From personal experience, Do you prefer rehabbing or turnkey?

10 Replies

Hello Everyone,

I am new in the real estate business, and I am doing intensive research, and I am preparing to buy my first rental property in the next few months, I wanted to ask the bigger pockets community, Thier opinion of that can help my decision on what type of property I should aim for.

I have yet to purchase my first investment so wait for others to chime in. However oh, my guess would be that when it comes to profitability, rehabbing would give you more control over how much you can potentially make

Welcome to BP @Account Closed! There are pros and cons for both options. The issue a lot of people have with turnkey is that forcing appreciation and selling quickly for a profit has been removed. When you choose the turnkey method, the turnkey company has done this for you, this is how we make our money. The BRRR method is a great option for a person who has a bunch of free time, they're handy, and know people and have a good network of people who they can contract for any extra work. BRRR method can take a long time, the longer it takes, the longer you have to pay out of pocket for the mortgage - if you financed.

The turnkey method means that you don't need to do any of that work. The turnkey company does all of the work on their time and dime. The turnkey company has networks and systems in place to find the best properties and rehab to a high standard and quality. This also means that you won't have to worry about vacancy risk during the rehab process. Going with the turnkey option means that you've traded extra potential return from forced appreciation for the luxury of having your time and energy back and having someone else do the hard work for you.

Investors who choose turnkey are probably looking for passive income or they live in more expensive markets. This all depends on your goals and what you would like from your investment. Before you decide on turnkey or BRRR, have a discussion with yourself (and/or your partner) about what your objectives are in REI.

Best wishes!

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@Account Closed

With a turnkey property, the value has already been created. The rehab, if purchased correctly, will allow you to create value, thus increasing the value and allowing you to capture that appreciation. Turnkey is great if you do not have or do not want to put together a team but, you will make more with a rehab.

Originally posted by @Bijou Diaou:

Hello Everyone,

I am new in the real estate business, and I am doing intensive research, and I am preparing to buy my first rental property in the next few months, I wanted to ask the bigger pockets community, Thier opinion of that can help my decision on what type of property I should aim for.

 It mostly depends on what you are planning on doing. If you want an investment that is passive and hands-off, Turnkey is a good way to go. It also helps you get a foot in the door into a different market. If you are rehabbing, it becomes a full-time job and I would stick to your local market. 

@Account Closed I have many colleagues who BRRRR and do it remotely. They are successful and I believe anyone can do it with the right connections. But you will lose time and take more risks with BRRRR. Most turnkey investors invest because they are looking for a place to stash their cash. They see smaller yields, but they are OK with it because it comes with the convenience and the ability to focus on their career and extracurriculars. There are many pros and cons to both that you need to consider. I buy turnkeys as well so if you need some help feel free to reach out to me. Good luck!

It really depends on the deal and what time of the year and what is on my plate.  Personally, I like a light rehab.  I can change like floors, kitchen counters and bathroom vanity. Easy stuff that can be done quick and have the property on the market to be rented. Most important is to evaluate your own personal time, finances, and skill level.  Play to your strengths. 

The problem with buying turnkey property is you usually have to pay retail price for it, which makes it difficult to put anything into it to maximize returns. If it needs a little something to boost rental value, you probably cannot afford to make that investment after paying retail price for a turnkey property. With a property needing a bit of work, you can more easily add value.

I avoid rehabs as Im out of state and cant imagine doing a long distance rehab... its hard enough doing those locally.  I also avoid turn key flips in general due to the extra cost.  My sweet spot are properties that are not flips but in near turn-key condition.  All 4 investment properties I have bought were like this, all inspections reports came back clear of any big issues, and none required more than $600 of work to get it renter ready.