Turn Key Investing
Member since 2026 · 1 post · 3 votes
Turn Key Investing
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Specialist · Long Beach, CA · Member since 2011 · 887 posts · 399 votes
2moI think many people don't like the idea of buying a turnkey property because they are paying retail. And many investors are told that you should never buy retail, and to always buy at a discount. But the truth is that when you buy a property that has a new roof, new HVAC, new plumbing, etc, you are prepaying for that cap ex. Versus having to pay for it down the road.
If your goal is long term hold, there is nothing wrong with turnkey. Many of my properties that I still own today were purchased turnkey. And if you buy brand new construction, it's peace of mind for long term hold.
I know Zach and his team at Rent To Retirement. They are a great team to work with. With any company, go out and visit the market and see the neighborhoods for yourself.
7 Replies
- 2moJoseph CacciapagliaBusiness MemberLender · San Antonio, TX · Member since 2020 · 1k+ posts · 1k+ votes
I've seen a lot of investors get burned by turnkey operators. I've never bought from them myself, but have helped several investors out of bad deals that they got into from turnkey companies. There is just such a large information asymmetry built into the model, that it creates the perfect situation for bad actors.
- Member since 2026 · 37 posts · 57 votes2mo
I would recommend exercising caution when considering turnkey companies. Many turnkey operators make their money when the property is purchased, which can create a misalignment of incentives. Their focus is often on selling the property, the investment model, and the promise of a cash-flowing, semi-passive investment. Once the sale is complete, however, the level of support and accountability from the turnkey provider may not match what was originally presented. I recommend that you read the BiggerPockets forums to learn from other investors' experiences.
While turnkey companies promote a proven system, the investor is ultimately responsible if that system fails to perform as expected. When problems arise, the response from the turnkey operator is often that the investor "should have done more due diligence." In other words, once the purchase is complete, the investor may be left holding the consequences of a poor-performing property—essentially having bought a "lemon" with limited recourse against the company that facilitated the investment.
Common turnkey problems include:
Property classifications may be misleading. Terms like Class A, B, and C are often used to market properties, but there is no universal standard for these classifications. A property marketed as one class may not actually match the neighborhood conditions, tenant profile, or investment characteristics represented. If you discover after purchase that the property does not align with the classification you were sold, the turnkey provider can point out that these classifications are subjective and that you should have performed additional due diligence. This exact scenario has actually played out publicly on the BiggerPockets forums.
Pro formas and property management promises may not hold up. Turnkey operators have an incentive to make the numbers look attractive on paper, including projected rents, expenses, and returns. However, actual performance can differ significantly after purchase. When major issues arise with tenants, property management, or expenses, investors are told they should have performed additional due diligence, leaving them responsible for resolving the problems.
- 2moJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Samantha Andrews:
I would recommend exercising caution when considering turnkey companies. Many turnkey operators make their money when the property is purchased, which can create a misalignment of incentives. Their focus is often on selling the property, the investment model, and the promise of a cash-flowing, semi-passive investment. Once the sale is complete, however, the level of support and accountability from the turnkey provider may not match what was originally presented. I recommend that you read the BiggerPockets forums to learn from other investors' experiences.
While turnkey companies promote a proven system, the investor is ultimately responsible if that system fails to perform as expected. When problems arise, the response from the turnkey operator is often that the investor "should have done more due diligence." In other words, once the purchase is complete, the investor may be left holding the consequences of a poor-performing property—essentially having bought a "lemon" with limited recourse against the company that facilitated the investment.
Common turnkey problems include:
Property classifications may be misleading. Terms like Class A, B, and C are often used to market properties, but there is no universal standard for these classifications. A property marketed as one class may not actually match the neighborhood conditions, tenant profile, or investment characteristics represented. If you discover after purchase that the property does not align with the classification you were sold, the turnkey provider can point out that these classifications are subjective and that you should have performed additional due diligence. This exact scenario has actually played out publicly on the BiggerPockets forums.
Pro formas and property management promises may not hold up. Turnkey operators have an incentive to make the numbers look attractive on paper, including projected rents, expenses, and returns. However, actual performance can differ significantly after purchase. When major issues arise with tenants, property management, or expenses, investors are told they should have performed additional due diligence, leaving them responsible for resolving the problems.
"Many turnkey operators make their money when the property is purchased,"
All sales agents be them brokers or turnkey providers made their money when the property is purchased this is not news :) And or if the turnkey outfit actually owns the property like REI nation for one they make their money just like any other value add flipper at closing pay off their debt if any and the delta is profit that goes to the company to support operations and or income for the owners..
buying any rental comes down to basic due diligence there is plenty of info on line to help protect folks when purchasing rentals..
There are many bad turn key companies. There are only a few good ones.
Many turn key companies have mislead people to get the sale and cut and ran when things got bad.
There's countless stories here and more elsewhere (where they don't get shouted down as much). Many people coming to the defense of specific turn key companies are employees of the same company (yet limited or no disclosure is made when arguing on their behalf). As if that isn't bad enough, affiliates of turn key companies also frequently chime in defending them, without being up front that they too, are on the take and benefit directly from the companies they're defending. See a pattern?
Real estate is a solid investment, I don't think turn key is a good fit for almost all investors.
- 2moDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 13k+ posts · 9k+ votes
There are a LOT of bad turnkey companies out there that may have started out with great intentions, but as they grew, they started focusing on sustaining their operations over integrity.
RTR had a pretty good reputation for integrity, but they still have issues finding great PMCs to recommend.
@Samantha Andrews has a great story about them.
Logical Property Management4.9465 Reviews - 2moNatalie NixonPro MemberReal Estate Consultant · Birmingham, AL · Member since 2023 · 18 posts · 11 votes
HI Alecia,
I think you'll find both good and bad turnkey providers. The key is doing your due diligence. I'd look at who is responsible for the renovation and ongoing property management so you understand accountability, and I'd ask for their KPIs (occupancy, collections, maintenance, renewals, etc.) to see how the portfolio is actually performing.
Natalie
- Specialist · Long Beach, CA · Member since 2011 · 887 posts · 399 votes2mo
I think many people don't like the idea of buying a turnkey property because they are paying retail. And many investors are told that you should never buy retail, and to always buy at a discount. But the truth is that when you buy a property that has a new roof, new HVAC, new plumbing, etc, you are prepaying for that cap ex. Versus having to pay for it down the road.
If your goal is long term hold, there is nothing wrong with turnkey. Many of my properties that I still own today were purchased turnkey. And if you buy brand new construction, it's peace of mind for long term hold.
I know Zach and his team at Rent To Retirement. They are a great team to work with. With any company, go out and visit the market and see the neighborhoods for yourself.
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