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Normally, whenever you buy a property, you are going to want to do some sort of work in order to get it into the condition you want before using it as a rental. However, that also means that it is going to take longer for you to start earning the cash flow you want from your investments.
So, what is the solution for investors who want to buy move-in ready properties in order to kickstart their cash flow? The answer is turnkey real estate.
These properties hold the key to unlocking a world of quick-start passive income that can help you fund your life or continue expanding your portfolio much sooner. However, they do come with some drawbacks.
In order to decide whether investing in turnkey properties is right for you and your portfolio, lets take a look at the pros and cons of turnkey real estate investing.
But first, if you are looking at buying a turnkey property and need to make sure you can secure the correct financing today, click the link below to book a free strategy call with our team at LendCity today.
What is Turnkey Real Estate?
Before looking over the pros and cons it is important to establish what turnkey real estate actually is. In essence, turnkey properties are homes that are recently renovated or well-maintained that are essentially move-in ready once you buy them. In fact, many realtors and companies that market turnkey properties for sale refer to turnkey investing as buying passive income due to the strong cash flow potential these properties hold.
Pro: Move-In Ready
One of the biggest advantages of turnkey real estate is the fact that these properties are move-in ready. Instead of taking the time to repaint and update a property before advertising your rental, you are free to just start marketing the property.
This means that not only can you save time on renovations and begin marketing the property even faster, but you can also use the fact it is a turnkey property to your advantage and capitalize on the fact that it is a recently updated property. As a result, it may be easier to find tenants who want to rent your property and those tenants may be willing to pay higher rents in return for their high-quality accommodations.
As a bonus, when tenant turnover does occur it can also be easier to find new tenants due to the updated features and amenities in the unit.
Con: More Expensive
Turnkey real estate is excellent because of all of the updated, customized features that you can get without doing any of the work yourself. However, that does not come without a price.
Turnkey real estate is often much more expensive than other properties because instead of paying for all of the updates and renovations yourself, the previous property owner paid for them and decided to bake the costs into the sale price on the property.
Occasionally, this can result in overpaying for a property, so it is crucial that you look for comparable properties to determine whether you are getting a bargain with all of the time a turnkey investment will save you, or if it is worth it to buy and update a property yourself for less money.
Discover How To Buy Unlimited Rental Properties With This Step By Step Guide
Pro: A Hands-Off Experience
Turnkey investments are also an excellent means of adding hands-off properties to your investment portfolio.
Since these properties require almost no work when your first purchase them, it is easy for you to sit back and start collecting passive cash flow almost immediately. Then, if you want a truly hands-off experience, all you need to do is contract the property under a full-time property management service to experience true hands-off passive income.
Naturally, there is a cost associated with hiring the property management company or adding the property to your current property management solution, but in exchange you receive significantly more time that you can use to continue investing and earning more money.
Con: Less Customization
Another drawback to turnkey real estate is the fact that there is much less room for customization in terms of property layout the types of features you want to include.
Since turnkey properties have prices set to reflect the fact they are already completed and updated, even if you wanted to customize the property, it does not financially make sense to do so.
If you plan to someday live in the property, or plan to use it as an investment while living in the property through a method such as house hacking, this can potentially be a deal breaker.
Pro: Great Option for Out-Of-Town Investors
One of the greatest advantages of turnkey real estate is how well the done-for-you approach to these properties can benefit out of town real estate investors.
One of the main drawbacks of investing in real estate that is out of town, is the fact that you have to trust that the pictures and descriptions provided to you accurately reflect the condition of the property. However, if you buy a property from a reputable turnkey seller, you can rest assured that the property is going to be in top condition and your money will be well spent on a profitable piece of real estate.
Financing Your Turnkey Investments
Whenever you are looking to secure financing for your turnkey investment properties, it is important to be wary of the increased purchase price of the property, so you be sure that you qualify for the full amount needed. Fortunately for you, our team at LendCity has the solution for you.
By getting a pre-approval through us, we can help you lock down the highest amount of mortgage financing available to you at the best available interest rate. That way you can buy the turnkey property and start collecting rent as soon as possible.