What to Ask When Working With a Turnkey Provider
When it comes to generating passive income, turnkey real estate investment is a smart strategy. You purchase a property in an ideal area for rentals, remodel it in order to make it attractive to tenants, and then have it managed by a turnkey real estate investment company.
In fact, from purchasing and renovating, to the rental process itself, an experienced turnkey real estate investment company can guide you and help you put your money into the right location. First, though, you have to ask the right questions to find the best company.
What to Ask a Potential Turnkey Real Estate Investment Company
How long has your company been in the property management business?
As exciting as it is to help an up-and-coming company get off the ground, you don’t want your rental property (and your tenants) to be guinea pigs in the experiment of a fledgling property management company learning how to do business. If they’ve been in business for a year or so, proceed with caution. Three years or more is best. By then, they’ll have learned how to manage things properly and efficiently (and if they haven’t, it will show).
In what area are your properties located?
This is helpful to know for two reasons. One, it will tell you if the company has a thorough understanding of the area in which your property is located. This is key to advertising to and attracting tenants, as well as determining rent prices that are appropriate for the neighborhood where your property lies. Another reason you’d want to know where a rental company operates is if you purchase additional properties in the future, you’ll know whether or not your current property management company can manage them for you.
Do you own the property and do you do the renovations?
Find out if the company purchase's the property under their name before offering it for sale. If they do, this is a huge benefit because they have physically been to the property and know everything about it. Then ask if they renovated the property. If they didn't, who did, or was the property even renovated? A top turnkey real estate investment company will purchase the property under their name and renovate it before they even offer it for sale. This is huge for you as the investor because you don't have to go out and find contractors or fork out the money for the renovations, they have already been done.
How many tenants do you evict, on average, every year?
Every rental property owner’s goal is to secure responsible, long-term tenants and keep them happy. With this in mind, a good turnkey real estate investment company should work to screen potential tenants in order to eliminate any possible risks to their clients, from property damage to late or missing rent payments. A high eviction rate signals that a property management company is letting a lot of bad apples slip through the cracks during their screening process --- wasting everyone’s time and money.
How will you handle repairs and maintenance for my property?
One of the benefits of working with a turnkey real estate investment company is that you get to be a landlord without dealing with the day-to-day hassles that come with the job. One of those hassles is maintenance, and it can be a particular problem to keep everything in your property up-to-date and working well if you live out of the area. Before hiring them, find out if a property management company has licensed repair persons on staff, if they work with specific companies that are licensed and insured, or if they simply call around and see who they can have show up on short notice.
What services do you offer and how much will they cost?
Find out exactly what is included in the contract with a potential turnkey real estate investment company. What services will they offer for the price? Some companies offer different tiers of service for different pricing. Make sure you have a complete understanding of any additional fees that may pop up. Are you still charged if the property is empty? Is there a fee if you cancel with them and switch to a different property management company? Get everything in writing up front and ask questions if you’re unclear about anything so that you know what you’re buying into before getting started.
Meet the Author:
Tom Ott (Investor, Agent, & Turnkey Provider)
Home Town: Cleveland, Ohio
Specialty: Turnkey Provider and House Hacker
Years in Service: 2
Passion: Assisting Investors Earn Passive Income
Goal: Educate Investors to Help Them Achieve Their Goals