Is turn key dead?

Question

I like the turnkey model, but it's very challenging to find trusted partners and they seem to rotate; curious to hear others experience.

Drew Sygit · Answer

@Austin Johnson lots of great info so far!

I'll add that price point impacts turnkeys also.

Labor & material prices don't change much whether one is working on a $100k rehab property or a $500k new build.

So, the lower you go in price, the harder it is for the turnkey provider to generate a profit - and the more likely they are to cut corners:(

Dominic Marshall · Answer

@Austin Johnson

Finding trusted partners in the turnkey investment space is indeed a common challenge, as the industry can vary widely in terms of reliability and consistency. Many investors have shared experiences where providers operating across multiple states often face difficulties in maintaining deep market knowledge, leading to inconsistencies in property selection, regulatory compliance, and overall service quality. This can result in properties acquired at or above market value, inflated projections on returns and cash flow, and limited support for essential aspects like insurance setup or LLC formation.

In contrast, focusing on providers with a specialized approach to a single market can offer significant advantages. These specialists typically bring extensive local expertise, with decades of experience in navigating the region's unique dynamics. This allows for acquiring properties below market value, identifying seller financing opportunities, and managing substantial portfolios efficiently at scale. Such depth ensures more stable partnerships and better aligned investment outcomes.

If you'd like to discuss further, we're happy to help.

Josh Young · Answer

@Austin Johnson I think turn key was easy when interest rates were super low and real estate investing was easy. Now it’s much harder to make the numbers work, there is just not enough meat on the bone for them to make money and for you to make money, so some of the turn key operators can only make it work in high cash flow (low appreciation) markets. Here in the greater phoenix area we don’t get many turn key operators because it’s hard for them to get the numbers to work for cash flow. Personally I don’t mind lower cash flow if I can get into a deal with less money down, I also don’t mind doing value add. Turn key is doable here, you just have to hunt for it, casa grande has the best price to rent ratios, I’ve helped several clients buy places there and I also manage them for them, so I guess that’s kinda a turn key service.

Patrick O'Sullivan · Answer

Turnkey is definitely harder today, but I don't think it is dead. When rates were low, it was much easier for both investors and operators to make the numbers work. Now it takes more patience and more careful vetting.

The biggest difference I see is that the quality of the operator matters more than anything. The ones who stay focused on a single market and really understand it tend to deliver a more reliable experience. Cash flow is usually more modest than it used to be, but some markets still work if the expectations are realistic.

Turnkey can still be a good fit if you want something simpler, it just takes more digging to find the right team.

Todd Anderson · Answer

@Austin Johnson,

Many of the investors that I work with find that turnkey still does work if you are looking at new construction.  It is much easier to make new construction build to rent investments work when the investor is able to get some of the incentives that builders are offering for their properties.

When I talk with investors that are looking for turnkey today I always mention to them to look at new construction.  Some of the builders that we have worked with have offered free property management and rate buydowns to as low as 3.5%.  With this type of incentive we are able to find good cash flow day one.  we have also found a number of builders that have already filled their properties, the the investment into a new construction property comes with a renter.

Take the opportunity to look into Build to Rent for a turnkey investment and feel free to reach out with any specific questions.

Best of luck.

Is turn key dead?

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