Turnkey outside of NYC

[Jermaine McIntosh]

Hey all,

I heard a few investors start out by investing in turnkey properties outside of NYC due to NYC's very high prices. So I would like to know for those who have invested in turnkey properties what are the pros/cons of this type of investment?

Thanks

[David Hodge]

Hi @Jermaine McIntosh,

I have not purchased a turnkey property yet but will be closing on my first one tomorrow. It's a SFH in Birmingham. There are a lot of pros and cons but I'd say the major pro is that it's fairly easy for someone who doesn't have a lot of time to be hands on with purchasing, rehabbing and tenanting a property. It is also safer for an inexperienced investor to purchase a property that doesn't require any additional rehab work. If you purchase a fixer upper, you could easily under estimate rehab costs and end up spending more on a property than if you purchased it turnkey.

The major con is that you're typically buying retail.  You aren't going to find an incredible deal from a turnkey company like you might if you search for distressed properties and fix them up yourself (if you're a TK provider and you disagree, please send me you best deals!!)  The work has already been done so it's easy for you but you probably won't have much equity on day one like a more active investor might.  Another con is the potential of getting screwed over by an unethical provider.  This can be avoided by doing your own research.

I am currently buying TK because I work 70+ hours a week and don't have time to be hands on right now.  I do hope to become a more active investor in the future.  I feel that buying some TK properties is a safe way to get my feet wet and hopefully make some decent returns!