Landlording & Rental Properties

Your Complete Guide to Finding a Profitable, Well-Managed Turnkey Deal [With Example Pro Forma!]

Expertise: Personal Development, Business Management, Real Estate Investing Basics, Landlording & Rental Properties, Personal Finance, Flipping Houses
120 Articles Written

After emailing back and forth with Allison, the totally awesome Managing Editor of the BiggerPockets Blog, she mentioned that laying out actual deals or case studies is super helpful here on the blog. COOL! We do mainly turnkey investments in our business, so my goal is to talk through not only what the numbers of a deal look like, but also some thinking surrounding the deal.

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Considering Turnkey?

As an overview, what are some actionable things for the turnkey investor to think about? What are the different types of turnkey deals? What are the types of providers and the rehabs they are doing? And from there, what does the management to service your investment look like? There are three things I believe really drive the entire thought process if you are considering turnkey:

  1. What area do I want to buy in (geography, state, city, kind of market)?
  2. What is the quality and scope of the renovations?
  3. Who is managing my property and what are the details around that management?


First, I always like to start with “what is the end game?” You could start by thinking about the investment itself. Maybe you want a property in a C+, B, or A neighborhood with at least a 1% rent rate to sales price (as in, $1k rent and $100k house). Or maybe the neighborhood or schools aren’t as important as straight cash flow is to you. You night look in a neighborhood that could produce a C- or D class property in the $40-$65k range, renting likely a 1.5-2% rent ratio. This isn’t the model that I personally work in, but I do know a lot of people who are in that market.

There are some really easy tools these days to be able to see where the property actually is, what the neighbors’ houses look like, and even fairly sophisticated demographics for the area. Between several of the well known sites like and, you can garner a lot of data on the property. Pair that with Google Earth, and you can see a picture of the entire street, neighborhood, house itself (usually), and whatever surrounds it.

Actual topographic view of the subject property in the post from Google Earth

Type of Rehab

With regard to the rehab, first you need to know what is being repaired or replaced in the property. Is the seller doing the basic paint and carpet? A partial renovation? Or a full rehab like you would see for a fully flipped house on the MLS? Make sure before you buy a turnkey investment property that you ask what kinds of renovations were done and even for a list of those items. Ask the provider what their philosophy on renovations is, so you are informed and understand what you are getting before you buy.

I’m not suggesting one is better than the other. For my business, we do full renovations on nearly every property. But not every turnkey provider or owner is looking to do just that. Make sure you ask the question. Know the type of work that is happening and have clarity on exactly what you are getting into before you purchase.

Interior shot of a recently renovated turnkey rehab from my team

Related: 5 Exit Strategies to Consider for Turnkey Rental Properties

Property Management

The renovation and sales side of the turnkey experience may be over, but the profits and cash flow come with a tenant in place, and this is all about the management. Ask if your turnkey provider is also the management or if they bring in outside management once the property is sold. We decided early on to set up our business with us controlling everything from the buying, renovating, selling, and managing the property. If we didn’t control every stage, we didn’t feel we would have clear ownership after the sale. There are some great turnkey providers out there who don’t manage their own, so I’m not suggesting you couldn’t find that setup that would work for you. Just make sure you ask the question who is managing my property? And if it is not the turnkey provider itself, then what does this handoff look like?

Some more questions to ask would be:

  • How much do you charge for placement of a tenant?
  • How long are your typical leases?
  • What is the annual review or lease renewal process?
  • How much are the monthly management fees? Is it a flat fee or percentage?
  • How are your rentals priced compared to other rental properties in the market?

Regarding Your Provider

Who to Call if There is a Problem

Maybe the issue is as simple as a question about your owner’s statement or a maintenance charge. Whatever the situation, you will want to know exactly who you speak with within the organization. What is the expected timeline to get information or changes back to you? As we grew, we had to learn to do a better job of teaching our clients who they needed to contact for each specific question or issue. Make sure you know who to contact for whatever department you are looking for after the sale.

Also, ask about what kind of warranty, if any, there is on the property and how long it lasts. What does that warranty cover? If my HVAC goes out in the next 12 months, are you going to fix or replace it? These are seriously important questions, as HVAC replacement on your dime as the client could cost you a year or more worth of your anticipated cash flow.

Kitchen shot from a turnkey property recently renovated by my team

Who’s Actually Selling You the House

In the turnkey space, there are both direct provider sales and aggregators not connected specifically to one company. The aggregator’s job is to get interested buyers thorough marketing and education and to help connect the dots with great marketing and online tools to both develop buyer leads and partner the turnkey provider with the buyers themselves.

If there is an aggregator or marketing company involved with bringing the provider and you together, make sure to ask them who takes what responsibility if you have issues and what that line of communication (and responsibility) looks like. Within our business, we sell direct to the client, do the rehab, and manage the property because we believe it’s most simple for clients—although much more complex with internal handoffs from acquisitions, renovations, and then management. I think the key here is to ask the question and know what the company you are interested in does.

Related: The Top 3 Mistakes New Turnkey Owners Make Once They Buy


There is more than just the numbers on your pro forma that creates the return on your investment. Read and study carefully. Some companies include just your cash flow number from your rent, mortgage, and management fee. While we can all agree that the cash flow number looks way better without including all the other types of expenses, they are real expenses for a reason. Because maintenance and capex will be important at some point, if not right at the purchase of your property depending on the type of renovation, make sure you factor in all the expenses.

If you aren’t sure what the rate of return actually is, use a tool like they have here at BiggerPockets, and plug all the information into the rental calculator and see what the actual rate of return is on the property. I’ve attached an actual pro forma here (from the middle property above) to provide an example that includes all the other expenses and the calculated cap rate and cash-on-cash return after expenses.

Final Thoughts

It’s a great joy for me to write about the turnkey properties because it is an awesome asset class that has now become very attainable for more and more investors. The opportunity to take full advantage of all the benefits of real estate without having to swing a hammer or know how to buy a distressed property is really awesome, as long as you have the right property and the right team working with you.

Start saving, buying, and investing now. I don’t think people realize how little they need to invest to start their real estate portfolio. Save your money! Get fired up about what life looks like when you have made the commitment to do all this hard work of saving, learning, and investing. Then begin to enjoy the rental income, tax benefits, and the fact that your tenant is now paying off your house for you. If you have been on the sidelines thinking about investing and are ready to pull the trigger, then go out there and do it!

Are you considering turnkey investments? Why or why not?

Leave your comments below!

Nathan Brooks is the co-founder and CEO of Bridge Turnkey Investments, a Kansas City-based company renovating and selling more than 100 turnkey properties per year. With over a decade of experience in real estate, Nathan is a seasoned investor with a large personal portfolio and a growing business portfolio. Just last year, through Bridge Turnkey Investments, he helped investors add over $12 million in value to their real estate portfolios. Nathan regularly produces educational content to fuel his passion for helping other people learn about and find success in real estate investing. He has been featured regularly on industry podcasts such as the BiggerPockets Podcast, Active Duty Passive Income Podcast, Freedom Real Estate Investing Podcast, Fearless Pursuit of Freedom Podcast, Titanium Vault, The Real Estate Investing Podcast, The Best Real Estate Investing Advice Ever Show, the Good Success Podcast, FlipNerd, Wholesaling Inc., The Real Estate Investing Profits Master Series, Flipping Junkie Podcast, Flip Empire podcast, Think Realty Radio, and more. He is a sought-after speaker and writer and can be found on stage regularly at events across the country.

    Cary Keith Rental Property Investor from Somerset Ky
    Replied over 2 years ago
    I love all the great information and examples.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied over 2 years ago
    Thanks Cary! We wanted to make it as clear, easy, and concise as possible.
    William S. Rental Property Investor from Overland Park, KS
    Replied over 2 years ago
    Your CapEx budget is too low for a hold. $57/m? More like $150/m. Even if everything is new, items still have a lifespan and will eventually need to be replaced. If you break down the lifespan (over 30 years, length of mortgage) and cost to replace the roof, hvac, etc it will be much higher. There are also hidden PM fees (lease fees) that need to be budgeted for.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied over 2 years ago
    Hi William … I appreciate you reading and responding. Although I’m not seeing what you are referring to. If you calculate to replace everything you are referring to in the span of the 30 years, let’s do the math together: $57 a month x 12 = $684 yearly $684 yearly x 30 years = $20,520 Total Budgeted: $20,520 Assume the costs you mentioned plus others I’d suggest: Roof: $5k HVAC: $4k 2 Water Heaters: $650 x 2 = $1,300 Appliances: $1,500 Paint Exterior: $4k Total: $15,800 Even if you assumed to paint the interior on your own dime twice at $2,500, you are still just $300 over the total assumption, and I’ve included far more things that you did. Secondly, if the “hidden lease fee’s” there is an assumption in the pro forma for vacancy at 8%, which would assume turning the property EVERY YEAR. This, is not the actual turns we experience … pretty far from it. The cost of the turns usually paid for within the deposit of the tenant, which would be upkeep on the inside of the property. We also place our tenants (within our business) for free the first year, so that is an even bigger savings. We’ve included, and been conservative, with the numbers on the pro forma… and the assumptions of $150 a month are really not based on the real data of numbers. If that is what you are finding in your current investments, we’d love to help you on your future ones!
    Brandon Hall CPA from Raleigh, NC
    Replied over 2 years ago
    The good news is that Nathan accounted for Capex. Hardly anyone does. The bad news is that I agree, $57/mo is too low. It doesn’t take into account inflation nor asset aging. The assets are not all going to expire at the same time. A better estimate would be something like “the roof is expected to last 9 more years, the HVAC 4 more years, etc etc. so here’s how much we need to put away based on when we expect the assets to expire and the lost buying power due to inflation over time.” Additionally, I hope no one is maintaining a $15-20k reserve for a SFH. We’d really only want to save $X amount for a Capex reserve up to a certain point, say the cost of a roof. Once we hit that point, we don’t have to save for Capex anymore and we can enjoy that extra cashflow. When we deplete the reserve account, we start saving again. I know that can get complicated, but simplicity scares me in real estate. The majority of newbies like simplicity, but that’s exactly what gets them into trouble.
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied over 2 years ago
    Hi Brandon – I appreciate the kind words, and yes, we try to make it transparent and easy to read. Part of what we do anyway, is replace almost everything within the properties anyway. So in nearly every case, we’ve already replaced the roof and windows/HVAC etc… at the time of sale. So there isn’t 4 more years on a brand new HVAC, which is why I do believe our numbers do represent an accurate picture. And totally agree on the reserves… I was just pointing out how much was actually being calculated for over that time period. Thanks Brandon!
    William S. Rental Property Investor from Overland Park, KS
    Replied over 2 years ago
    Nathan. Thank you for responding. The benefit of buying from a turn key company is that they should have a cost breakdown of the rehab. The rehab was just completed. Different markets charge different prices to replace roofs, etc. When buying from a company I recommend looking at what materials were used. For example, carpet vs vinyl plank. Using durable materials in the rehab will reduce your capex budget. The PM fees are a bigger concern for me. Lease fee, inspection fee, etc. If you buy a SFH in a nice area, and use technology wisely then managing remotely is possible. Get the right tenant and you shouldn’t hear much from them.
    Steven Dixson from Bronx, New York
    Replied over 2 years ago
    Is the cash for the capex, vacancy and repairs being withheld by management?
    Nathan Brooks Real Estate Investor from Kansas City, KS
    Replied over 2 years ago
    Hi Steven, we don’t hold back those costs, we just include them to give a more accurate picture of their future anticipated returns/expenses. All the funds go to the owner.
    Julie Rogers from North Lauderdale, Florida
    Replied over 2 years ago
    Nice article. That kitchen did not look like a kitchen in a $95,000 home, more like a $450,000 home. Still very nice pictures/work. Should I paint the exterior before I rent, of after I rent.
    Gianni Laverde Investor from Corona, NY
    Replied over 2 years ago
    Great article Nathan. Thanks for sharing. Gianni
    Jeff Wendt from Rochester, New York
    Replied over 2 years ago
    I am considering turnkey real estate investing. I am currently educating myself through books and podcasts as I would like to make my first rental purchase in the next 12 months.
    Erik Whiting Real Estate Investor from Springfield, MO
    Replied over 2 years ago
    Thank you for taking the time to lay out your story and the numbers behind them. A few questions. Closing costs of $1000 on a deal that includes a loan at 4.5% amortized over 30 years. Is this a fixed rate Govt backed loan, and if so, how did you end up with zero loan points or loan fees? If not a typical Govt loan, what are your terms for rates resetting, balloons, etc and where did you get such cheap commercial or private money? Does your vacancy rate (8%) include cost of evictions/attorneys, etc? Finally, is your strategy to hold on for long-term appreciation and equity thru debt reduction vs. cash flow today? Thank you again for taking time to share your story.
    Beatriz Delgado Diez from Ladera Ranch, California
    Replied almost 2 years ago
    Where do you include the leasing fees?