Turnkey Investment Property: An Easy Entrance Into Real Estate Investing

CEO Khai Intela
You've probably heard of real estate investing before, but have you ever considered turnkey investment property? If you've ever rented an apartment or a business property, you've likely dealt with a landlord and wished you...

You've probably heard of real estate investing before, but have you ever considered turnkey investment property? If you've ever rented an apartment or a business property, you've likely dealt with a landlord and wished you were in their position, earning money effortlessly. That's where turnkey properties come in.

In this article, we're going to dive into the world of turnkey real estate investing. We'll discuss what it is, how it works, and the pros and cons you should be aware of. So, if you're ready to embark on your real estate investment journey, let's get started!

Real Estate Investing - The Backbone Information

Before we delve into turnkey properties, let's first understand the basics of real estate investing. Real estate refers to any piece of land or property legally attached to it. When you invest in real estate, you're essentially purchasing a property or land along with any man-made additions.

Types of Real Estate: 3 Most Popular Categories

When considering turnkey properties, there are three main categories you should be familiar with:

Residential/Rental Property Investing

Investing in rental properties can be a great way to boost your portfolio and generate significant cash flow. It's important to consider factors like location, crime rate, and rental rates of other investors in the area. Additionally, keep in mind that a down payment of 20% to 30% is typically required.

Commercial Property Investing (CRE)

Commercial properties are exclusively meant for business-related purposes. These properties, such as office buildings, hotels, and malls, generate income for tenants and rent-related cash flow for investors. Investing in commercial property often requires full property management services.

Industrial Property Investing

Industrial real estate plays a vital role in supporting the economy. These properties are used for creating and manufacturing goods, storage, and other industrial activities. Industrial properties can vary in condition, with Class A properties being in the best condition and Class C properties requiring renovation.

What Is a Turnkey Property?

Now, let's focus on what a turnkey property is. A turnkey rental property is a property that is ready to be rented out immediately. These properties have already been renovated and require minimal effort from the investor. Turnkey providers handle the renovations and often offer property management services, making it a convenient option for investors.

Turnkey Business, Cost & Contract - Things You Should Know

When investing in turnkey properties, turnkey providers take on the responsibility of setup and provide the property to the investor. The term "turnkey" refers to the idea of handing over the keys to the tenant, making it ready for immediate use. Turnkey costs include expenses such as labor, materials, cleaning, and inspection. Additionally, a turnkey contract stipulates that the contractor is responsible for the design and construction of the property.

Is Investing in Turnkey Property Legal?

Investing in turnkey rental properties is legal as long as you follow legal guidelines and avoid any shortcuts. However, it's essential to be cautious and avoid fraudulent turnkey companies. Look out for red flags such as claims of no risk, poor property rehab, and promises of fully passive income. Additionally, ensure the property management is reputable before making an investment.

Should You Be Interested?

Investing in turnkey properties can be a great opportunity, especially if you're short on time or prefer to skip the renovation process. While there are risks involved, there will always be a demand for rental properties. With proper research and due diligence, turnkey property investing can provide a steady source of passive income.

Strategies for Buying Turnkey Properties

For beginners in the turnkey real estate market, it's important to consider effective strategies. Here are a few strategies you should think about:

Real Estate Wholesaling

Similar to house flipping, real estate wholesaling involves contracting a house with a seller and assigning the contract to another buyer for a higher price. It can be a profitable short-term strategy if you find the right property.

Real Estate Prehabbing

Prehabbing combines wholesale and rehabbing strategies. You purchase a property and sell it to a rehabber who will restore and sell it. Prehabbing allows for more freedom, as you can make some improvements to the property before selling it.

Real Estate Investment Fund (REIT)

REITs are companies that own income-generating real estate. Investors can buy shares in these companies and receive regular dividends. REITs are a low-risk option for beginners or those on a tight budget.

Online Real Estate Platforms

Online platforms and turnkey real estate websites offer opportunities for crowdfunding and out-of-state investments. These platforms connect developers and investors looking to finance projects through equity or debt.

The Ups & Downs of Investing in Turnkey Projects

Like any business, investing in turnkey properties comes with its ups and downs. On the positive side, there's no responsibility for renovations, and you have the opportunity for out-of-state investments. However, you should be cautious of bad property managers and the potential risk of overpaying for a turnkey property.

Places to Look for Turnkey Properties

To find turnkey properties, consider attending investor meetings and networking with other investors. The internet is also a valuable resource, as you can search for credible turnkey companies and utilize online real estate platforms like Mashvisor's Property Finder tool.

Turnkey Investment Property: Final Thoughts

Investing in turnkey properties has become increasingly popular in recent years. It provides numerous opportunities for real estate investors, but it's important to have a solid strategy in place. Understand the ups and downs, and always perform due diligence before making an investment. If you're ready to expand your investment portfolio, sign up for Mashvisor's free trial to access real-time information and profit-making areas near you.