unknown facts about turnkey homesAre you a real estate investor? Here are some unknown facts about turnkey homes.

Real estate can be a lucrative business if you know how to capitalize on good investment opportunities. Real estate has become flexible with time and multiple alternatives to the conventional models of direct ownership have come into place. Turnkey properties provide an opportunity to generate passive income and enjoy a hassle-less investment experience.

They are different from design-build homes and an investor can reap the monetary benefits without being involved in constructing and managing a building. To gain clarity, first, let us take a look at what turnkey homes are.

What Is A Turnkey Property?

  • A turnkey property is a completely furnished and renovated piece of real-estate. It can be a house, apartment, or duplex that does not require any maintenance work and is ready to be rented out. There are multiple turnkey property management companies that help investors buy good properties and take responsibility for the maintenance and repair of the property.

These companies even help out investors find prospective tenants. In some cases, you might come across a turnkey property that has already been rented out and is generating cash flow.

History of Turnkey Properties

  • The Great Recession of 2008 gave way to the phenomenon of turnkey properties. With the burst in the housing bubble, the price of real estate properties took a steep hit. Purchasing a house became approximately 30% more profitable than renting one for accommodation. Investors capitalized on this opportunity by buying houses and hiring management companies to renovate them.

Once renovated and maintained, those houses were put out for sale. Investors bought these move-in-ready homes and rented them out. Immediate cash flow was generated as soon as tenants occupied the empty homes.

This business model of generating cash with less hassle piqued the interest of busy investors who couldn’t dedicate much time and energy to conventional real estate properties.

What Factors to Consider Before Buying a Turnkey Property?

Investing in turnkey properties can be risky because most of the work is done remotely. The following factors must be taken into consideration before buying a turnkey property:

  • If you are a newbie investor, your safest options are to invest in an already booming market. Look for a place where the supply and demand curve of rental properties is favored for renters rather than tenants. North Carolina is one such market where turnkey properties are much in demand and the rental yields are strong.
  • When choosing the location to buy the turnkey property, carry out competitive market analysis by considering the following factors:
    • Annual average rental returns from homes in that location.
    • The annual income of families in that area.
    • Economic growth rate and the kind of industries based in the area.
  • Scrutinize and vet the turnkey management company well before entrusting them with your money. Consider the following factors before signing a turnkey management company:
    • Duration of work experience. In most cases, the longer a company has been in business, the more trustworthy it will be.
    • Check with their previous and current clients and ask for reviews based on their experience.
    • Look for a turnkey company that is neither understaffed nor has inexperienced staff members.
  • A fraudulent turkey company may try to trick you by showing pictures of well-renovated and luxurious homes that may not have been renovated well in reality. Before hiring the company, visit them and ask them to conduct an in-person walkthrough for you where you get to visit the homes renovated by them.
  • The average management fee charged by turnkey companies is between 3-7% of the purchases. If a management company asks for more than that, it can be a red flag that the company is fraudulent.

This information has been brought to you by Turnkey Military. It is a turnkey management company located in North Carolina.