When purchasing a turnkey property, some real estate investors believe that the investment is fool proof. These properties are already rehabbed, usually by a specialized turnkey real estate company, and there is typically already a renter in the home before it is purchased. Those same firms then offer property management services to the investor. Below are a few tips to know before purchasing a turnkey property from these companies.
When purchasing turnkey properties, it may be best to choose middle class homes rather than extremely cheap properties. Although those properties are at a low cost with a high possible return on rental income, they can also be risky. The neighborhoods those properties are located in are typically high crime and the chance of the tenant missing payments increases dramatically. Choosing properties that are more in the middle will be less risky and have a steadier return on investment.
Typically, turnkey properties are sold at above market value so it may be difficult for real estate investors to find a property at or below the market value. Looking for a good turnkey property with a good price may be difficult, but worth the search if a real estate investor finds it. Investors should only purchase properties above the market value if they’ve ensured the property is in a good neighborhood and they will receive a return on their investment.
The Property Management Company
The property management company is an important aspect of turnkey real estate companies. Real estate investors should thoroughly research the companies before deciding to use them and make sure that they provide high-quality tenants, low vacancies, and reasonable repair and management costs. It may be best to pay for a property management company that charges more but has a good reputation.
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