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What Is A Turnkey House? A Guide For Investors

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Buying a turnkey house seems like a dream – just unlock the door (turn the key) and move right in, skipping the headaches of renovations and repairs. But is purchasing a so-called “turnkey” property really as easy as it sounds? What exactly makes a house “turnkey,” and is this type of home a wise investment?

Turnkey real estate may promise convenience, but some underlying issues could turn your dream turnkey home business into a nightmare. As an investor, understand both the pros and cons before taking the plunge. After all, your profit depends on making smart decisions upfront.

Don’t take shortcuts – let’s discover the full truth about turnkey homes.

What Makes a House Turnkey?

The appeal of a turnkey home is obvious – a house you can just unlock and move into without having to lift a finger for repairs or renovations. But what truly makes a property “turnkey” ready?

A turnkey home is where all the fundamental issues have been addressed upfront and necessary upgrades made to bring the home up to modern expectations. It has visual appeal that aligns with buyers’ tastes so they can enjoy the property without requiring renovations. All structural, mechanical, and electrical systems are thoroughly inspected and updated to current standards. Kitchens and bathrooms are redesigned for optimal function and livability. New contemporary finishes are incorporated to reflect evolving homebuyer preferences.

A legitimate turnkey home doesn’t need any work. The result is a move-in-ready residence tailored to today’s lifestyles. A “turnkey property” can mean more than just a home; it can also mean a turnkey real estate investment.

The Difference Between a Turnkey House for Investors and Homebuyers

A turnkey house holds different meanings for real estate investors versus owner-occupants. While both can benefit from a move-in-ready property requiring no repairs, the core motivations and desired outcomes differ.

A turnkey house for investors provides a convenient shortcut to cash-flowing rental properties without the typical landlord headaches. With a turnkey rental property, the heavy lifting of rehabbing and preparing the home for tenants is handled entirely by an experienced turnkey provider.

When investing, what makes a house turnkey isn’t just that it’s renovated and ready to occupy. Still, it should come either with a tenant in place or stipulating that the turnkey provider will source a tenant within a given timeframe. The consequence of purchasing a turkey investment property instead of doing the work yourself is that investors pay a premium purchase price for convenience. However, they gain an accessible entry point into rental property ownership, which is especially beneficial for novice or remote investors.

In contrast, what a turnkey house means to a homebuyer is a residence that is ready for them to occupy, not an income-producing asset. The appeal is moving into an updated home without tackling renovations. These homes are usually either recently renovated or new construction. Homebuyers want a low-maintenance, modern house catering to their lifestyle rather than tenant preferences. And there’s no passive income, only the benefits of upgrades completed upfront by a seller or developer.

While turnkey houses provide convenience for investors and homebuyers, the core motivation differs. Investors aim to minimize direct involvement to achieve passive income from day one. Homebuyers simply want to forego home improvement projects when buying.

The Benefits of Turnkey Houses

With a turnkey rental property, investors hand off the heavy lifting to an experienced turnkey company and avoid getting their hands dirty with renovations or hunting down delinquent tenants. Turnkey rentals provide a convenient, hands-off approach to earning attractive cash flow from rental properties.

Here are some of the main advantages turnkey houses provide over traditional rental investing:

  • Real Estate Market ExpertiseTurnkey providers have specialized knowledge of their local rental markets, which saves investors from having to identify promising opportunities.
  • Property ManagementMany turnkey companies engage a property management company, like Oz Realty, on behalf of the investor (with their permission). With a turnkey rental, investors enjoy a fully passive investment and avoid having to handle any repairs, renovations, or property management themselves.
  • Ideal for Out-of-State Investors Turnkey rentals enable investors to own properties across different states without being local to the market. Therefore, real estate investors can geographically diversify into new areas by buying turnkey properties from trusted providers. Turnkey rentals make it easy for remote investors who don’t have the time or ability to physically visit and research a market, or manage properties. It’s an excellent investment solution for those who live in expensive real estate markets and want to become a landlord but can’t afford to buy in their local area.
  • Immediate CashflowTurnkey properties come with tenants already placed (or about to be placed), so investors can begin collecting rents sooner. With a tenant secured, turnkey properties begin generating rental income for the investor immediately or shortly after purchase.
  • Reduced Risk Because turnkey properties are fully renovated and rented by the provider beforehand, investors avoid the risks of surprise costs that can come with repairs or renovations. The turnkey investment property company takes on all the risk. Turnkey properties mitigate risks associated with fixer-uppers.
  • Save Time and Money Turnkey properties eliminate the headaches and costs of independently finding, purchasing, renovating, and renting a property. The provider handles these time-consuming tasks on the investor’s behalf, often at competitive pricing through established contractor relationships.
  • Easier Entry for BeginnersTurnkey rentals offer a simplified way for new real estate investors to get started with rental properties while minimizing risk. They provide new investors with a “turnkey” experience that avoids having to self-manage properties as a landlord. Think of it as a great way to “dip your toe” into being a landlord.
  • Convenience Turnkey properties make investing in any rental market convenient by handling everything locally through an experienced team. Investors don’t have to travel to visit potential properties or manage them. With the right turnkey real estate provider, investors skip all the hard steps and jump straight to collecting rent.

Turnkey houses allow investors to tap into the income potential of rentals while avoiding many frustrations of traditional rental business operations and renovations. Turnkey property investing can be an excellent option for hands-off investing.

The Downsides of Turnkey Properties

While turnkey real estate investments offer an appealing hands-off solution for real estate investors, it comes with inherent tradeoffs compared to the traditional DIY rental approach.

Here are some key potential downsides to keep in mind with turnkey real estate investing:

  • Higher Purchase Price If you’re looking to snag a great deal below market, turnkey properties might not be your best option. Turnkey real estate investments typically come at a premium price since renovation costs are included in the purchase price. Most turnkey providers price their properties based on the projected return of the asset, not necessarily its market value. In some situations, that could mean buying a property below market, while in others, it might mean paying a little more for the convenience of the asset.
  • Limited Location Options Investors are limited to the inventory and markets that turnkey providers operate in and the properties they have sourced. With a DIY approach, investors can look anywhere and secure any type of property. However, that also leaves them prone to picking the wrong location.
  • Less Customization Turnkey investment properties come with predetermined upgrades and finishes chosen by the turnkey real estate company. That means that buyers don’t have the flexibility to choose how they want to upgrade the property. DIY investors can personalize and customize renovations to their own tastes.
  • Quality Concerns There is dependence on turnkey companies to complete quality workmanship. Some rehabs may cut corners or have an inferior aesthetic, leaving investors dissatisfied.
  • Harder to Re-Renovate If an investor wants to make more upgrades to their property, it can feel wasteful and require undoing recent upgrades.
  • Concealed Issues Possible Fresh paint, flooring, etc., may hide underlying problems that are not properly addressed during the turnkey renovation. This is why working with a reputable turnkey provider like Ohio Cashflow is incredibly important.
  • Due Diligence Required Investors must thoroughly vet the turnkey provider’s expertise and evaluate the property’s condition despite renovations. Read reviews and talk to past investors to hear about their experiences.

While turnkeys offer investment simplicity, investors sacrifice some flexibility, customization, and oversight. Carefully examining the provider and property can help minimize the risks.

Your Guide to Investing in Turnkey Houses

Turnkey rental properties have become increasingly popular for real estate investors who want passive real estate investing without headaches. Also called “ready to rent” properties, turnkey rentals are acquired, renovated, and rented by a turnkey company before being sold to an investor. This lets the investor know their realizable return rates and start collecting rental income with minimal effort. If you’re considering turnkey real estate investing, here are some tips.

Research Markets

The first step is identifying promising turnkey markets. Look for affordability, strong job and population growth, low unemployment, and solid home price and rent appreciation. Midwestern cities like Toledo, Cleveland, and Cincinnati in Ohio offer affordable prices and stable growth. Analyze market data to determine if a location has investment potential.

Vet Turnkey Providers

Not all turnkey companies are equal. Look for an established company with a proven track record and hundreds of happy clients. Review online reviews and testimonials. Make sure they use high-quality materials and renovations that appeal to tenants. Ask about their experience, number of properties sold, years in business, and approach to selecting neighborhoods and properties.

Do Due Diligence

Don’t take the turnkey provider’s word as fact. Independently verify the condition of the property and rents in the neighborhood. Hire an inspector to ensure there are no hidden issues. Check comparable rents by looking at other listings in the area. Drive by the property and surrounding neighborhood.

Understand All Costs

Turnkey properties cost more upfront but save investors time and effort later. Acquisition, renovation, financing, and profit costs are baked into the price. While turnkeys cost more initially, they can generate better returns over the long term than traditional house flipping.

Working with an experienced turnkey company is the easiest way for busy investors to own rental property. For a complete guide on how to invest in turnkey properties in one of the best mark ets in the Midwest, download our free eBook on buying turnkey houses in Toledo, Ohio.

This comprehensive guide covers everything you need to know about buying profitable turnkey houses in Toledo. You’ll get tips on researching the market, evaluating turnkey providers, doing due diligence on properties, understanding costs, and much more. It’s the perfect resource for any investor looking to achieve passive income through turnkey real estate investing in one of the top turnkey markets.

The Easier Way to Invest: Turnkey Property

Turnkey rental properties offer a more convenient and fully passive way to invest in real estate. By purchasing a fully renovated and rented property from a reputable turnkey company, investors can start to generate passive income immediately without having to do any of the legwork themselves.

While turnkey investing can have higher upfront costs, it saves investors a lot of time and effort down the road for property management. Working with an experienced turnkey operator ensures the renovations meet local market demands and tenants are properly vetted.

If you’re interested in further exploring turnkey real estate investing, consider working with our team at Ohio Cashflow, a highly-rated turnkey real estate company operating in Toledo, America’s #1 real estate market. 

At Ohio Cashflow, we’ve spent over a decade perfecting the turnkey rental property investing experience for our clients. We handle everything from finding undervalued properties to overseeing high-qualit, screening to scre,ening tenants and ongoing property management.

Investors can start earning passive income immediately without any of the typical headaches of being a landlord. We focus on the stable Toledo real estate market, where we have established relationships with contractors, property managers, realtors and more.

Ready to start earning attractive cash flow in Toledo without landlord worries? Apply to invest with Ohio Cashflow, and we’ll take care of the rest.

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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.