wealth much faster. It took a while to put all the pieces in place, but once I did, I’m able to arrange what is basically a turnkey operation that doesn’t involve turnkey prices.

How have I been able to do this? I took the time to learn the different disciplines that go into real estate investing.

  • I learned how contractors work. I learned how to negotiate with them, how to communicate with them, how to make them money.
  • I learned how property managers work. I learned how to negotiate with them, how to communicate with them, how to save them time. I learned how to make their job easier.
  • I learned how wholesalers work. I learned how to bring them value, how to get them paid, how to help them keep their clients happy, how to make their businesses more efficient.
  • I learned how real estate agents work. I learned how to make their job easy, how to communicate with them, how to make them money.
  • I learned how lenders work. I learned how to structure my finances to look more appealing (Brandon Turner has written good posts on this), how to bring value to them, how to make them money.

Once I learned how all the different pieces work, I was able to put them together in a way that is very efficient. I was able to build a self-sustaining system that can be replicated with speed and ease. This is the key to every great business, whether you're a wholesaler, agent, contractor, lender, etc.

If you want to find success in this field, part of it is hard work. Part of it is discipline. Part of it is networking. But a BIG part of it is learning—understanding the role everyone plays, not just you.

If you aren’t interested in learning, then by all means, use a turnkey provider. They are able to provide that service because they learned all the things I just mentioned and have put together a system to bring you the finished product! All I ask is you understand that it’s costing you a lot of money to do so:

  • Money in the form of equity you’re giving up
  • Money in the form of time you’re losing to build up your wealth
  • Money in the form of future returns you would have made had you learned the business

This is how life works. If you want the convenience, you will pay for it. There is nothing wrong with this. For many people, this just suits their personality better. They aren’t as concerned with saving money as they are with a smooth, downhill journey with fewer obstacles, less stress, and minimized challenges.

But for others, they are here precisely because they want to run the uphill race. They want to learn. They want to overcome obstacles, overcome stress, and overcome more challenges. They want to pay the price to learn the game so they can excel at it. These people are fine with the pain because they really want the gain.


Related: Yes, Turnkey Rentals CAN Be a Solid Investment Choice: Here Are the Numbers to Prove It

This is what I believe the overwhelming majority of BiggerPockets members are drawn to this site for. It’s the free education, the ability to learn how the business works without having to pay a guru for it. That’s the beauty of this site. The power of it.

So if that’s the case, understand that the turnkey model doesn’t always fit that description. If you’re looking for the convenience store Coke, then by all means, there are some amazing convenience store providers to choose from.

But if you want the real value in BiggerPockets—the learning, the free education—ask yourself if you’re selling yourself short and leaving value on the table by purchasing a property someone else has already put the sweat equity into.

The forums don’t help you much if you don’t run into problems to ask questions about. The podcasts don’t help you much if you’re not trying to learn how the business works. The blog doesn’t help you much if you aren’t going to replicate the success or learn from the lessons that the authors are writing about. The calculators don’t help you much if the turnkey provider has already given you the ROI.

The books, webinars, free courses, and networking opportunities don’t help you much if you are ignoring every single aspect of real estate investing other than just owning a property someone else has turned over to you.

Find your sweet spot. Get your hands dirty. Jump in, learn, and get the most out of what free websites like this offer you. They may not be free forever! Pay the price to learn the business and reap the rewards later. Don't shortchange yourself or count yourself out because it feels overwhelming or awkward. Believe in yourself and these resources. Value learning over earning.

And by all means, please contact me if you want any clarity on this. I’m here to help, and so are many others.

What’s your stance on this? Do you prefer to add value yourself or pay for an easier experience? Why?

Let’s talk in the comments section below!

David Greene is a former police officer with over nine years of experience investing in real estate that includes single family, multifamily, and house flipping. David has bought, rehabbed, and man...
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    Jennifer Gomez from Newport News, Virginia
    Replied about 4 years ago
    Thanks David, this is just what I need to be reading. I have a number of questions since I’m so new at this. I agree with your first commenter, Chris.. I am eager to educate myself on how the various facets operate so as to speed up the process. Sending a private message. Thanks a million in advance!
    David Greene
    Replied about 4 years ago
    Look forward to hearing how I can help Jennifer
    Russell Pitts from Kirkland, WA
    Replied over 3 years ago
    David, it seems you’re, in not so many words, saying that those who invest in turnkey properties lack confidence, are timid, lazy, and/or are uneducated. I have been strongly researching turnkey and plan on going down that road to replace my current income. However, I’m also really curious what you would do if you had a very full time job and a busy family life but you still wanted to be a real estate investor. I can’t help get the feeling that if I were to dive in full steam ahead that it would be a second job for me and I’d basically have to quit my day job to make life work. Perhaps those who want turnkey are also those who purely don’t have time, but they are the big advantages of real estate but can only jump in so much due to other constraints.
    David Greene
    Replied over 3 years ago
    Hey Russell, I actually probably agree with you on that. The point of the article was to say that turnkey investments are best suited for a highly specific kind of investor-namely, one who makes lots of money and doesn’t have the time to learn how to do it themselves. If that’s the situation you’re in, you would be one of those people best suited for turnkey. I just really wanted to make sure I helped educate people that most turnkey investments are NOT a good “deal” and you are paying very highly for the ability to not have to do any of the work yourself. For some people, that makes the most sense. Just like buying a soda from a convenience store makes more sense if you just don’t have enough time to go to costco and buy them yourself. Hope that helps clarify things a bit!
    Tom Unger
    Replied over 3 years ago
    Great article!!! I too have looked at Turnkey and found that the time one spends on doing the due diligence to research the many different companies offering products and services, could be spent on “buying the Coke from Costco.” I hope nobody is just throwing money at a Turnkey property hoping it will perform. The company itself should be vetted as well as the areas where the properties are located including several dynamics such as Population Growth, Crime Indexes, Employment, Economy, Vacancy Rates, etc… Some other things to consider are the dynamics associated with the Property Management company which should include many vetting type questions as well as the area’s Laws and Ordinances. Add to that, one should have some idea of how to calculate Cash On Cash, Return On Investment, Net Operating Income and the like. All of which is going to require a some time to accomplish. Either choice, you’re going to spend a lot of time learning something. So it might be wiser to invest in yourself-in the long run. The payoff will be sweeter.
    CJ Wallace Real Estate Agent from Sierra Vista, Arizona
    Replied about 1 year ago
    I have your book "Out Of State Real Estate Investing"....boy it is super useful. I plan on controlling a 5 to 12-unit by December 31, 2019!! Thank you so much for providing so much value. Keep up the good work!
    Gordon Olson from Anoka, MN
    Replied about 1 year ago
    Good stuff here David! I ordered a copy of your BRRRR book, looking forward to reading that too.
    Arya Jackson from San Francisco, Bay Area
    Replied about 1 year ago
    This has definitely opened my eyes to the pros and cons of turn key or DIY. I'd like to think DIY would be fun and more profitable but maybe turn key is the way to go. Thanks for the advice.
    Rogelio M. from San Antonio, Texas
    Replied 10 months ago
    Just now getting around to reading the post .... have not seen, yet, a better explanation of the DIY project vs. turnkey. As the economy enters the hyper-supply stage of the economic cycle, profit margins will begin to feel the pinch. Finding profitable business opportunities will become ever tougher; unwary investors may then resort to 'services' provided by intermediaries such as wholesalers, and .... turnkey providers! The introduction of one more intermediary into a project, further squeezes the potential profit margin. Entering into a transaction now with an already reduced profit margin precludes the investor from incorporating a safety margin, as we enter a hyper supply. The hyper supply is the precursor to a recession. Of course, no one knows precisely when the recession will begin. However, entering a recession, holding a property without a previously built in safety margin, is dangerous.