Many of us want to make money investing in rental properties. However, you might not have the time or experience to manage properties. One solution is buying a turnkey property as a way to generate passive income.
A turnkey property is ready to rent when you buy it, so you can start generating income much faster. However, people use the term passive income loosely regarding turnkey rentals. You might not need to handle renovations or day-to-day management, but there is still work to do.
This post will cover the basics of generating passive income with turnkey properties.
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Buying a Turnkey Property to Earn Passive Income
Understanding Turnkey Properties
A turnkey property is one that is fully renovated and ready to rent. Some companies even offer property management services with the property. That means the company handles finding new tenants, maintenance, rent collection, and more.
The upside is that you can buy a property and have it producing income in less time. You also don’t need to worry about all the time and work that go into management. However, turnkey properties usually cost more.
Finding a Market for Turnkey Investing
Since you don’t need to renovate or manage the property, you could invest anywhere in the country. That means you want to target a market that can offer strong returns. You should look for places with high rental demand and low vacancy rates. Substantial population or job growth can also be attractive for rental investments. You should also consider real estate values to ensure the area fits your budget.
Investigate Turnkey Companies
Once you have a target market, you can look at turnkey companies. Most areas have companies specializing in buying properties, renovating, and selling them as turnkey rentals. Investigate companies to learn about their histories. See how long they have been in business and see if you can find reviews. Look at their operation and see the types of deals they offer.
Beyond looking into companies, you need to vet the turnkey properties on the market. You must perform due diligence like you would with any real estate purchase. Hire an inspector to check the home and ensure it is in good condition. Beyond that, you also need to review the financial side of the operation. Consider monthly rent revenue, annual expenses, taxes, and more.
Property management is another consideration. Some turnkey companies offer property management as part of the deal. That might be convenient, but it doesn’t mean their management services are the best option. Investors should explore other property management options before signing an agreement with a turnkey property seller.
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