The past few years have witnessed a rise in the sale and purchase of turnkey properties. The turnkey model of selling, buying, and renting out properties has been quite successful. This success can be attributed to the convenience provided by turnkey homes. It is is a readymade home that can be occupied on short notice.
However, like all other real estate Investments, dealing in turnkey properties carries some inherent risks. Let us see, what are the common challenges faced by buyers of turnkey properties and how to avoid them.
Low Value for Money
- Real estate investors are often tempted to invest in low-priced turnkey properties. Basing your decisions solely on price can turn out to be very risky. If a property is priced lower than the market value, there must be some hidden reasons for that such as substandard refurbishment work.
The other reason for the low cost can be due to its placement in a shabby neighborhood. If you are purchasing the turnkey property from a rental point of you, dingy neighborhoods will not fetch you high returns through rents.
- On the other hand, purchasing an overpriced piece of property will also bring low value for money. Some companies try to sell turnkey properties at higher rates to inexperienced and out-of-state investors.
To avoid these situations, investors should get in touch with local consultants and learn about the market rates of local properties.
Substandard Renovation Work
- The biggest convenience offered by turnkey properties lies in the fact that complete renovation is a part of their package deal. The investor has to spend neither money nor energy to remodel it. However, if the property is poorly renovated, it will cost the investor a fortune to fix it. Multiple additional costs and hassle will incur to bring it up to the mark.
Before purchasing the property, it is imperative to carry out independent and unbiased inspection of the property’s interior and exterior surfaces.
- There are multiple experienced consultants who can check the quality of the renovation work. Unless a satisfactory report is received, one must avoid putting his money in the property. This practice will filter out fraudulent dealers of turnkey properties.
Falling Prey to a Fraudulent Turnkey Company
- Do a quick Google search on turnkey companies and you will be surprised to see how many of them exist. These companies assist investors in finding turnkey properties according to their requirements and budgets. They can be of great help in regulating the sale and purchase processes.
However, not all companies are true to their word. Getting in partnership with a fraudulent company will cost you time and money. Before committing to a turnkey company, determine its credibility by doing the following:
- carry out a background check of the company
- read out the online reviews posted by past clients
- communicate in person with past clients to get their feedback
If you are residing in North Carolina, take a look at Turnkey Military. They deal in turnkey homes which are located in military neighborhoods. They believe in building reliable partnerships through open communication.
Absence of Warranties
- Look for a turnkey company that offers at least one year’s warranty for the entire building; interior and exterior both. Warranties reduce the financial risk of the investor. They also lend more credence to the quality of work put in by the seller.
Look for a company that provides multiple-year warranties on separate items such as HVAC systems and other utilities. Multiple-year warranties will provide a safety net against unforeseen costs.