Turnkey Property Investing
Presently, real estate has become a popular passive investment method, and more people are investing in it. As an investor, you always seek new opportunities to grow your portfolio. When it comes to real estate, there are many different strategies that you can pursue. But what is a great way to achieve your investment goals? The answer is turnkey property investing.
Turnkey property investing is a popular option for many investors because it offers several advantages. If you are looking for a new investment opportunity, turnkey properties are definitely worth considering.
This article will discuss why turnkey properties might be your wisest investment. Let’s explore the potential of turnkey rental property investing!
What is Turnkey Property Investing?
Due to the property’s excellent condition, turnkey rentals have emerged as one of the most popular investment strategies for generating passive income in real estate.
The word “Turnkey” means these investments have undergone substantial physical improvement and will or already have attracted the best-in-class Tenants. Turnkey is derived from the idea that you can turn the key and start making money from the investment without any hassles.
In turnkey rental property investing, you hire an asset manager or property manager to deal with all maintenance, tenant relations, and rent collection matters. If things go well, you, as the Owner receive a monthly financial statement and a cashflow payment with little to no extra time invested. You can contact Summerfield Property Management’s experts for any turnkey property management queries.
Investing in a Turnkey Property: Is it the right choice?
There are several reasons why residential turnkey properties are a smart investment. For one, they offer a high degree of flexibility. You can choose to live in the property yourself, lease it out, or sell it if you desire.
Another reason why turnkey properties are a good investment is that they offer the potential for good returns. You can see a significant ROI in a short period with the right property.
Turnkey properties are relatively low-risk investments. Since the property is already fully renovated and leased out, you will know exactly what you are getting into before you make your purchase.
Investing in a turnkey property is an excellent option to earn passive income. Rental properties can generate considerable net operating income.
Based on current US tax law investing in real estate offers substantial tax reduction benefits. Depreciation based on capital cost segregation allows you to significantly reduce the taxable portion of your net operating income from real estate investments.
Like many investment properties, turnkey rentals can steadily increase in value over time which allows your initial equity investment to grow over time.
Investing in a turnkey property is an incredible way to build your wealth.
Things to Keep in Mind Before Investing in a Turnkey Property
When you are looking for a turnkey property, here are some things to keep in mind.
1. Location- You want to buy property located in a desirable area. This will ensure that you can find tenants quickly and charge a premium rent. Make sure you look for locations with good employment, well-liked attractions, and reasonably priced housing.
2. Seller- Another thing to look for in a turnkey property is a motivated seller. A motivated seller is someone who is looking to sell the property quickly and who is willing to negotiate on price.
3. Condition- You also want to make sure that the property is in good condition. If it is truly “Turnkey” it should be free of any significant repairs or renovations.
4. Laws- Focus on landlord-friendly markets with reasonably priced real estate. You want a solid rent-to-value ratio to assure good cash flow.
Turnkey Property Investing: Conclusion
Turnkey property investing is an incredible option within the real estate space. They don’t need a lot of maintenance or renovation. Additionally, they are immediately rentable, resulting in quick cash flow once vacancies are filled.
Real estate investing is not without risk but with proper due diligence and research, turnkey property investing can provide low risk and high reward.
If you are looking for experienced property managers to help manage your turnkey property, consider contacting Summerfield Property Management (SPM).
Turnkey Property Investing: FAQs
Q: How can you tell if a property is a good investment?
A: One metric to consider is the 1 percent rule. It suggests that a property’s monthly rent should be no less than 1 percent of the upfront cost, which includes any initial renovations and the purchase price. It is one well-known method to help you determine if a property is a smart investment.
Q: What is the 2 percent rule in real estate?
A: According to the “2% rule,” an investment property’s monthly rent should be 2% of the purchase price or more. Here is an example of the 2% rule for a $1,000,000 purchase price: $1,000,000 x 0.02 = $20,000.
Q: What factors should be considered before investing in a turnkey property?
A: Before making a purchase, it is important to thoroughly research and comprehend where we are in the investment cycle; the present and predicted cost of financing, trending employment environment, etc. It’s crucial to understand the impact of such factors on rental rates, recent selling prices, etc.