For some real estate investors, turnkey real estate is an elusive idea. It doesn't quite make sense. After all, at first glance—some of the pieces of the turnkey real estate puzzle don't seem to add up! For inexperienced investors or those used to investing a certain way, the turnkey method sounds too good to be true.
The idea that you can buy real estate, let someone else deal with the details, and earn passive income without the hassle and headache that comes from investing in single-family homes...it doesn't sound possible!
There are a few things you need to know about turnkey real estate if you want to truly understand it and its true value. After all, it isn't like other ways of investing in real estate.
One of the first things you'll notice is that compared to your average single-family investment property deal, turnkey properties are sold at around market value. This might seem strange to investors inexperienced in the turnkey method. The typical, non-turnkey strategy relies on two crucial tactics:
- Buying below market value
- Forcing appreciation
Investors will search out deals that can offer them the best possible cash flow while also forcing appreciation through strategic renovations.
Convenience and Agility
What happens in turnkey real estate investment, by contrast, is that the turnkey provider has done this already. The provider finds properties that are best-suited for generating passive income, purchases them, renovates them, and makes them turnkey-ready.
When an investor comes along, they can purchase the property, step right in, and start earning passive income. This allows investors to skip the steps of property hunting, negotiating, renovating, finding tenants, so on and so forth. There's no forced appreciation, but you're also not having to face the potential of nasty surprises during long, expensive renovations.
Still, this is a debatable point when it comes to investing in turnkey real estate. Some investors like it and some really don't. That said, the true value of a turnkey provider doesn't come from the cost of the property, appreciation, or even in saving you hassle in the property buying process.
No, the real value is in the expertise.
Your Investments Hinge on Expertise
We've discussed time and time again the value in making mistakes. You can only grow as a real estate investor if you get out there, do the work, make mistakes, and get better. The "getting better" part is key. Success is built on the slow and eventual mastery of your given craft. You get better. Smarter. More strategic.
Unfortunately for investors, there is a lot to master when it comes to real estate—especially if you're trying to do it all. Whether you're evaluating the condition and suitability of a property, negotiating deals, vetting tenants, working with contractors, landlording, or tackling tenant turnover and evictions, there is a lot to handle and a lot to eventually master.
A lot of those things you probably don't even want to do. If you're doing them it's only to save money. It's only because you think you have to. Here's the truth of the matter: you don't. You don't have to do it yourself and it's probably better for your business if you don't.
The job of investor, real estate agent, and landlord are all completely different job descriptions. So why would you try to do each one yourself?
When you partner with a turnkey real estate company, the cost isn't the selling point. It's the expertise. You're leveraging the combined years of experience from a team of people who've been doing this—negotiating deals, handling renovations, finding great tenants, keeping great tenants, and maintaining properties—for a long, long time.
Does it cost you a little bit more? Yes, it does. There's no getting around that. However, the premium services gained, the wealth of expertise and experience you can draw from, the element of great customer service...that's worth it.
If you're an inexperienced real estate investor, or even if you're just an overwhelmed or part-time investor, turnkey real estate offers you a leg-up in a business that can be unforgiving.
When you partner with an experienced turnkey provider who is invested in your success, it's hard to go wrong.