What You Should Know Before Investing in Turnkey Property
Investing in turnkey property has become a very popular way to add to an investment portfolio. Yet, just like any other investment, it’s important to look at how it will fit into your income goals for both now and in the future.
It’s also important to take the time to review whether a specific property is your best option. Certain conditions may make it ideal, or in some cases, it may be best to invest in another property altogether.
Here we review what you should look for as well as avoid with a turnkey property.
What to Look for in Turnkey Property
A turnkey property is mostly considered a passive investment. You buy a property that is either completely ready for moving in or is in good condition with an existing tenant. The main benefit to this is that you don’t have to do much work other than purchasing the property to start making a return on the investment.
If you do decide that this type of investment is right for your goals, you should make sure that all aspects of it fit.
Some questions you should ask are:
- Is the location convenient to where I live?
- Does the price of the property make sense given the area’s market?
- Is it truly a turnkey property or are renovations needed?
- Do you want to manage tenants on your own or hire a property manager?
These are just a few questions, but more will likely come up as you start to match your needs with the properties you come across. As with any real estate transaction or large investment, the proper amount of research and reflection is required to make an informed decision.
What You Should Avoid with Turnkey Property
With turnkey properties increasing in popularity, the chances of making mistakes also increase. Not only has it attracted unscrupulous turnkey companies, but it also increases false claims about what’s involved.
One of the more common claims is that you can buy cheap property and still make a high rate of return. In fact, this is a very risky combination unless you work with a company knowledgeable about this type of property and area like LAS Companies. If a property is priced low, it can signify a number of problems. One being that renovation will either be needed now or in the near future. Or, it could also indicate that the economic conditions of the area where the property is located may be experiencing difficulties. This would eventually put the value of your investment in jeopardy. It could also make it difficult to maintain tenants if they have a higher chance of unstable employment. That’s why in these areas LAS Companies only allows tenants that receive assistance to avoid this issue.
You should also consider the fact that if an investment company is asking for a low fee on a property, it’s also safe to assume that they won’t have the best in support and customer service. Purchasing property involves a large amount of cash up front, so you want to make sure you can ask questions and get answers in a timely manner. You also want someone you can partner with to help you make good decisions and ensure your investment’s longevity.
These “red flags” also indicate that you should avoid this type of investment if you’re having difficulty coming up with a down payment on the property. Being in this financial state could put you in a position that forces you to buy a cheaper property. If you were to move forward with the purchase, you could end up needing to spend more money on repairs that you didn’t plan on. Or, you could end up losing money on your investment if you have trouble finding and maintaining a long-term tenant.
The best way to avoid potential problems with a turnkey investment is to do your due diligence. Make sure you’re making the best decision for your goals. Only work with a reputable investment company, and never spend more money than you’re comfortable with.
Learn How to Invest in Turnkey Property the Right Way
In spite of the problems that could arise with a turnkey property, there are circumstances where it can be a perfect addition to your investment portfolio. The key is to work with a company who has your best interests in mind and can help you find a property that fits best with them.
At LAS Companies, we have worked with many other investors just like you. We helped them determine the best possible way to match their investments with their goals and ensure a solid financial future.
If you’re wondering how you can invest in a turnkey property and avoid any pitfalls, fill out the form to get in touch with a member of our team. We offer a free, no-obligation consultation so you can determine if you’d like to work with us and how we can help you reach your investment goals.