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The Pros and Cons of Turnkey Real Estate Investment

You’ll have countless options as you search for the ideal investment strategies to reach your goals, so learning about as many of them as possible is advisable. Turnkey real estate investments provide a method of purchasing and managing an investment property with little hands-on effort, making it worth considering if the time commitment is keeping you out of the real estate market.

Turnkey real estate investment is when you purchase a fully renovated home, condo, or apartment that’s ready to rent out immediately. You’ll often buy these properties directly from a restoration company, which might also offer property management services.

 These property management services ensure you don’t have to handle the day-to-day operations of the rental unit, as you’ll pay someone else to do the work for you.

You also don’t have to live in the community where you purchase the turnkey property, providing additional buying options. The fact that the property is ready to rent also means you won’t miss out on rental income while renovating.

Turnkey real estate investment is becoming popular with those looking to take advantage of these assets’ cash flow and appreciation without making the time commitment real estate requires. This guide examines the pros and cons of turnkey real estate investments.

The Benefits of Turnkey Real Estate Investment

You’ll encounter numerous benefits when researching turnkey real estate investments because the process is highly advantageous to buyers. Buying a property and having a property manager handle the maintenance, deal with renters, and complete repairs makes your life easier and reduces stress. 

Some pros you’ll experience with this setup include the following:

Invest Anywhere

You aren’t bound by a specific geographical area when you go with a turnkey property because you don’t have to visit it to make repairs, vet prospective tenants, complete walk-throughs, or clean up during turnover. Your property manager will do all this work for you, so you can buy your rental home anywhere in the country or even internationally.

This benefit makes it possible to buy a retirement home in an exotic location and have your renters pay the mortgage and build equity.

Earn Passive Income

Passive income is one of the main benefits of real estate, and having a property manager handle most of the work makes it even more passive. You could have money coming in every month from your investment property, and you won’t have to complete any tasks yourself to receive it. This additional monthly cash flow is sometimes reason enough to go this route.

Get Ready-to-Rent Real Estate

The turnkey property you purchase will be ready to rent out without any work from you whatsoever. You won’t have to remodel, paint, or repair the home before it’s prepared for your renters because the restoration company takes care of everything. 

All you have to do is complete the purchase and wait for your renters to begin paying their rent and building your equity.

Find Better Value

Those living in hot real estate markets might struggle to find good value on a rental property. Turnkey real estate investments allow you to explore less expensive or emerging markets, helping you find a home at a more reasonable rate. The result can be more significant returns on your investment if that market ultimately takes off. 

Turnkey real estate can be highly profitable in many scenarios. You should be aware of some drawbacks, though, as they could influence the return you earn on your investment.

Three Problems You Could Encounter With Turnkey Real Estate Investments

Turnkey real estate investments aren’t perfect, mainly because nothing in life is free. You’ll be paying someone else to manage your investment, and since property has a physical presence, there’s always the chance of something going wrong. Some cons associated with turnkey real estate investment include the following:

1. Potential for Poor Management

Choosing your property manager is of the utmost importance because that person or firm will vet tenants, handle repairs, and take care of any other issues at your rental property. You will see the property infrequently if you buy in another community, so keeping an eye on things becomes challenging. 

There’s always the potential for your property manager to do a poor job, costing you money and making your investment less lucrative.

2. Additional Fees

You will have to pay the property manager to care for your investment home, reducing your monthly cash flow. You’ll also have to pay the property management firm or the contractors they hire to handle any repairs or maintenance the unit requires over the years. These fees add up and could turn your promising investment into a money pit over time.

3. Less Control

You will have little control over the tenants living in your rental home or the maintenance and repair process with turnkey real estate investments. 

This lack of control is nice because it means less work, but it also puts your entire investment in someone else’s hands, and that individual likely won’t be motivated to ensure the property performs at maximum levels. On-site landlords can see how the home is doing and make adjustments, but you might not have that option with a turnkey property. 

These cons aren’t necessarily deal-breakers, but they could influence your investment’s performance in the coming years. It’s worth evaluating these potential shortcomings to ensure turnkey real estate investments are suitable options for you.

Learning About Retirement Investments

Investing in real estate can provide immediate cash flow, and the property will likely appreciate as you build equity, making it worth your consideration as you approach retirement. 

Turnkey real estate investments can work for people who don’t have the time to manage and maintain a rental property, but they are far from your only investment option.

Bogart Wealth offers retirement and financial planning services in McLean, Virginia, and The Woodlands, Texas. Our team can discuss your retirement goals with you and help ensure you understand all the ways you can invest your money. 

Contact Bogart Wealth to learn more about turnkey real estate investments and other methods to save for retirement.

IMPORTANT DISCLOSURE INFORMATION:
Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Bogart Wealth, LLC [“Bogart Wealth”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level (s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Bogart Wealth. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Bogart Wealth is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Bogart Wealth’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at bogartwealth.com


Please Note: Bogart Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Bogart Wealth’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.
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