When “turn-key” and “current tenants want to stay!” is too good to be

To many investors–especially newbies–coming across a turn-key rental property sounds appealing. It can sound even more appealing when the current tenants “pay rent on time and want to stay!” But buyer beware. Don’t believe an ad description. Do your due diligence!

Credit: http://www.sdretirementplans.com/

Turn-key is a term that can be used loosely

If you’re looking through real estate ads online or from deals people such as wholesalers or retiring landlords send, you might see the word “turn-key” a lot. But what turn-key means to you could mean something else to another person! Also, sometimes the term is used just to get more people looking at the property. From personal experience, I’ve learned that turn-key doesn’t mean immaculate. The place could needs tons of various small repairs or maintenance, but, it’s in livable condition! Small things like peeling paint, half-working stoves, worn out floors, and the like can really ad up in costs. You will have to weigh on when these items will need to be addressed and factor in the extra cost for maintaining a nice looking property.

Don’t jump for joy too fast when you hear “the current renters want to stay”

I notice this line is used fairly frequently in real estate ads. “Renters pay on time and want to stay!” This could be true. Or this could be too good to be true. It’s your responsibility to find out the truth. Be sure to get proof that those current renters are paying on time. If the landlord can not show some sort of proof whether it be a rent roll, receipt copies, or a spreadsheet on rental deposits, you may want to either re-negotiate the deal or even walk away. The last thing you want is to close on a property and almost immediately deal with headache tenants and eviction processes…unless the deal was THAT good! Otherwise, if possible, you should negotiate along with your offer price that you want the tenants to be vacated before closing.

So remember, take pause when you see something that sounds great. Ads are written to sell a property and will easily leave out honest details. This is one of many reasons doing your research (due diligence) is so important!