Brand new to investing. Is Turnkey investing a good option?

[Josh Haney]

Hey everyone,

I'm brand new to real estate investing and have been reading/researching the different methods people use. I recently stumbled upon turnkey investing and wanted to hear from the BP community on their experiences. I've seen both good and bad reviews, but I like the passiveness of it as i am working a W2.

Thanks beforehand!

[Scott Trench]

It's one of many viable options depending on your preference for yield/risk/time commitment. A turnkey property SHOULD (with a good operator, good market, etc.) be a "mostly" passive investment. But, there are plenty of cases where that hasn't worked out. 

However, in exchange for what should be a renovated property in great condition with a tenant and management system in place, you pay retail price, or sometimes above retail price. 

I think that turnkey is a good option for the individual who is not ambitious to get above average returns - and indeed is ok with slightly below average returns, but who cares about a quality asset, in a quality location, with a good management firm in place, and is willing to lightly lever (bring a huge down payment or buy cash) the deal in order to get good cash flow. 

It's a good diversification play, and a way to get exposure to RE without having to be hands on. The price is that the Turnkey company has done the value-add, and is handing you the finished product at full price.