Are turnkey rentals a smart investment strategy?
In this episode of Coffee with Carl, Carl Zoellner, Esq. explains the investment strategy behind turnkey rentals and whether or not you should consider investing in them.
Updated May 18, 2021
So a lot of you are wanting to know about turnkey rentals.
What I will tell you is, it’s another way many people choose to invest.
But is it right for you?
Defining Turnkey Rentals
Let’s start out by defining what “turnkey” is. Turnkey is usually where someone who is putting in money — such as an investor — passes it to a third party to identify a property for them, maybe even rehab it, make it rentable, and then that party will manage the property, as well.
In other words, a turnkey property is a fully renovated home or apartment building that an investor can purchase and immediately rent out.
It’s really a one-stop shop as far as identifying, setting up and profiting off of rental properties or distressed properties that you’re paying someone to take care of.
When to Consider Turnkey Real Estate Investments
So, for whom are turnkey real estate investments appropriate?
People living in insanely high cost-of-living states.
Take California for example. If you’re a Californian, $50,000 doesn’t get you anything in terms of property, whereas in Indiana, you can buy a house with that same $50k.
So in this situation, I may need someone to help me identify and maybe run that property for me.
Turnkey Providers
Turnkey property providers identify properties. Then, if they need to rehab them a bit, they do. After the rehab, turnkey providers will find tenants or potentially buyers depending on how much the value increases and your personal investment strategy.
There are many different roads you can take with turnkey providers, whether it be flipping or rentals. Either way, these turnkey providers are out there to help you.
Know Your Numbers
Now, what I would say to each investor is: you’ve got to run your numbers.
Does it make sense to use a turnkey provider? Is there enough meat on the bone to cover your management fees, and any other fee that’s necessary in order to facilitate this investment as well as generate some positive cash flow on the property?
We’ve got to run the numbers and be sure it’s a good deal.
If you’re not sure if it makes sense for you or you’re still not completely comfortable with the idea, I would encourage you to connect with folks who are already out there in this arena using turnkey properties.
There’s a lot of great groups out there doing it. Speak with them. See if you can connect with someone and if they can give you a peek behind the curtain.
The Takeaway
Overall, turnkey is another unique and great option out there for investors to take advantage of.
If you’d like to speak to someone about your specific investing strategy and how to make sure you’re operating your investments as efficiently and profitably as possible, I highly recommend taking advantage of a free Strategy Session with one of our Senior Advisors. During your phone consultation, you’ll go over the best custom entity structure for your individual situation — no one-size-fits-all strategies here. It’s a $750 value, but completely free for our readers. You can schedule online or by calling 888.871.8535.
Watch as Carl covers turnkey property providers and when to consider using this investing tactic.
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