I recently got a really smart question over on BiggerPockets from Matt Van Parys about buying and owning a turnkey rental property. I was really impressed with it and thought it might help some of you out there who want to build passive income through real estate investing.
Here is the question:
I was just curious about what to expect from a turnkey company. Is it going to be as “simple” as all the companies claim? From the limited research I’ve done, I simply go pick something from their inventory, and then they take it from there with minor involvement. I’ve also seen all over BP that turnkeys are a waste of money. So I was just hoping to get the opinion of someone who has used a turnkey company and had a (presumably) good experience.
It’s a good question right? As I’ve discovered, people either love or hate turnkeys. So what does that mean you do about them?
Here’s what I say:
I actually love your message. I would love if more people would ask exactly what you are asking. Only because they more typically make assumptions one way or another and then are frustrated when it turns out differently than they expect.
The answer is- yes and no. As far as the simplicity of it. The process is that simple, yes. However, people tend to take that too far to the extreme and assume they can be completely 100% hands-off or that there will never be any challenges. I never want to say turnkeys are hands-off. No investment should be. While the process is simple, you absolutely want to take the time to do due diligence on the property you are pursuing (people don’t think they have to do that) and then once you own it, you do want to be on a quiet standby in case the property managers start to slide. At that point you’d want to jump in and do something about it. Some people buy turnkeys and literally just collect their checks and never think twice because their properties run so well, and others do have to jump in and/or may experience some challenges. No rhyme or reason usually, but anything can happen. I just encourage turnkey buyers that they may have to speak up and put their foot down on occasion, so just be ready in case it happens.
As far as whether they are a waste of money or not, I say….to each their own. People can knock them all day long, but they are the only reason I’m in real estate. I have no interest in swinging hammers or working that hard. I’ve never understood why the people who do want to get their hands dirty are so negative towards options that allow someone to not get their hands dirty. This article isn’t answering your question directly, but it does have considerations for whether or not to pay more for a turnkey-
As you can tell, I’m a turnkey advocate all day long. I have absolutely no interest whatsoever in being that involved in my properties. I just want the returns. All of my turnkeys produce great cash flow, I bought at a good time and they’ve all appreciated well, and I do next to nothing on them. If someone wants to knock how much I paid for that opportunity, rock on to them! 🙂
So what do you think? Are you ready to get the latest and best turnkey property deals? Find out how here: