Investopia defines turnkey investing as:
“A turnkey property is a fully renovated home or apartment building that an investor can purchase and immediately rent out. Turnkey properties are typically purchased from companies that specialize in the restoration of older properties. Those same firms may also offer property management services to buyers, minimizing the amount of time and effort they have to put into the rental.”
When I think of turnkey investing this is generally what I have in mind. However, you will find some variation of the product from provider to provider. For example I have seen “turnkey” marketed as a rehabbed property…period. No tenant, no management and no ongoing service of any kind provide by the company. That can be fine, but it’s not what I consider turnkey. I see it as a house, with a little marketing sprinkled on it to attract investors.
More often houses are sold with either a tenant in place, or with a property manager actively marketing the property. Not a bad situation, it does allow a provider to focus on it’s strengths – rehabbing houses – and the provider may have multiple property management companies in it’s network, allowing you some flexibility to find a manager you’re comfortable with. In this scenario I would expect a little more involvement on the part of the investor, the provider may be formally introducing you to a management company, but there may still be some due diligence and onboarding that needs to be done.
My preferred situation is too have the provider do everything in house: rehab, rent, manage and maintain the property. To me this is an ideal situation because it is the most passive way to invest, and that’s one of my goals. These companies often work in larger markets and have hundreds (if not thousands) of houses under management. I like this arrangement because there is only one company to communicate with. If for instance there is a problem with a recently installed HVAC there will be no finger pointing between companies and contractors as to who’s responsible for the problem and who needs to fix it. Additionally, should you choose to buy multiple houses with a provider like this, it gets easier each time. You exist in their system already, just add another property to it!
Did I leave something out? Do you have any questions? Let me know in the comments and I’ll do my best to help you out.