Are Turnkey Rental Properties for Sale a Good Investment?

Even though they are a good investment, finding turnkey rental properties for sale can be hard. This article shows you how to find one easily.

Table of Contents

1. What Are Turnkey Properties?
2. Pros and Cons of Investing in Turnkey Rental Properties
3. How to Find Profitable Turnkey Rental Properties for Sale

When real estate investors buy a rental property, they usually fix it and prepare it for rental. In some cases, the property would require a complete renovation. Turnkey rental properties eliminate this need because the property is bought fully furnished and ready for rental, thus ensuring the only job of the investor is to find renters and collect checks.

Investing in turnkey rental properties can be an excellent option for real estate investors. It eliminates the difficulties related to dealing with contractors, getting permits, and getting the property ready for the renter.

To find great turnkey rental properties for sale, the investor will need a reliable tool that connects the property to the investor. Mashvisor’s Property Finder tool provides investors with turnkey properties listed for sale. By the time you finish reading this article, you will have discovered how to use the tool to get the best properties.

What Are Turnkey Properties?

Turnkey properties are those that have been renovated and fully furnished with everything needed to make the property livable for renters. It means that instead of a real estate investor buying, remodeling, and furnishing a rental property, it would come already renovated and furnished. The only thing the investor gets to do is find renters for the property.

Investors can build wealth through the profitable and practical use of turnkey properties. In the US, these types of properties are very well-liked by experienced and beginner investors. The way it works is that a turnkey provider handles every element of the deal on behalf of the investor. All the investor needs to do is sign the papers and start renting out the space.

Now, turnkey properties might not be the cheapest option available, but the fact that they have already been transformed into livable homes makes them extremely valuable. Sometimes, a renter is ready to move into the property even before the property is listed for sale.

When looking for turnkey rental properties for sale, there are several things you should consider. They include the value of the property for sale, location, profitability, and inspection history. Don’t ignore them just because the property is ready to be inhabited.

Related: Turnkey Real Estate Investing: What Does It Mean? 

Pros and Cons of Investing in Turnkey Rental Properties

Turnkey properties are a great form of real estate investing, but they have their flaws. Here are the pros and cons of investing in turnkey rental properties.

Pros of Investing in Turnkey Rental Properties

Turnkey rental properties boast amazing advantages over other forms of real estate investments. Here are some of them:

1. Reduced Vacancy Rates

In some cases, renters are already waiting in line to rent a turnkey property before the sale is completed. As an investor, you wouldn’t need to put much effort into finding tenants for your property. It is due to renters’ strong attraction to turnkey properties. When you purchase a turnkey home, tenants may already be living there.

2. Passive Income

Turnkey rental properties are almost a passive form of investment. It is because turnkey companies would take care of everything from renovating the house, furnishing it, and sometimes finding renters. Plus, when there is an issue with the property, the property manager will be responsible for addressing it instead of you, the investor.

3. Opportunity to Invest Out-of-State 

Although anyone can invest in real estate outside their home state, purchasing a turnkey home is much simpler. Finding a turnkey company to help you is incredibly simple. There are many of them, and they all focus on specific areas of the country.

Instead of traveling to do the work yourself, it is better to employ a turnkey company with experience in several states.

4. Positive Cash Flow

If you manage to survive the 15- to 30-year mortgage payment period, you can end up with significant positive cash flow from the property. Also, you will end up with a substantial boost in the equity of the property when you eventually decide to put it up for sale.

5. Diversified Portfolio

If you are a newbie to turnkey property investing, it means you are diversifying your portfolio. There are many advantages to portfolio diversification. When you diversify, you will be protected from certain downturns that affect a specific type of property or location.

Related: Diversification and Real Estate Investing: 3 Ways to Diversify Your Portfolio

Cons of Investing in Turnkey Rental Properties

Having looked at the advantages of investing in turnkey rental properties, here are some of the disadvantages of this type of investing:

1. Too Much Reliance on Others

With turnkey rental properties, you will have to rely on others a lot. Someone else will be calling the shots on how the property will look. It doesn’t mean that the property will come out looking like trash; it just means that you won’t have much say in how the property comes out. But since you are not living on the property, this shouldn’t matter as long as a renter wants it.

2. High Costs

Because of the involvement of turnkey companies, it will cost you more as a real estate investor. Even though it may be expensive to use a turnkey company, it will eventually cost less than when you fix the property yourself. It is because these companies have access to discounts from vendors and contractors.

3. Low-Quality Tenants

When some real estate investors put their property up for rent, they usually have a specific type of renters in mind. But when you use a turnkey company, you may end up getting stuck with terrible tenants, especially if you buy a property with an existing tenant already.

Also, some tenants are so lazy that they pick up a phone to call the landlord when there’s a minor problem instead of fixing it themselves. But don’t worry because your turnkey provider will be the one to answer the tenant’s calls.

4. Rent Not Guaranteed

Even though newly renovated rental properties appeal to renters, there is no guarantee that you will get a renter fast. Therefore, you should thoroughly research the property for sale before you buy it. Make sure that the turnkey property manager knows enough about the property.

Also, conduct a rental analysis on the property so that you have an estimated amount of rent the property will bring in.

5. Possibly Low-Quality Property

This is especially true if you did not perform thorough research and adequate market analysis of the property. When you use a turnkey company, you won’t be able to look at the property yourself and choose a good location. You will have to defer to the company’s judgment about the property.

This way, you might end up buying a low-quality property in a bad location. Also, since the turnkey company is in charge of renovations, they might perform a crappy job. These companies are out to make money, so don’t expect them to spend a lot on the best equipment and materials when renovating the property.

How to Find Profitable Turnkey Rental Properties for Sale

Finding profitable turnkey rental properties for sale is a good skill to develop as a real estate investor. That being said, there are many ways to find such properties. In this section, you will discover how to find these types of rental properties that are for sale so you can start receiving rental income right away.

Here are five steps you should take to find profitable turnkey rental properties for sale:

1. Find the Best Market to Invest in

It does not matter where you decide to invest in turnkey properties that are listed for sale; you must perform thorough research and do your due diligence. Make sure to look for properties in places with a high population. Also, ensure that the rental rates in those areas are high and that the people living there can afford the rent.

It will not do you any good if you miss one of these critical factors. If the rental property for sale is in a highly populated place, but the people can’t afford the rent, you will find it difficult to find renters. Ensure to hit the trifecta of increased population, high rental rates, and finally, high affordability, and you will have hit the jackpot of the perfect rental property.

Mashvisor can help you find the best properties to invest in. With its analytics tool, Mashvisor can show you the best market and neighborhoods to invest in with excellent turnkey rental properties listed for sale.

2. Get Adequate Financing

You will need financing when trying to buy a rental property unless you decide to pay cash. Ensure you confirm your eligibility from a lender. Talk about what you plan to achieve with the money. If the turnkey company you want to work with is legit, they will recommend one of their best lenders to you.

Don’t forget about your long-term goals. If you plan to grow your portfolio, find a lender with licenses in different states. It will make all your future investments in turnkey rental properties smoother.

3. Find a Reputable Turnkey Company

Your next step is to find a good turnkey company experienced in dealing with properties and putting them up for sale. You must research the company you decide to work with. When you find the one to your liking, ask for their referrals and their previous work. Also, they must be transparent about their fees and rates.

Remember, this is the company you will continue to use for years to come if you plan on expanding your portfolio. Therefore, do your due diligence to get the best company and service possible.

4. Find a Property to Buy

Create a list of requirements the property must meet. It helps you narrow your focus to finding specific rental properties listed for sale. You can choose among several options for the type of property, such as single family homes, multi family homes, or condo/coop, among others. Determine the number of bedrooms and bathrooms you want for your property. Once you find the property of your choice, get a qualified professional to inspect the property.

This is another area where Mashvisor’s Property Finder tool can be of great help. You can use the tool to find the best rental properties for sale based on your preference.

Related: How Is Mashvisor’s Property Finder Helping Real Estate Investors?

5. Buy the Property

Once you find the property you want, and the inspector says it’s suitable for rental, buy the property. Sometimes you might get a property with renters already occupying it, and sometimes, you might have to find renters yourself. Also, your turnkey company can help you find renders depending on your agreement with them.

Conclusion

In this article, you’ve discovered what a turnkey rental property is, and you’ve been shown the advantages and disadvantages of owning a turnkey rental property. Hopefully, you’ve also learned how to find good turnkey rental properties for sale.

Having known them, it is time to answer the question of whether turnkey rental properties for sale are a good investment. Rental properties are a good investment opportunity for both beginner and experienced real estate investors. You can turn the advantages to your own benefit and minimize the disadvantages at the same time.

To find lucrative rental properties for sale, look no further than Mashvisor. Its Property Finder tool will help you find profitable markets with the best-performing properties. Then, it will help you find the best properties in that market for a real estate investor to invest in.

The tool uses artificial intelligence (AI) technology to find the perfect property for you based on your search criteria. It will also sort the properties out based on their estimated profitability, which relieves you of the stress of analyzing the properties yourself.

Therefore, if you want to invest in a turnkey rental property with maximum profitability, use Mashvisor.

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