Are you thinking about investing in a turnkey rental property? If so, read on to learn the insanely awesome advantages of a turnkey rental property.
Many experts agree that if you’re looking to invest in real estate, it takes a solid team effort.
Very few people can make a wise investment in rental property and perform all the required tasks on their own without a little help. Having an extensive understanding and knowledge of the real estate market is critical, and not everyone has that on hand.
This is a big reason why people start looking at turnkey rental properties. Maybe you’ve heard whispers about its ease of access and high returns.
If so, then we’ve got seven advantages of a turnkey rental property for you to check out here!
What is a Turnkey Rental Property?
Just as the name implies, turnkey properties are homes or apartment buildings that are fully renovated and ready for a tenant. Hence, the term “turnkey,” because the key is ready to be turned.
Turnkey investments involve investors who want to purchase properties, renovate them (or have them renovated), find tenants, and then have the property managed.
Often, turnkey rental properties can be fully managed through a company designed to do just that.
This option of investment is usually incredibly appealing for people who want to dip their toes into real estate without having to perform much of the time-consuming tasks.
So, let’s dive straight into the advantages a turnkey rental.
#1. Takes Very Little Effort on Your Part
One of the biggest advantages to a turnkey rental property and the reason why many people end up choosing it is for how easy it is.
A turnkey investment is a streamlined process that is often managed by a company.
Normally, when you invest in a property there are a number of things you need to do:
- Research the market
- Find the property
- Purchase the property
- Renovate the property if necessary
- Screen tenants
- Manage the property
It’s pretty much a dedicated job from beginning to end!
Not everyone has that kind of time or freedom, which is why a turnkey rental property is so appealing. A turnkey company can help you get started on your investment with very little effort on your end.
#2. Benefit From a Wide Knowledge Base
When you choose turnkey investments through a provider company, then you’re also taking advantage of the knowledge and networking connections they have.
Do you know where the best real estate investments are? Do you know how much they’ll cost, what the returns will be like, or when you’ll see them?
Maybe not. And that’s exactly why you want to pull from other people’s expertise.
So, for example, if you’re the kind of person finding yourself asking questions like, “Is it a good idea to buy a foreclosed home?” then there’s a good chance turnkey is for you.
#3. You Don’t Need to Live Near the Property
Maybe living near your investment property isn’t such a big deal. Maybe you were already intent on investing in property near where you live anyway!
The good news, though, is that a turnkey rental property doesn’t require you to live near the property.
This means you could be living in Florida and investing in real estate in Wyoming for all anyone cares.
It’s an important advantage, because the best investments may not be near where you live. And generally, if you were investing entirely on your own, it’s a very smart idea to live close by. You need to be available and on-call for inspections, repairs, meeting with tenants, etc.
As a turnkey investor, you don’t need to do any of that. The company finds the best investment wherever it may be and helps get you to where you’re going.
#4. Get Cash Right Away
As we’ve already covered, investing in turnkey properties is a very streamlined process.
The company has most likely found a suitable property in your price range and can have it all lined up rather quickly.
This means you can get to the returns on your investment for a passive income sooner rather than later.
#5. Diversify Your Portfolio
It’s one thing you may hear a lot of people say off-handedly: “Make sure you diversify your portfolio!”
Basically, diversification means that you invest in more than one area and/or by more than one means to reduce your risk.
It’s risky putting all your eggs in one basket (another thing people say), so investing in turnkey rental properties is another way to mitigate risk.
#6. Repairs Are Done “In-House”
Purchasing a property is only half the battle. Repairs and upkeep are not only time consuming but costly, as well.
One great thing about turnkey rental properties is that they often come with warranties. Just like almost anything you’d buy, a company often provides some kind of warranty for some timeframe. Meaning, at the beginning of your investment, repair costs are often covered and done for you.
Even after a warranty expires, many turnkey providers will offer to do the repairs with their own contractors, making the whole process easy and convenient.
#7. Tax Breaks and Deductions
A big draw for a lot of people with turnkey investments are the tax breaks and deductions.
Investors can reduce income tax by writing off many things from their investment, including:
- Repairs
- Maintenance
- Mortgage interest
- Property management fees
- etc.
There are a lot of aspects to investing in a turnkey rental which can help with taxes. The Internal Revenue Service (IRS) does have specific guidelines on this, though, so it’s important to read up on some of their real estate tax tips.
To top it off, profits are not taxed until the property has been sold. This means that if you’ve purchased a property for $200,000 and it has appreciated to $300,000 before selling, then that $100,000 is tax-free!
Honing in on the Advantages of Turnkey
You may be interested in a turnkey rental property investment but are hesitant. You may be asking yourself, “What does it mean? How much will it cost? What will I need to do?”
Hopefully, we’ve answered some of those questions today and shown you some of best advantages of turnkey investment.
If you’re interested in purchasing a home in a new city, check out this blog post here for more info!
