I have not bought turnkey, so I will tell you how I would check one.

Run their house against your own numbers, not their sheet. I buy single-family in Memphis under $100K, I need an ARV of $180K to $265K, and for a 3BR I want rent in the $1,395 to $1,950 range Section 8 pays here. Then the 1% rule: rent at least 1% of what you have in it.

Most turnkey is priced at retail, which means the equity and the easy refinance are already gone on day one. If a house they show you still clears those numbers after their markup, look hard at it. If it only works on their pro forma, pass.

@Amanda Clark, I think a turnkey company can be worth considering, but I'd want to see how the property actually performs before calling it a good investment. I agree with James about checking the numbers yourself instead of relying only on what the company provides. I'd also want to know what repairs were completed, whether there are existing tenants, and what happens if something goes wrong after closing.

I'm a real estate attorney, broker, and investor based in Maryland, and I work with clients on property purchases, contracts, and rental property matters. I've seen how important it is to review the documents and understand exactly what you're buying before making a commitment.

Thanks for asking this, @Amanda Clark! Are you looking at turnkey properties in a particular state? Happy to stay connected!

Welcome Amanda. One thing I'd ask any turnkey company for is the actual rent and expense history on properties they've already sold, not just the projected numbers on their sheet. I'd also find out who manages the property after closing and whether it's the same company selling it, since that's where interests can get mixed. Then compare their price to what a local agent says the house would sell for, because with turnkey you're usually paying extra for the finished product. If it still works for you after that markup, it's worth a closer look.

The company that sells you the house is rarely what decides the outcome. The management after closing does. We run 236 doors in Memphis, mostly single-family, and the turnkey deals that hold up here share three things: the rehab was done to a rent-ready standard you can verify with your own walk and dated photos, not just their scope sheet; the tenant was screened on verified, repeatable income and a story that matches the paperwork, not placed fast to close; and the first-year numbers include turnover and vacancy, not just rent minus mortgage. For a Memphis 3BR, Section 8 rents run $1,395-$1,950, so test their pro forma against that range. Ask who manages it on day 31 and how turnovers get scheduled. That answer tells you more than the sales sheet.

Turnkey can work, but the stories that go badly usually skip the same step: checking the numbers independently of the company selling the property. Get your own inspector, call two or three local property managers who have no tie to the turnkey company to sanity-check the rent, and ask the company for past sales you can look up and verify. Also find out whether they'll manage the property too, because then the same company is grading its own work. What market are you looking at?

I haven't bought turnkey either, I buy direct to seller in Delray 33446 (Monarch Lakes townhouses) — my current is $242k + $60k rehab, ARV $420k, rent $2100, DSCR refi at 70% pulling $126k out.

But I underwrite turnkey for clients (I'm a lender in Boynton Beach) so I see where they go wrong. Here's how I check a turnkey if I was buying:

1. Run it like James said — YOUR numbers, not their pro forma. I take their rent and cut 10%, I add 10% to their taxes (Florida reassesses after sale), I add 8% vacancy + 8% management + 5% cap ex even if they say "new roof." If it still DSCRs over 1.25 at 7.5% fixed, I look deeper. Most don't.

2. ARV vs their price. Turnkey is often retail + $20k markup. I pull 3 sold comps within 0.5 mile, 6 months, same bed/bath. If their price is ARV, you have no equity on day one and you can't refi. My Delray deal works because I'm $118k under ARV after rehab. If turnkey is at ARV, you need 20%+ rent upside to make sense.

3. Who holds the risk? Ask: who did the rehab? Is there a 1-year warranty? Who is the property manager — their in-house or 3rd party? What happens if tenant doesn't pay month 2? Good turnkey has answers in writing. Bad one says "we have never had issues."

4. 200 owner lesson — I'm tracking 200 out-of-state owners 20+ years in one zip. 90% of turnkey inventory is those same landlords selling tired rentals. The good turnkey companies buy them, do real rehab, and sell with real numbers. The bad ones paint and list.

If the house clears 1% rule (like James uses — $1395-$1950 rent on $100k in Memphis) AND 1.25 DSCR on YOUR numbers AND you have an exit at ARV, then turnkey can work for out-of-state.

If it only works on their sheet, pass — that's what I'm seeing mostly in South FL right now.

Some people have good experiences, so the useful question is how to vet one. What I'd check: 1) Rent: ask for the signed lease and last 12 months of payment history, not the pro forma. Check rent against recent leased comps yourself. 2) Price: compare to recent sold comps for the as-is condition, because the turnkey markup is a cost you carry. 3) Property: pay for your own inspection (not theirs) and ask for the age and condition of the roof, furnace, water heater, electrical and sewer line. 4) Management: find out who manages it, what the fee is, what the reserves policy is, and whether the manager is independent of the seller. 5) Run it yourself with a full expense load (taxes at the post-sale value, insurance quoted, vacancy, repairs, capex, management) and confirm DSCR is 1.25x or better at your actual loan terms. What's your budget and target return? That would help people give you more specific answers.

Turnkey is a relatively "new" phenomena.

Started after the Great Recession when houses could be bought for pennies from banks overloaded with too much REO inventory.

Real estate prices & rents were rising double-digits annually, which masked a lot of the mistakes newbie investors were making by overpaying.

With the relatively "normal" flat real estate appreciation & rental markets currently, AND interest rates higher, but actually also back to their "normal", an investor is going to find it difficult to buy a cashflowing turnkey without taking on additional risk.

That risk is buying Class C or D rentals and hoping for S8 tenants, but still having to deal with those tenants damaging the property.

Or, they buy new construction turnkey, with massively subsidized temporary bought down interest rates, to barely cashflow, and hope when the 3 year temp rates are up, they can refinance to a lower rate.