A turnkey rental is a “done for you” rental property. Turnkey providers specialize in finding discounted properties in desirable rental neighborhoods, rehab the homes, find and place quality tenants, a have property management in place to manage the day-to-day operations of the investment property.
Turnkey providers eliminate many of the obstacles that stop potential investors from entering a new market, including:
- Identifying high return markets
- Identifying ideal neighborhood to invest in
- Sourcing and negotiate discounted properties
- Securing bridge capital to finance the project
- Sourcing reliable contractors to rehab the home
- Managing the rehab process
- Screening tenants and do background checks
- Managing the day-to-day operations of a rental
We do the heavy lifting of building your rental portfolio.
Why buy turnkey rentals?
- Ease of Transaction – Low impact investing that creates stable passive income and can be done part-time.
- Increased Net Worth – Home prices rise, mortgages get paid-down, and property improvements.
- Low Entry Cost – Become an investor with little experience and as little as $15K.
- Cash Flow – Rental properties provide a unique opportunity to generate cash flow that only improves over time.
- Appreciation – Property values are on the rise from coast to coast, and appreciation over time can help build wealth.
- Equity – With properly managed, cash flowing rental properties, your tenants are generally paying down your debt for you each and every month to help you build equity.
- Tax Benefits – There are many well-known tax benefits to investing in rental properties (ask your tax advisor).
Who buys turnkey rentals?
- Busy professionals who like the idea of own investment real estate but don’t have the time.
- Investors that live in expensive areas that would like to invest in new markets to realize the higher returns.
- New investors that feel overwhelmed with the process of building a rental portfolio
- People that want their money to do the work.
It’s undeniable that real estate is the vehicle that has made most wealthy people, well, wealthy. Even if real estate isn’t what got them there, it’s become the investment vehicle of choice for many looking to protect and grow their wealth. In particular, wealth and ongoing cash flow are maximized with long-term buy and hold rental properties.
But let’s be clear – one of the beauties of owning rental properties is that the barrier to entry is quite low, thanks to the fact that it’s easy to leverage (borrow against). For new investors with stable financials and credit, access to lending isn’t hard to find.
So, why doesn’t everyone do it?
There are several common reasons:
It Takes Effort to Find Deals
Watch any HGTV based real estate investor show, and there’s never mention to actually finding the properties… but that’s usually the hardest part of all. Ask any seasoned investor – their biggest challenge is always “not enough deals”. It doesn’t matter if they’re buying 2 houses a year and want to grow to 5, or buying 100 houses a year and want to grow to 200, truly good deals are always a challenge to find.
It’s a Burden to Get Properties Ready
From the initial rehab, to ongoing ‘make-ready’s’ between tenants, working with contractors and getting houses ‘rent ready’ (so you can get paid!) is not for the faint of heart… especially if you don’t have much extra time in your day, or aren’t located geographically near your properties. God forbid you’re trying to do the work yourself… it will almost always take longer than having a professional do it, and let’s not forget about your ‘opportunity cost’ of doing, well, almost anything else!
Tenants, Toilets, and Termites!
Do you want to get maintenance calls at 3am? Nobody wants that! Many would-be newbies try to ‘save money’ by managing properties themselves, but a good property manager will be more efficient than you’ll ever be, will ultimately save you money and time, and will usually save you from a ton of drama! Plus, good property managers are often managing hundreds properties and can develop efficiencies that you simply can’t compete with.
It’s much better to be an investor, not a “landlord”.
Challenges Lining Up Financing Your Rental Properties
We stated above that access to lending for real estate investors isn’t hard to find… but there are a few challenges. First, not all lenders are created equal. You truly want a lender that ‘gets’ you and cares about what your goals are. The right lender can help with your strategy, and save you a lot of time, money, and grief in the long run. Second, you’ll get access to the best deals if your lender specializes in investments. Your local ‘big bank’ store may tell you they can finance your deals, but you shouldn’t spend a single minute with them… seriously… don’t make us say, “told you so” (we won’t go into detail … but just don’t ‘go there’)!
One of the very best lenders we’ve found in the country, especially if you own less than 10 rentals at this point, is Steve Bighaus – LEARN MORE HERE
Hard to Plan Your Attack
When you’re on an island by yourself, it’s hard to know what your options are with rental properties. You hear about the benefits (tax advantages, cash flow, appreciation, etc.), and maybe even know someone that owns rental properties, but resources to help you ‘plan’ your financial future with rental properties are not as readily available as say, your neighborhood insurance agent.
So, what’s a want-to-be rental investor to do?
Enter – Turnkey Rental Properties.
What is ‘Turnkey’? There are a few common definitions, but generally, it’s a service to help you wade through all the things above. It’s a way to have someone help you get access to funding, and help you understand some options of buying rental properties that are usually completely renovated with tenants and management already in place. (This is a ‘true’ Turnkey solution.)