Turn-key rentals sometimes get a bad rap since they aren’t considered “value-add.” However, there are other benefits they bring to the table.
If you are not familiar with the term turn-key it is a property that is rent ready when you buy. The renovation has already been complete and property management may already be in place.
Let’s talk about what turn-key properties provide so you can decide if investing in one makes sense.
Are Turn-Key Rental Properties Right For You?
Boots on the Ground
As investors we often talk about boots on the ground and how it makes sense to find some when investing in a new market.
Often turn-key properties come with property management in place who are familiar with the market and already have resources in place, such as plumbers, electricians and handymen.
By purchasing a turn-key property you eliminate all the leg work of finding these resources. It becomes plug and play.
I believe it is important to diversify in any asset class, real estate included. If you have a bunch of properties in one market then you are at the mercy of that market, both good and bad.
By investing in a different geographical area that has different market dynamics you are leveling the risk-profile of your portfolio.
Once you have identified a potential new market you can seek out established turn-key provides to then do the heavy lifting so you can continue to be the master of your current or local market.
It’s then just the job of vetting out a good turn-key provide as opposed to doing all the work mentioned in my first point.
Eliminates Long Distance Renovations
Renovations are a handful to begin with, but picture doing one from a distance on a property in another state. It can be “entertaining” to say the least. If you don’t have much experience doing renovation projects yet this can leave you over exposed to issues.
The truth is my ability to find decent contractors and oversee a renovation is much better now than on my first property. Like I always say, “experience is the best teacher.”
Sometimes leveraging other people’s experience makes sense though – and that is what a turn-key provider can offer. Don’t be afraid to pick their brain and learn about what renovations were done and the cost of them.
Time Value of Money
If you have a 9 to 5 earning a good wage, taking time away from that to handle real estate investing may not be your highest and best use. Turn-key providers give you the ability to invest in rental properties without having to commit a ton of time.
Case by Case
Each one of us have different goals and different responsibilities in our lives. Thus, the decision to buy turn-key vs. doing it yourself is a personal one.
If you do go the turn-key route be sure to vet out any turn-key/property management well as they will be an integral piece to your investment being profitable.