Call us today! (844) 289-8876

How To Invest In Turnkey Rental Properties?

Table of Contents

Rental properties are a valuable asset, but the demands of finding a good deal and managing ongoing maintenance can be overwhelming. Fortunately, there is a streamlined way to enter the world of rental property investing with reduced stress and fewer obstacles: turnkey real estate.

Turnkey rental properties provide an excellent opportunity for aspiring real estate investors who want to own rental properties without the hassle of day-to-day management. Essentially, turnkey rentals allow you to transfer the responsibilities of a fully prepared investment property to a property management company. This company handles everything from locating the property to placing tenants.

With a turnkey rental, you can enjoy the benefits of passive income without the common headaches of being a landlord. No more late-night emergency calls or dealing with problematic tenants. The property management company takes care of maintenance, tenant screening, and minimizing vacancy rates. Simply put, you get to be a landlord without learning how to become one.

You can get the benefits of being a landlord without needing to master the intricacies of property management. Unlike traditional buy-and-hold rental properties, turnkey rentals are already renovated and often come with qualified tenants. When you purchase a turnkey rental, you acquire a property ready to generate income from day one.

If you’re wondering how to get started with turnkey real estate investing, you’ve come to the right place. This article is your beginner’s guide to turnkey rentals.

Why Do Real Estate Investors Buy Turnkey Properties?

Turnkey rental properties have exploded in popularity among real estate investors in recent years. And for good reason – turnkey rentals provide an appealing hands-off way to invest in real estate. Rather than dealing with the sweat and headaches of traditional rental ownership, turnkey investors can enjoy the perks of property income without the dirty work.

But what specifically draws investors to the turnkey rental model? What core benefits make this hands-off approach so enticing?

Turnkey rentals offer a unique combination of advantages that address many of the common pain points faced by real estate investors. From convenience to risk reduction, turnkey properties attract investors by simplifying the path to passive rental income.

An Easy Entry into Being a Landlord

From finding and renovating a property to screening tenants and managing maintenance issues, traditional rental investing involves major effort and headaches. It’s easy to feel overwhelmed as a new investor trying to learn the ropes.

Turnkey real estate streamlines the path for aspiring landlords. Turnkey rentals provide an easy entry into property ownership providing:

  • Convenience
  • Fixed Pricing
  • Expert Guidance
  • Professional Tenant Screening

Avoid Unforeseen Costs

Investors don’t need to worry about blowing their renovation budget because the renovation and its costs are taken on by the turnkey provider. Since turnkey properties are already renovated, initial maintenance costs can be lower compared to properties that might require extensive updates. This can make budgeting and financial planning more predictable. It’s easier to stay within your budget.

Turnkey Properties Are Passive Real Estate Investing

Most turnkey investment companies provide the option for investors to get either in-house property management or a referral to a third party property management company. Professional property management saves the investor the stress of learning how to effectively manage their investment properties or vetting potential investment properties.

Easier for Out-of-State Investors

Sometimes, investing in real estate close to home is not the most profitable or accessible real estate market. For investors who want to invest from out-of-state, turnkey rentals offer a valuable solution. Entering an unfamiliar real estate market presents numerous challenges, from understanding local market dynamics to establishing key relationships and finding profitable deals.

Learning a new market requires extensive research and a deep understanding of local trends, property values, and neighborhood characteristics. This can be a time-consuming and complex process for out-of-state investors, especially if you don’t have past real estate investing experience. Additionally, forming relationships with trustworthy local real estate agents, contractors, and other professionals is crucial but difficult to achieve remotely.

Investors need to find off-market properties, which offer the best deals. These properties are typically not listed publicly, requiring a network of local contacts to uncover. Without being embedded in the local market, identifying and securing these opportunities can be nearly impossible.

Turnkey providers simplify the investing process remote investors. They possess in-depth knowledge of the local market, established relationships with key players, and access to off-market deals. By leveraging their expertise, turnkey providers eliminate the need for out-of-state investors to navigate these hurdles. Investors can trust that their turnkey provider has already done the legwork, allowing them to benefit from a well-vetted, ready-to-rent property without the stress of market research and networking.

As an absentee owner, you never have to worry about vetting contractors or supervising renovations from afar. The turnkey company handles all upgrades and maintenance so your property is move-in ready.

Getting Started With Turnkey Real Estate: How Do You Find Turnkey Properties?

Finding Turnkey Properties

Now that you know the basics of turnkey rental properties and their benefits, you may be wondering, “This all sounds great, but how do I actually find and purchase a turnkey rental?”

Getting started in turnkey real estate investing involves narrowing down your investment criteria, researching reputable turnkey providers, and evaluating potential properties.

While the turnkey investment model aims to make rental ownership easy, you still want to do your due diligence before purchasing to maximize returns and avoid pitfalls.

Narrow Down Your Preferred Locations

Think of your turnkey investment property journey as a funnel. First, you need to narrow down your search by picking the area you want to invest in.

The most important factors when picking a location to invest in are:

  • Median Home Prices: Gauges affordability and potential appreciation.
  • Rental Yields: Indicates income potential relative to property cost.
  • Population Growth: Higher demand for housing in growing areas.
  • Job Market and Employment Rates: Strong job markets attract more people.
  • Average Rent Prices: Estimates potential rental income.
  • Vacancy Rates: Low rates suggest high demand and reduced vacancy risk.
  • Crime Rates: Low crime rates make areas more attractive.
  • School Quality: High-quality schools increase demand for housing.
  • Property Taxes: Affects overall profitability.
  • Supply and Demand Dynamics: Predicts future property values and rental prices.
  • Infrastructure Development: Impacts property values and desirability.
  • Local Government Policies: Choose areas with landlord friendly rental regulations.

Research Turnkey Real Estate Companies

Selecting the right turnkey real estate company to work with is one of the most important decisions you’ll make as an turnkey investor. The provider you choose will have a major impact on the success or failure of your investment. Never trust a turnkey real estate compay without thoroughly researching them. You need to be sure that they are a business with a strong track record who you can trust with your hard-earned money.

When researching companies, go beyond the sales pitch and marketing gloss. Here’s what to look for when evaluating prospective turnkey real estate companies:

  • Look for an established company with several years of experience in the turnkey space.
  • Make sure the company has a proven track record of successful turnkey projects.
  • Review testimonials and do online research to evaluate reputation.
  • Confirm the company thoroughly vets and manages tenants.
  • Look for signs of strong local market expertise.
  • Evaluate the quality of their renovations based on pictures and videos of completed projects.
  • Make sure there is a clear process for assigning title and ownership to you once purchased.
  • Be wary of outsized or unrealistic projected returns on investment.
  • Ask detailed questions and verify claims through independent research and due diligence.

Talk to Past Investors

Speaking with past clients is one of the best ways to gain insider knowledge about a potential turnkey real estate provider. Ask the company for references you can contact to learn about firsthand experiences working with the provider.

Here are some key questions to ask past turnkey clients:

  • How long ago did you purchase a turnkey property from this company?
  • What location did you invest in? How has the market performed since your purchase?
  • How did you evaluate the property? Did it meet your expectations in terms of condition and quality?
  • How has the ongoing property management been? Are you satisfied with the tenants and maintenance?
  • Have you encountered any major repairs or headaches with your property? How did the turnkey company respond?
  • What has your return on investment been so far? Has it met the initial projections?
  • How responsive has the company been to any issues or concerns you’ve had?
  • Would you recommend this turnkey provider to other investors? Why or why not?
  • Are there any downsides or red flags you’ve noticed working with this turnkey company?

Turnkey Real Estate Company Red Flags

When considering a turnkey real estate investment, it’s important to do your due diligence on the provider to avoid potential red flags.

Some turnkey company red flags to keep your eye out for are if they: They offer an unclear definition of “turnkey”.

  • Use third-party property management.
  • Act as just a middleman and not as the property owner.
  • Push sales at any cost.
  • Overestimate your desire for passivity.
  • Allow poor renovations or unrealistic pricing.
  • Stumble over stats.
  • Lack data sources.
  • Avoid visit inquiries.

Buying Your First Turnkey Property

Once you’ve narrowed down your target real estate market and preferred turnkey provider, it’s time to start vetting investment properties. When you are ready to purchase your first turnkey rental property, there are several key steps to take to carefully evaluate potential investments:

  1. Reviewing potential property options and ensuring they meet your investment criteria.
  2. Putting a property under contract once you find one you like.
  3. Ordering a professional home inspection on the property.
  4. Negotiating repairs based on inspection findings.
  5. Only after a satisfactory inspection outcome can you order an appraisal.
  6. Visiting the market and meeting your turnkey provider in person.
  7. Securing qualified tenants prior to closing.
  8. Gathering final paperwork needed to close.
  9. Closing on the property.
  10. Collecting rental income and saving for future expenses.

Review the Property

Don’t just rely on the turnkey provider’s claims or numbers at face value – do your due diligence. Only proceed once you’ve determined the property meets your objectives and you have confidence it will perform as expected.

Ohio Cashflow targets B-Class areas because they tend to offer the best turnkey rental opportunities because of:

  • Affordability
  • Stable Cash Flow
  • Lower Vacancy Rates
  • Diverse Tenant Demographic
  • Lower investment Risk

Evaluate potential returns using key metrics like cash flow, cash-on-cash return, and cap rate. Cash flow is the monthly rental income minus operating expenses, which should ideally be positive. The cash-on-cash return measures the annual return on your actual cash investment, and the cap rate, calculated by dividing net operating income by the property’s purchase price, helps assess profitability.

Don’t forget to calculate property management costs. Typical management fees range from 5% to 12% of the monthly rental income, so factor these into your cash flow calculations. Additionally, consider leasing fees, maintenance, repair costs, and potential vacancy rates, estimating a realistic vacancy rate of 5-10% to account for periods without rental income.

Check Comparable Sales

When evaluating a possible turnkey rental investment, assess the asking price and confirm you aren’t overpaying. Turnkey providers often apply some markup to account for acquisition, renovations, and facilitation costs. However, the overall price should still align with comparable property sales in that particular market and should generally fit within the market price per square foot.

Analyze Rental Rates

Validate the projected rental rate for a turnkey investment property. The rental income will be the primary driver of your cash flow, so verifying the accuracy of the turnkey provider’s quoted rental rate is essential.

One way to confirm the rate is by looking at current rents being achieved on comparable rental listings in that neighborhood. You want assurance that if the unit ever goes vacant, you can realistically re-lease it for the same or potentially higher rent. Having objective market data for comparison helps avoid taking the turnkey provider’s word at face value.

Our Top Turnkey Rental Property Investment Tips

Turnkey real estate investment isn’t for everyone, but with the right provider and a strong real estate market, it can be a great way to become a landlord. Some investors continue purchasing turnkey properties, while others use it as a stepping stone to traditional real estate investing.

  1. Research, Research, Research!
      The unfortunate truth is that there are a lot of bad turnkey real estate companies (and a lot of good ones), so you need to make sure you protect yourself through your own research.
  2. Ask the Tough Questions
    Don’t be afraid to ask your turnkey provider any question, even if you think it is dumb or insulting. If they shy away from answering hard questions, then you can assume they are hiding something.
  3. Be Flexible and Patient
    The first property you’re shown might not the the right one for you. You need to be flexible and take your time evaluating properties.
  4. Be Ready to Act Quickly
    Turnkey properties tend to sell quickly, so it’s important that you have your funds liquid so that when you make an offer, you can close quickly.

Curb Your Expectations
If you expect to buy a beautiful home as an investment property, you need to change your expectations. Turnkey properties should be functional and match the tenant demographic of the area. Over-updating a property won’t necessarily result in a higher purchase price.

Turnkey Investing – Your Entry Point into Passive Income

Buying turnkey property.

For newcomers, turnkey rentals offer an easy entry point into real estate investing without the typical headaches of being a landlord. Turnkey providers source, renovate, and manage rental properties on your behalf – enabling passive income with less effort.

However, it’s important to thoroughly research potential turnkey companies, inspect properties, and analyze returns before purchasing to maximize your investment. Focus on markets with strong fundamentals and target affordable B-Class neighborhoods that balance purchase prices and rental demand.

By partnering with a reputable turnkey provider like Ohio Cashflow, new investors can securely enter the rental property market and start building their real estate portfolio.

Ready to achieve passive income through turnkey real estate? Browse our available turnkey properties in growing Midwest markets and submit an investor application to get started today.

Read next...

Building a rental real estate portfolio can set you up for long-term wealth. But starting your own portfolio from scratch involves major work and due diligence. Finding promising properties, renovating them, screening tenants, handling maintenance - it's a ton of work.
The idea of making money in real estate sounds amazing. Who wouldn't want to collect rent checks every month and watch their wealth grow? But actually being a landlord? Many would probably say "no thanks!" to dealing with late-night clogged toilet emergencies and tenant complaints.
Real estate investors are searching for ways to profit passively from rental properties, without the midnight maintenance calls and tenant headaches. Turnkey providers promise a solution: fully renovated and managed properties ready for absentee ownership. But how does the turnkey process really work, and are these hands-off investments worth the premium price?

About the author

Picture of Kelsey Heath
Kelsey Heath is a real estate content specialist with an extensive background in residential, industrial, and commercial property. She has been involved in the industry for a decade as a professional and personal investor, gaining a deep understanding of the market and trends. With a passion for written communication, Kelsey loves helping people understand the sometimes-complicated concepts behind real estate and is now a sought-out guest and ghostwriter.