When looking at investment opportunities in real estate, turn-key properties are an excellent way to see quick returns, passive income, and portfolio diversification without the headaches that typically come with real estate.
A turn-key property is a home or apartment building that has been renovated and repaired before the sale, making it move-in ready at the time of sale. They often come with tenants and a property management company that does all the heavy lifting.
Read on to learn about the 7 key benefits of investing in turn-key properties.
1. They Are Convenient to Purchase
A turn-key property will have already been renovated and repaired before the sale goes through, saving you a ton of time and making it a convenient and smart purchase. You no longer have to worry about rehabbing the building, dealing with contractors, finding tenants, or dealing with property appraisals.
2. They Are Almost Always Represented by a Managing Company
Typically, turn-key properties will be represented by a property management company that will stay on for a fee to deal with the building. This includes collecting rent payments, arranging for repairs, and dealing with tenant requests and complaints. Investing in a turn-key property allows you to build wealth without dealing with the headaches that normally come with rental properties.
3. They Have Lower Vacancy Rates
When you purchase a turn-key property, you are far more likely to see a quick return on your investment as the building will be move-in-ready. If the building does not already have tenants at the closure of the sale, acquiring new tenants for the building will be a breeze because the building requires no repairs or renovations – it’s already livable.
This allows you to generate cash flow almost instantly.
4. If There Are Tenants in Place, Less Leg Work Required
A lot of the time, a turn-key property will already have a tenant in place which saves you from having to screen new tenants, hold viewings and open-house meetings, or pay to post up listings of the property.
If the property doesn’t have a tenant in place, the property management company in charge of the building will take on the responsibility of finding tenants and screening them.
5. They Are Fantastic for Expanding Your Portfolio Quickly
Turn-key properties are excellent for diversifying your portfolio and growing it quickly, because they do not require you to spend time finding tenants, securing cash for repairs and renovations, or traveling to the area to inspect the building.
Rather, they are fairly easy to invest in even if you are securing the property remotely as the contract arrangements and sale can be done through the managing company.
6. Turn-key Properties Can Boost Your Safety Net
Since they generate quick cash flow and passive income, they can help boost your safety net against other rental regions that have higher risks.
If you are invested in properties that may be impacted by depreciation or are located in areas where natural disasters can occur, investing in a turn-key property in another region can pad your safety net in case another area of your portfolio gets hit.
7. They Are Easy to Manage
When you purchase a turn-key property, you can choose whether you want to keep the property management company or choose to self-manage the building.
By working with the existing property management, you can save yourself both the time needed to maintain the property and the time needed to handle current and new tenants.
While turn-key properties can be more expensive to take on in that they will have additional fees for the managing company and, in some cases, may have long-term refurbishment costs, they are a fantastic way to build wealth without assuming many of the headaches that come with real estate investment.