Are Turnkey Rental Properties Actually Profitable for Out-of-State Investors?

Question

Hey everyone,

I’m a newer investor exploring out-of-state markets in the $100K–$150K range and trying to figure out the best way to start. I’ve been hearing a lot about turnkey properties — homes that are already renovated, tenant-occupied, and ready to cash flow from day one.

On paper, they sound like a stress-free way to get started (especially if you’re not local), but I’ve also read mixed opinions about whether they really perform as advertised once you factor in management fees, maintenance, and long-term expenses.

For those who’ve bought turnkey rentals:

• Did the numbers hold up after your first year or two?
• How was your experience working with the turnkey provider and property manager?
• Do turnkey properties make sense for building a portfolio, or are they better as a stepping stone to something else (like BRRRR or small multifamily)?

I’d love to hear real experiences — the good and the bad — especially from other out-of-state investors.

Christopher

Michael Hansen · Answer

I bought a turnkey in Memphis in 2021.  The numbers worked out for me.  I got cocky and bought one in Alabama in 2023 and didn't work out as well.  I still have it but cash flow about -200/month.  The Memphis is about 400/month.  Mortgage rates/price and timing matter.  Good luck!

Elealeh Fulmaran · Answer

Turnkey can be a great first rung for out‑of‑state if it gets you off the sidelines, but underwrite it like any other deal: verify true market rent, stress test with management, maintenance, turnover, taxes and insurance, and ask for a two‑year rent roll plus inspection with photos. Assume some “turnkey” touch‑ups after closing, vet the PM first, and bake in a leasing fee if the tenant leaves. If your goal is speed and confidence, start with one solid turnkey; if your goal is scaling with limited capital, plan to pivot into value‑add like BRRRR once you’ve built your team and reserves.

Greg Scott · Answer

Yes, I purchased turnkey rentals in the past.  If the turnkey provider is good, the returns should be similar to projections.  However, the returns are not nearly as good as if you are more active in real estate, which is why I moved away from turnkeys after 5 properties.  Still, all 5 properties ended up being profitable.

I'm a little concerned about the price ranges you are mentioning.  All else equal, I'd rather have one $250K property than two $125K properties. The $125K properties are either going to be in much rougher areas or parts of the country where the economy is not strong.

David Krulac · Answer

This year we bought 7 properties.  On 3 we got fixed financing at 4.25% and 4.75% interest, which made those new builds positive cashflow.  Two others were bank repos, which bought for about 70% of the bank asking prices, those are also positive cash flow.  One was bought from a tired landlord, again positive, and the last one was bought at Sheriff Sale which was bought at 58% of ARV.  The properties that I'm buying are single detached houses, mostly 3 bedrooms, 2+ baths, and 2 car garage built since year 2000.

Steve K. · Answer

I have not owned any personally but in my experience in underwriting turnkey investment opportunities, most of the time they end up costing a big premium and the projected returns are extremely optimistic, if not outright scams. I decided never to invest in turnkey when the company recommended to me by a friend ended up being a complete scam (Morris Invest). I'd consider turnkey investing a high risk strategy for that reason, with even the best possible outcome not being worth the risk. But that's just my opinion. I'm sure some people make money buying turnkey properties and of course not all turnkey companies are scams. However the risk is there, and even in a best-case turnkey investment scenario, your returns will be meager compared to an active investment strategy. As far as a comparable (passive) investment, I'd go with an index fund over a turnkey investment.

Christopher Rubio · Answer

@David Krulac

That’s really impressive — seven properties in one year with those kinds of terms and discounts is incredible. I like that you’re mixing strategies too, from new builds to repos and Sheriff Sales. It sounds like you’ve really found a formula that works in today’s market, especially locking in those lower rates and targeting newer builds.

If you don’t mind sharing, what markets are you finding those kinds of opportunities in? And for someone newer with limited capital, what would you say is the best way to start identifying deals like that or building relationships with lenders and sellers?

I’d love to hear how you might be able to help or what you’d recommend for someone just getting started.

Christopher Rubio · Answer

@Elealeh Fulmaran

That’s really solid advice — thank you for laying it out so clearly. I like how you framed turnkey as a possible “first rung” but still emphasized treating it like any other deal with full underwriting and realistic assumptions. The checklist you mentioned — especially verifying true rent, reviewing a two-year rent roll, and vetting the PM first — makes a lot of sense for someone like me who’s newer and learning how to protect myself from mistakes.

I’m still trying to find that balance between getting started and not overreaching, so this kind of guidance helps a lot. I’d love to hear how you might be able to help or what markets or approaches you’d recommend for someone in my position looking to start smart.

Christopher Rubio · Answer

@Steve K.

I really appreciate you sharing that — that’s definitely eye-opening. I’ve heard mixed things about turnkey investing, but it’s helpful to hear from someone who’s actually looked at them from the underwriting side. The premium and overly optimistic projections make a lot of sense, especially for new investors who might get drawn in by “hands-off” promises.

Sorry to hear about your experience with Morris Invest — that’s exactly the kind of situation I’d want to avoid. I’m definitely cautious about jumping into something that sounds too easy, but I’m still trying to figure out if there’s a middle ground between fully passive turnkey and full-blown BRRRR projects.

From your experience, are there any safer ways to approach a semi-passive strategy without getting caught in those risky turnkey setups? I’d love to hear how you might be able to help or share more insight as I work through my options.

Robert Ellis · Answer

if they are built after 1942 yes

Christopher Rubio · Answer

@Michael Hansen

Thanks for sharing that — really helpful perspective. Sounds like timing and location made a big difference between those two deals. The Memphis one definitely sounds like it worked out well, and I’ve been hearing more good things about that market lately.

Since I’m still new and learning, I’m curious — what do you think made the Alabama deal underperform compared to your Memphis one? Was it just timing, or were there other factors like management or neighborhood class that played a role?

I’d love to hear how you might be able to help or what advice you’d give someone like me looking to get started smart and avoid those early mistakes.

Are Turnkey Rental Properties Actually Profitable for Out-of-State Investors?

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