Definition of "Turnkey property"

Deonne Ramos real estate agent
Deonne Ramos, Real Estate Agent Keller Williams Realty

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.

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