Turn-Key 101

While there are a few ways to get started in real estate investment, one of the most popular methods is to buy a bargain-priced property that needs some work, rehab it, and then either rent it out or sell it. Here’s the thing, though. Not everyone has the time (or the inclination) to take on this process. Fortunately, turnkey properties exist as another avenue for building wealth through real estate investment. Turnkey properties are those that have already been rehabbed and are ready to start producing income. But how does one get to this point of steady cash flow through property ownership? Here’s a step-by-step guide on how to buy a turnkey investment, from start to finish.

1. Choose your market. The first step in any turnkey house hunt is to zero in on a particular market. Some parts of the country are experiencing huge rental booms, while growth is slower in others. Do some research to find an area with a positive rental climate. If this happens to be in the same area you live in, great, but don’t sweat it if it isn’t. There are plenty of turnkey investors who live and invest in different areas.

2. Secure financing. Once you’ve decided on an area to invest in, it’s time to get financed. If you’re paying all cash, go ahead and move on to Step 3. If you’re not, though, you need to find a lender in the state you’re investing in (bonus points if they’re licensed in multiple states) and get qualified for a mortgage.

3. Connect with an experiences turnkey marketer. After you have the financial details in place, shop around for a reputable turnkey marketer in the area. You want someone who is not only experienced, but also has your best interests in mind. The point is for YOU to make money here, so remember that. Also, they obviously need to have a large inventory of properties so you have plenty of options to choose from. If you can, meet them in person so you can get a better feel for how they do business and if working with them will be a good fit for you.

4. Research and review properties. The turnkey marketer you go with will provide you with a list of properties that meets the criteria you’ve requested. Spend some time going over each property and analyzing things like rental rates and history, taxes, and vacancies in the area. The turnkey group will provide some or all of this information to you, but it doesn’t hurt to back it up with your own research as well.

5. Pick a property and get it under contract. After you’ve done your research and decided on a property, move to get it under contract. Sign the purchase agreements, send off your earnest check, and make sure you include an addendum that promises to refund that earnest money if the inspection or appraisal don’t go as planned.

6. Have an inspection done. Now it’s time for the inspection so you can be sure that the property is worthy of your investment. If the turnkey group has already had the property inspected, ask for a copy of the inspection report so you can see for yourself that everything is in good condition. If you’re still leery, pony up the cash and order your own inspection.

7. Negotiate. With the inspection complete, now you can start negotiating on the property. You can haggle the price, or you can request that certain repairs be made. If the negotiating doesn’t go how you want it to or you have any doubts about the property, you may want to back out before you go any farther in the process.

8. Order an appraisal. If you’re satisfied with the inspection and any negotiations that were agreed upon, you’re ready to have the property appraised. This will ensure that the home is worth what you’re paying for it, so don’t do this until after the inspection/negotiations are complete.

9. Get tenants. Many turnkey groups will already have qualified tenants in place, but if they don’t, you need to secure renters. Some lenders won’t allow you to close until you have tenants, so this is a critical step.

10. Wrap up the paperwork and close on the property. You’ve made it to the final step! It’s time to finish up all the paperwork and close the deal so you can start enjoying that sweet, sweet cash flow.