What to Look For in a Turnkey Rental Property Company

A good turnkey rental property company can be your ticket to financial freedom and a lifetime of passive income. It can be a real joy to work with a good turnkey provider. When you’re finally ready to start your journey and get into rental property investing, here are four key features to look for in a turnkey company:

1. Transparency

A trustworthy turnkey rental property company operates with complete transparency. You should be able to view available properties, ask questions and get answers without committing to anything. You shouldn’t even have to give your name or email address in order to learn about the company and its operations. Think about it. When you go to a site like Zillow or Trulia, you have access to all the listing information, including price, historical tax data, nearby schools and more without submitting any personal information. Why would a turnkey rental property operate any differently?

Potential Dangers

When a turnkey rental property only shares information with you privately, it’s like being boxed in a separate room from other interested investors. How can you know that you’re getting access to the same listings as everyone else? How can you be sure you’d be paying the same price for a certain property as a more “desirable” investor? The answer is, you can’t be sure at all. You’re essentially being fitted with blinders to keep you in the dark so that you can never tell if you’re being offered the same deals and getting the same rates and treatment as another investor. And that’s not right.

2. Experience

Every company has to start someplace. But when it’s your money that you’re investing, you want to be sure it’s in experienced hands. A trustworthy turnkey rental property company has experience buying, rehabbing, renting and selling rental properties. They have a solid growth history that demonstrates their knowledge and expertise in the turnkey rental property space. The owners and managers in the company should have personal real estate investing experience, either through their private holdings, education or employment.

Potential Dangers

Working with a turnkey rental property company that lacks experience is frustrating and potentially dangerous. Not only will they be unprepared to handle the unexpected; they could get you into a financial situation where you risk losing money or become vulnerable to a legal filing. There are lots of moving parts when buying a good rental property; rehabbing it, vetting tenants and then managing the property and the tenant. Every piece of the puzzle needs to be carefully arranged. Do you want some inexperienced company that’s still driving on the learning curve with your money? No.

3. Fair Selling Points

Honest turnkey rental property companies won’t try to make money off you by making you fork over the difference between the final appraised value and their asking price. They should be making their money on the difference between what they bought the property for and its fair market value after rehab. For example, if you put a $115,000 turnkey rental property under contract and your lender appraises it at just $85,000, you should be able to put down your 20% that equals $17,000, finance $68,000 and take ownership.

Potential Dangers

An unprincipled turnkey rental property company (and there are a lot of them) might make the investor pay the original full $115,000 purchase price even though the appraisal only came in at $85,000. The unsuspecting investor would need to put down $47,000 instead of $17,000. If the investor refuses, it’s no problem for the unscrupulous turnkey company. They’ll just turn around and sell it to another investor at full asking price. Unfortunately, this kind of thing goes on everyday. If you encounter this, don’t fall prey to it. Instead, work with a turnkey rental property company like MartelTurnkey that knows how to give investors a fair deal.

4. Owned Inventory

Reputable turnkey rental property companies already own the inventory they’re selling. As an investor, you’d be able to view available listings, know that they’ve already been rehabbed and either have a tenant in place or they’re ready to be rented out. You’d know who you’re buying from. As owners, the turnkey rental property company is vested in the property. They’ve spent time and money on it and stand behind the quality.

Potential Dangers

Some turnkey providers don’t have enough inventory to offer investors. They may have trouble finding deals or financing so they only have a small selection of properties. They may even try to sell properties they don’t yet own. Since they have no personal financial interest in the property, they don’t have to stand behind the quality. They’re literally just serving as a middleman. In other cases, turnkey providers with low inventory may only give deals to their preferred investors. You’ll have to wait at the back of the line for inventory, in which case you’ll get your pick of the worst of the crop.

There are many turnkey rental property companies to choose from. Some specialize in certain kinds of rentals, or in certain regions of the country. Whatever your situation, when you’re ready to find a turnkey rental property company, make sure it has these four key features. And if you have any questions about turnkey rentals or how to choose a good turnkey property, please feel free to call MartelTurnkey. We’re always happy to help, no matter what your question is.

Further Reading: To learn more about the potential dangers of turnkey providers, please read, “Six Things to Watch Out For With Turnkey Providers.”