If you’re looking to invest in real estate for maximum upside potential and financial benefits while avoiding the common headaches that come with landlording, you should consider turnkey rental property investing.
Next to investing in the real estate market via REITs, turnkey rental property investing is one of the most passive yet financially viable methods of real estate investment.
According to James Chen in his article on Investopedia.com, “a turnkey property is a fully renovated home or apartment building that an investor can purchase and immediately rent out. A turnkey home is often a property purchased from a company that specializes in the restoration of older properties.”
This means that you, the investor, may buy, rehab, and manage a property through a third-party turnkey real estate provider.
Let’s dig deeper into a full-on turnkey rental property deal so you can see what this may include.
1. Finding a rental property.
You can collaborate with the company you’re working with to find a property based on a set of property criteria you have. These companies may have their own software that locates good investments in the region they’re in and they may even have pre-selected properties for you to choose from.
2. Finance your investment.
The turnkey provider may help you choose among the many options there are with financing your investment depending on your financial situation and goals.
3. Property acquisition.
After you’ve secured financing, the turnkey provider can help you with home inspections, loan documents, appraisals, and all the paperwork needed to acquire the property. They function much like a real estate agent would but with a focus on long-distance, hands-off investors.
The level of renovations needed will be based the number of issues the property has that don’t meet code and the overall goals you have for the property. The level of rehab work that needs to be done then, will be a decision that you and the turkey provider must make together.
5. Property management.
This is the step that most investors seek help with in the first place. Most investors don’t want to be on the hook for dealing with finding tenants, responding to tenant needs, fixing leaks, and getting calls at 2am in the morning with complaints of the A/C unit not getting hot enough. This is the on-going role of the turnkey provider.
According to Amanda Maher’s article on Buildium.com, “most turnkey firms will charge around a 3% fee for property acquisition, and then anywhere from 7 to 10% for ongoing management of turnkey rental properties.”
Still, before you go jumping feet first into a relationship with a turnkey rental property firm, you need to do your due diligence. There are many firms cropping up all over the country, particularly in areas where there are tons of cheap properties.
This may be the case because they were hit hard in the 2008 real estate crisis, or they are hit hard by storms, such as hurricanes. Conversely, turnkey investors tend to come from high-priced real estate markets seeking to invest in areas properties with dirt-cheap real estate – from their perspective.
Due to the long-distance nature of the relationship, some turnkey firm owners may be savvy internet marketers but poor real estate investors, lacking experience. This means you need to do your homework on the company you’re considering working with.
If you’re looking for the best turnkey rental property firm in the Baltimore, Maryland area, you should learn more about Utz Property Management.
Utz Property Management offers a full-suite of real estate services for a fully automated experience for investors. If you want help finding, rehabbing and managing properties, don’t wait, schedule a free turnkey discovery session with Jenni Utz today.
Or, you may contact Utz Property Management today at 410.332.4432.