Is Turnkey Real Estate Investing Worth Your Money?
Turnkey real estate investing refers to buying a piece of property that comes rent-ready, and often with a tenant already in place. It usually comes from a company that provides a full service for real estate investors.
What are our goals with turnkey real estate investing (or any investing for that matter)?
Ultimately you need to be focused on the total return of the investment, and essentially what boils down to the IRR (Internal Rate of Return). It’s the only accurate measure of performance.
What is a “good” IRR for real estate investment(s) anyway?
Calculating the actual total return, or IRR, over a period of time will allow you to also calculate the Compound Annual Growth Rate (CAGR) of your cash investment.
How do we compare real estate investing with stock market investing?
The most basic well-known stock market CAGR would be that of the S&P 500, which over its entire history has produced a CAGR of roughly 10% per year (when reinvesting dividends).
So naturally when it comes to our turnkey real estate investing (or any RE investment), we would want to best that benchmark to declare a “good” IRR.
What is our target CAGR?
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We should have our target CAGR set at 7-8% and above for a “good” IRR. Hopefully, we will match that 10%.
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