If you’re someone who desires financial freedom and independence, then you understand how important it is to diversify your investments. For many folks, that means investing in real estate. If you’ve looked into real estate investing before you may have heard about turnkey properties.
Turnkey homes are properties that are in high demand, giving renters instant enjoyment – and for investors, the possibility of more immediate returns.
But what are turnkey properties, and why do people invest in them?
Here’s what you need to understand about turnkey properties.
What Is a Turnkey Property?
Simply put, a turnkey property is a property that’s ready to move in. This means the property doesn’t require any significant changes such as renovations. A turnkey property could be a home, duplex, or apartment building.
A turnkey property requires little to no upfront effort from investors. This is the opposite of a home sold “as is,” which may require significant investment in both time and money to make it habitable and appealing to renters. Since turnkeys are ready to move in, they can potentially generate revenue faster.
Turnkeys are often sold by specialty real estate companies that do the heavy lifting of rehabbing the property and making it ready to move in prior to purchase by an investor. Often times these companies also manage the property. At Memphis Investment Properties, we offer full-service property management, meaning you won’t have to worry about regular maintenance or repairs.
The term turnkey property isn’t just used by investors. Realty companies sometimes use the term to refer to any home that’s ready to move in.
What You Need to Know About Investing in a Turnkey
Turnkey properties have become a popular choice for those who want to buy a property and invest in real estate. However, no investment is without risk, and there are both pros and cons to buying a turnkey property.
What Are the Pros of Investing In Turnkey Properties?
Since a turnkey property is ready for immediate move-in, that means an investor won’t have to commit a lot of resources to get a house ready for renters. In fact, some turnkey properties are already inhabited by tenants, meaning that revenue can be generated immediately.
Turnkey properties require little effort and time to rent out. If you hire a property manager, they can handle screening new tenants.
If you can maintain a high occupancy rate, that leads to a steady stream of income. Again, a property manager can help with this.
Turnkey properties are also a good way of diversifying your portfolio with out-of-state investments. We have seen many of our investors come from all over the U.S., even as far away as California.
With a turnkey property, you aren’t restricted to your local market. That means further diversifying your real estate investments by purchasing in different markets.
What Are the Cons of Investing in Turnkey Properties?
Turnkey investing isn’t right for everyone. Before you make the leap, here are a few potential negatives you need to be aware of.
First, turnkey properties still require research prior to making an investment. When buying from a turnkey property realtor, make sure you are buying from a reliable company.
Likewise, get to know the home and the area. Just because someone is selling a turnkey property doesn’t mean it’s a good investment.
Take Memphis, Tennessee, for example. Memphis has a healthy job market, and big changes are coming. Massive projects have been announced, such as a $5.6 billion investment by Ford. These long-term investments are going to attract talent to the area, but unless you do your research, you won’t know about them.
Another con of turnkey properties is financing. Unless you have cash on hand, you will likely need to apply for a mortgage. Most of our investors use a conventional 30-year mortgage.
Turnkey properties are also long-term investments. They lack the liquidity of investments such as stocks. If you’re looking to build wealth overnight, a turnkey property may not be for you.
Finally, turnkey properties are still real estate investments. Real estate investments have their own risks, so it’s important to consider if real estate investing is right for you. You could be surprised by a sudden issue such as a property tax hike.
Are Turnkey Properties Right for Me?
Are turnkey properties right for you? It depends. They won’t serve the needs of every investor.
However, if you are looking at investment types and are considering real estate, turnkey properties could be an easy entry point into real estate investing. Having the ability to generate income long-term, and often immediately, makes turnkey properties an attractive investment.
They can be a great way of further diversifying your portfolio, even if you already have existing real estate investments.
If you take the above pros and cons into consideration, then it’s time to move on to the next step – finding good turnkey properties.
Looking for Turnkey Properties?
When a turnkey property is paired with a reliable property management company, you are giving yourself tremendous peace of mind. The property management company will deal with issues such as screening new tenants, maintaining a high occupancy rate, and other issues, allowing you for a more passive investment.
That’s why at Memphis Investment Properties we not only provide newly renovated turnkey rental properties, but we offer a full property management solution. We have every department under one roof on our 22,000-square-foot campus.
Are you looking for a turnkey property in the Memphis area? Contact us today for more information.