You’re planning on getting your next property, searching listings and reading all that you could to prepare for this exciting moment. But all of a sudden, you encounter a term that’s somewhat foreign to you – “Turnkey Properties”. What is a Turnkey Property? Does it make any difference with other houses for sale?
Today we’ll talk everything about Turnkey Properties and what makes it different from other houses for sale.
Turnkey Properties are fully-renovated and furnished establishments that potential investors or buyers can get and use right away, as the term implies – the seller or agent simply ‘turns’ over the key to the property or establishment to you, and the only thing you’d usually need to do is live at it or use it as needed.
Most of the time, these houses simply require minor updates or repairs, such as cleaning for sanitary purposes, because most equipment and furnishings must be in good functioning order, or else it cannot be labeled a “Turnkey Property.” But, before you get too enthusiastic about Turnkey Properties, consider the benefits and potential drawbacks.
Advantages and benefits of Turnkey Properties
A few key features of Turnkey Properties in general, are the convenience, the renovation factors being considered, as well the expenses that comes with it.
Vacancy – Because Turnkey Properties are move-in ready, as an investor, you may expect a considerably lower vacancy rate because potential tenants or buyers can simply move in at any moment, which is always a pleasing advertising pitch. When it comes to real estate, people are more motivated to choose what is most convenient for them, which also saves you a significant amount of time and effort as an investor.
Convenience – As previously said, Turnkey Properties, particularly residences, already come complete with the majority of living requirements and equipment, saving you time and resources in setting up the space. As a potential investor, you also don’t need any experience in interior design, building, or remodeling. They are furnished with necessary fixtures, appliances, and sometimes even furniture, allowing buyers or tenants to occupy the property immediately.
Requires minimum effort and experience – Because you are getting a fully equipped house for your real estate investment ventures, this activity necessitates less effort and knowledge to carry out. For the most part, you only need the necessary funds and to arrange for the necessary papers. Once purchased, the property is now ready to be rented out or utilized in a variety of other companies.
Turnkey properties are also frequently advertised to real estate investors looking for rental income or passive investment opportunities. These properties are often in high-demand rental areas and are handled by professional property management firms, making these a good diversification plan as well.
Flexible arrangements – Turnkey Properties enables potential investors to differentiate prospects between different locations, particularly when the housing market and rental rates in a specific area are not performing well or there are just high vacancy rates in general. And, because Turnkey Properties require little care and upkeep, you can diversify your real estate investments in nearly any area with the assistance of remote management and real estate agents.
Long distance issues – While it generally sounds a plausible idea to own various properties spread across different areas, as a real estate investor with many Turnkey Properties spread around the country, management may necessitate more effort and diligence than typical. Normal dangers, such as structural and electrical damage, can be difficult to manage when you are currently too far away from the property in question.
Occupancy trust issues – Some tenants may slack off in terms of caring for the property throughout their stay or use, which can be a problem when you’re away for prolonged periods of time owing to work and distance (as previously noted). In such instances, you must seek the assistance of property managers.
Flexibility with customization – Because Turnkey Properties are completely furnished and outfitted with all of the necessary interior and living amenities, there is little to no room for additional alterations unless you opt to spend more money than necessary to make any desired adjustments. You also don’t get to make decisions about the actual building and design process, so there are no bespoke layout plans, which may be an issue for you if you’re a real estate investor or simply searching for a new home.
This may not be the ideal option if you prefer more control over the remodeling process and property management. These properties are intended for investors that prefer a hands-off approach, so you may have limited input or control over the property’s management and potential renovations.
Higher Pricing – Since these properties are already furnished and renovated, they are often priced at a premium compared to properties that require renovations or repairs. The added cost accounts for the convenience and the work already put into the property. This higher upfront cost may reduce the potential return on investment.
Planning your next step and resources
Now that you’ve read and understood the usual pros and cons of Turnkey Properties, which should have helped you weigh the differences and decide whether or not to get one for your investment or personal use, the next thing you should be planning is securing the appropriate funding for the said property, as they’re more expensive than typical housing in general.
It is critical to thoroughly weigh the benefits and drawbacks of turnkey properties based on your unique investment objectives and preferences. To make informed selections, conduct extensive due research, investigate alternative investing opportunities, and speak with real estate professionals.