Turnkey Real Estate Investing:
What a First-Timer Should Know Before They Buy
Turnkey real estate investing refers to buying a piece of property that comes rent-ready, usually from a company that provides a full service to an investor.
Here’s what a turnkey provider does:
they find the properties, rehab them, get them rented, sell them to you (the investor), and then manage the property for you (at least while they remain in business!).
Alternately, some providers might offer a “semi-turnkey” service. This is what I call a seller who does the flip, and gets a tenant in there, but then refers you to an independent management company that they don’t own or manage.
Is Turnkey Real Estate a Good Way to Buy Real Estate?
Generally speaking, turnkey companies can provide a valuable service, and it’s one of the few answers to the question of “How can I invest in real estate passively?” Or at least, “How can I invest in personally owned real estate passively?”
PROS: 1. Totally Passive Income (Or as Close as it Gets) It’s about as passive as it gets before moving down to crowdfunded real estate like Fundrise, or the public market’s offering of REITs (real estate investment trusts).
The Pros & Cons of Turnkey Real Estate Investing
The turnkey concept, or even property management in general, offers you the opportunity to invest in far away markets.
2. Invest Out-of-State in Cheaper Markets
CONS: 1. You Have to Rely Too Much on Others
The quality of your turnkey property management team directly effects the success of your investments.
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