Investing in a turnkey property (if done right) can provide you with a long-term, passive rental income. Considering it’s less costly to buy than to rent in America, by national standards, it promises a bright outlook.
Like in any other investment, however, you should exercise your due diligence right from the start. Turnkey single-family homes do have obvious advantages over other types of real estate, but they don’t always guarantee success.
So, how to get started in turnkey rentals? Keep these rules of thumb in mind:
Ask about Vacancy Rate
Turnkey properties may be immediately available for rent, but that doesn’t mean they’re going to be occupied all the time. Realistically speaking, don’t expect your investment property to have a tenant 365 days a year.
As an investor, you need to do your homework and understand the property’s marketability. Forecast location’s rental demand over the long-term. As your property manager, a reliable real estate investment company would tell you how long they can find a new tenant. An experienced firm may provide you with a proof to show the average occupancy rate of the properties they manage.
Do a Home Inspection
The biggest selling point of turnkey properties is they’re fully furnished upon sale. But a savvy investor is never sold on face value. To ensure the property is in good shape, hire a professional home inspector. This way, you know all four corners of the single-family home is in good condition and is less subject to costly repairs in the foreseeable future.
Stay Ahead of Surprises
Owning a rental property isn’t risk-free. Sudden events may affect your cash flow and compromise the profitability of your investment. Property tax hikes and natural calamities may cause you huge headaches and major expenses. When looking for turnkey properties, it pays to know the local political climate and watch out for disadvantageous policy changes. Moreover, consider the usual weather conditions that may cause chronic maintenance issues.
Turnkey properties eliminate the hassles of traditional real estate investing. They make an excellent alternative if you don’t have the ability or interest to manage your rentals physically. As long as you avoid their typical pitfalls, you have a great chance to augment your passive income for decades.