Definition of "Turnkey property"

What is a turnkey property? A turnkey property is a very popular type of investment property that real estate investors prefer because it starts bringing a return on investment quickly. Just like in any field, time is money in real estate, too. So those who have neither the time nor the money to run a house-flipping business, are more likely to invest in turnkey properties, namely houses and apartments in all shapes and sizes that are move-in ready, fully furnished and ready to be occupied by a renter. 

Knowing the definition of turnkey property is crucial for wannabe real estate investors. This type of properties is worth buying especially in the best markets for landlords, where it is better to rent than to own a property. So, a turnkey property is cash flow ready. A tenant can rent the place immediately and pay the security deposit as well as the first and last month’s rent. So, the landlord begins to recover his or her investment right away. 

When buying a turnkey property with the intent to rent it afterward, the interior design doesn’t have to suit your tastes. What really matters is its location. Is it in a safe neighborhood? Is it in a safe city? How good is the school district? And how much is the HOA fee? These are all important questions that demand an answer before investing in a turnkey property. Also, investors should also do a SWOT analysis to better measure the rentability of a particular turnkey property.

While turnkey properties do not require any major repairs and are often in very good condition, that doesn’t imply that the new owners can’t make home improvements, especially if they plan to accommodate people with special needs or visual impairments. 

Where to look for turnkey properties? The first source - the companies specialized in buying and upgrading old buildings. Some are small family-owned house-flipping businesses, others are large companies with branches in every state. Secondly, distressed properties also make for excellent turnkey properties. Houses in foreclosure, REO properties, probate properties - all are great sources of move-in ready properties that may even be priced below the market price. The third place where you can find motivated sellers is around lakes. Waterfront properties may have higher maintenance costs that some homeowners may find unbearable after a while. However, rookie investors should be aware that there are many misleading advertisements and scams that promote vanilla shells as turnkey properties. Vanilla shells are the exact opposite - empty homes that still require a lot of work inside, from installing the right floor to decorating. 

All in all, turnkey properties are a great source of passive income. Investor’s main goal is not to own that property, but to use it as long as it is profitable. Turnkey properties are fairly liquid investments. Real estate agents can find a buyer for a fully furnished home in no time.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Mortgage banker is the person or business that originates mortgages and receives payments. The mortgage banker typically sells these mortgages to investors and obtains service fees for the ...

Insurance coverage provided for an individual having a lease at a favorable rate, one which is less than the market value of the property. The insurance indemnifies the tenant for business ...

The definition of the price-to-rent ratio is very important for real estate investors. This ratio is a measurement for the affordability of a particular rental property and tells investors ...

Agequake is not the era of earthquakes! It’s a term that was coined by author Paul Wallace in his 1999 book “Agequake: Ridding the demographic rollercoaster shaking business, ...

Bank modifies the borrower's mortgage obligation, such as when the bank approves the homeowner's request for an extension of time to pay because of illness or loss of a job. One's ...

Personal income minus personal income tax payments and other government deductions. It is the personal income available for people to spend or save; also called take-home pay. It may be a ...

Combination of IRC 1034 and 121 dealing with the sale of a personal residence with the once-in-a-lifetime $125,000 exclusion that may be available for the "over-55" seller. Should the ...

Map presented to a municipality's planning agency by a real estate developer for consideration and approval. ...

A method of purchasing real estate whereby a maximum amount of leverage is used. Normally the seller will finance the down payment necessary to acquire a mortgage. Thus, the purchaser is ...

Popular Real Estate Questions