Hi! Lately I've been educating myself on turnkey rental investments. Long story short, it seems I come across more articles/forums/videos explaining why turnkey should be avoided and all of the downsides (which is important to know and understand). But I thought I'd bring this to BP and see if I can get some insight from other investors. Thank you!
Turn key is nothing more than buying a home from a home flipper who renovates or builds new but instead of selling to owner occ they sell to investors.. its really as simple as that.
sometimes they own the management company so that keeps that part in house and there is a big push from the marketing side that you need to have the home have a tenant in it day one so you have cash flow right away.. I TOTALLY disagree with that.. I think that can lead to issues for the turn key company the PM and the owner.. to much pressure to put a tenant in .. and the owner has no say as to who went in.. it just comes with a tenant.. I think owners would be wise to go ahead and buy a renovated house then have some say as to who goes in it.
I started with turnkey remote rentals in 2009-2015 while working my engineering W2 job. Then went into syndications once my net worth went over 500k.
I think a lot of people on here are more active (less money) and would rag on turnkey but i think it was a great way for a working professional to get started.
It could be or it couldn't. Most people shy away from turnkey properties because the cash flow isn't worth the time. Of course, on the other hand, I'm sure you can find hundreds of others who do nothing but turnkey and are successful. There’s money to be made no matter which avenue you choose. Do your research, find what's comfortable for you, and go for it.
A lot of this depends on the area and the specific property. Some areas and types of property are more likely to cash flow than others. That being said, I've NEVER found a turn key property that actually cash flows and that's without outside PM. In my area at least the only way to get decent cash flow is to buy distressed properties at steep discounts, do quality rehab, and then rent at market value.
Yea, pretty much what all the others said. Nothing wrong with turnkey, i actually closed on 2 turnkey properties this year. They all cash flow, but they are all pretty much in the mid west.
Its still a pretty hot market, so everything is getting scooped up right now super fast. So i am currently looking at other ways to acquire property. I am trying to buy properties that require a slight rehab and renting it out at market.
There is nothing wrong with turnkey. Buy a finished house, get a tenant in place, and in 20 years you have an asset that someone else paid for. It is a get rich slow tactic. Stack up several of them and use the cash flow to pay down the mortgages faster. Absolutely. Let the house appreciate while someone else pays the bills. Yep. Tax benefits. Yep.
Are there faster ways to get there, sure. But they take more direct time and effort on your part. It's about finding the strategy that works best for you and the time that you have to dedicate to REI.
Guess what? You can use more than one strategy. Start with a turn key solution because it is easy and gets your foot in the door. Then maybe BRRR a house and get more of the benefits directly. Then jump to whatever. Just because you start with one doesn't mean that it will be the best solution for the rest of your life. You can incorporate multiple strategies!! The key is making sure that the time, money, and results fit with your plan.
It depends on your objective. I do not invest in actual turn key, but i do invest in properties that 80% ready and all I have to do is just perform a clean and some touch up paint. I have a W2 job so it works for out for me. Brrr works for others but for me due to my demanding job.
Turnkey can work but it really depends on your long term goals and current resources. There are more hands in the pot and you want to make sure the management company and construction company are very strong.
If you are a W2 professional and want to get started in Real estate but don't have the bandwidth then turnkey is the easiest way to get into investing. You can choose from one of the many markets in USA where you will find appreciation and cash flow and park your money and see the magic. Some of the midwest markets sell properties under 100k so its a small downpayment to get started. Good Luck!!
Think of turn key like going to a restaurant instead of cooking your own meal. You could cook your own meal, but you need a recipe, you have to buy ingredients, you need time to prepare it and you need the skills of a chef. Some people just don't have the time to cook meals or they want a professionally cooked meal, so they go to the restaurant. It is no different with turn key. The extra money you spend is for someone else's time and expertise. There are many situations where this makes sense.
From what I've seen in my market, turnkeys are poor investments. I might even have stronger words for some - toxic investments and even scams.
Here's the recipe: Take one newbie California investor* who can't find a cash flow property in their state. Take a property in the midwest in a lower middle class, even declining neighborhood. Buy it out of foreclosure, make repairs, put a tenant and then mark the price up. What can go wrong? Repairs and evictions. High cost of turnovers for single family houses. And probably an illiquid investment that might sell for less when you're ready to exit.
*I'm not picking on California, but more than one turnkey provider has said that California buyers were their biggest customer base.