What is a turnkey property?

A turnkey property is a completely renovated house or apartment building that an investor can purchase and rent out immediately. Purchasing a turnkey house often entails working with a business to restore older homes. Those same companies could also provide property management services to save purchasers time and trouble when renting.

How a Turnkey Property Works

Turnkey residences gained appeal during the 2007–2008 housing market collapse, when buying a home became more affordable than renting one in most of the United States. In actuality, owning is 30% less expensive than renting throughout the country, and it’s much less expensive in certain areas with a low cost of living. Investors frequently look to generate income streams in real estate hotspots like New York by purchasing rental properties in less expensive regions of the nation and employing property managers to handle the rentals, leaving them to do little more than watch their profits grow from a distance.

Those who want to invest in real estate but lack the time, skills, or motivation to maintain or repair a property may find this technique particularly intriguing. The investor will often choose a different business to oversee the property. When a property changes hands, a tenant often occupies it, making things even more accessible for the investor.

But investors aren’t the only ones who use the phrase “turnkey property.” Real estate businesses may sometimes use this term in their marketing materials to refer to any freshly remodeled, move-in-ready property for sale. Some purchasers may prefer a turnkey house that requires no work, while others with hectic schedules or inexperience with home renovation may love the idea of doing the renovations themselves.

How to Make Money with a Turnkey Property

When a turnkey property is purchased, the new owner should be able to rent it immediately. The goal is to rent the property as soon as possible to swiftly earn cash from acquiring real estate that needs little to no renovation. The work required to turn a house into a turnkey property may include replacing light fixtures, fixing plumbing issues, repainting the inside, and replacing flooring as needed. The quicker the new buyer can realize a return on their investment, the shorter the turnaround time to rent the home.

Suppose the intention is to sell the property instead of renting it out. In that case, the value and efficacy of completely refurbishing a house or other accommodation can be questioned. The costs associated with maintenance, including, for example, new paint, may not be a selling feature since potential purchasers may choose to make improvements to the home. That may include removing or discarding the very renovations carried out by the present owner. Additionally, the cost of such repairs will raise the seller’s asking price. Sometimes, it’s more effective to ensure that just the necessary repairs are made to bring the building up to code, especially when selling a house.

Conclusion

• Turnkey homes have often undergone repairs and renovations.
• Investing in turnkey houses has grown in popularity.
• To make money, new purchasers often rent out the houses.