Turn Key Rental Properties – Is It Worth The Investment?
February 05, 2020
There are so many investment opportunities in real estate. You can actually invest in real estate without ever having to buy any real properties. It’s the kind of investment that when you play your cards right, acquire skills, and strategically place yourself where the opportunities are, you can end up making more than you have ever imagined. It’s all about making the right investment decisions, capitalizing on the most viable and fleeting opportunities, and learning the rules of the game. You also need to consider the stiff competition and all that comes with investing in real estate.
As you may already know, turnkey is yet another investment opportunity in real estate. It’s among the most profitable real estate opportunities anyone can ask for. But do you know how it works or what it’s all about? Well, don’t beat yourself up over it just yet!
With the real estate property prices increasing at a steady rate, with minimal chances of going down, having a property that is in rent-ready condition must sound like a dream come true to a real estate investor. Any investor with the right approach will find turnkey rental properties to be a golden investment opportunity. However, the question still remains, are turnkey rental properties a worthwhile investment?
Nonetheless, it may sound like the deal of a lifetime, but there are a few things that you’ll need to carefully consider before investing in turnkey rental properties. You just don’t want to invest your money blindly, right?
To decipher whether or not turn-key rental properties are worth investing in, let’s take a look at some of the most crucial factors to consider before investing in them:
1. First Things First, Build Your Portfolio
The caveat with turnkey properties is the time and energy it takes to find the best deals. You’ll need to go through so many listings before finally clinching on the best properties. According to Jack Gibson from High Return Real Estate, the first thing you’ll need to do when investing in turnkey property is to build your portfolio before anything else. As long as you’re using a listing site or real estate company that offers plenty of opportunities, you can start earning from your investments before you know it. In case you don’t have enough money to start investing and growing your portfolio, you can always apply for a portfolio loan in your local community bank and easily pay off any property. While the interests might be a little higher than when applying for other loans, it will still help to guarantee your purchase and get things moving from there.
2. Research on Different Turnkey Properties
One thing to note is that most turnkey properties are single-family homes. Nonetheless, you can still conduct your research and find other turnkey rental properties that are not single-family rental homes. You’ll have a variety of options to choose from if you go through a well-established online property listing in your location. This way, it will be relatively easy to find a turnkey property that meets your preferences and budget allocation. Most importantly, to determine the worth of the turnkey property, consider homes that require minimal to no rehab or renovations. Turnkey rental properties with fewer to zero construction fees will most definitely have a better return on investment rate. The first rule of thumb is to keep your options open and your expectations realistic.
This is another factor to consider when determining the worth of such an investment. It’s important that before investing in any turnkey rental property, you consider the maintenance issues that may arise over time. One thing to note is the amount of time it will take to manage the property on your own. This, considering your busy schedule as well as other time-demanding commitments. To make it easier, consider buying your properties directly from a turnkey investment company as they’ll offer you a property management package. Though at a cost, it will help to take much of the load off your shoulders.
Before investing in turnkey rental properties and when determining the value of the investment, it’s important to ask the right questions. Whether you’re a seasoned investor or a newbie, knowledge is crucial. Knowing what you’re getting into will allow you to make sound and informed decisions.
Among the questions to ask the turnkey investment company or broker should include:
- Is the property worth the value?
- What’s the holding period of the property?
- Does the property require renovations?
- Are there any tax bills and will they change when I invest in the property?
- What’s the vacancy rate in the neighborhood?
- Is the property already tenant occupied?
Finally, scouting for the best deals is a real estate investor’s biggest strategy. The worth of your investment will be determined by how much you’re willing to sacrifice, your research, and most importantly, making the right investment decision. With the above few pointers in mind, turn-key rental properties can indeed be worth the investment.