Top Benefits of Investing in TurnKey Real Estate
Your success in the real estate industry is not dependent on finding the best property. It is about choosing an income producing asset. This business is about mathematics and numbers. The way you play these numbers determines your success.
Right now, in San Francisco, renting is more affordable than buying a home. That means, housing is expensive and more & more people would like to rent in San Francisco. However, it also indicates that you cannot make a significant profit by using rental properties. The cost of buying an average home in San Francisco is well above $1.5 million. Add the costs of house maintenance, and you will pay around $6,000-$7,000 monthly for mortgage payments + home maintenance.
The average rent price in San Francisco is almost $4,400 which is way below the $6,000 mark. If you are not careful, the chances are that your rental asset will not provide positive cash flow.
This is where investing in the turnkey real estate can help you.
Purchase with Built-In Equity
To create a positive cash flow system, you must buy the property at a significant discount with built-in equity. Real estate investors achieve this goal by purchasing at off-season timings. They invest in distressed properties that require major renovation. A great turnkey rental is usually purchased for at least 30% below the market value. So, the house has built-in 30% equity even before it has started generating profit.
Ready to Move in Properties
Most often, distressed properties are in a rough condition when you buy them. They cannot be employed to provide immediate rental income. Depending on the state of the home, you can end up spending thousands of dollars on the house rehabbing.
A turnkey real estate is different.
The property is repaired and renovated to match the latest lifestyle trends. Everything is taken care of. A family can come and start living in the house immediately.
Avoid Home Maintenance
A good rule of thumb is to save 1% of your home value for ongoing home repairs. The problem can be a minor repair such as an expired bulb or a leaky faucet, but it will cost you money and time. When entering the “rental property business,” stay prepared to pay for these repairs at the wrong times. It is not unusual to receive calls from your tenants at midnight about an urgent issue.
In case of the turnkey real estate, a property management service is hired. Your property manager will deal with late payments, immediate repairs, and complaints. You do not have to worry about these day to day affairs.
No Need to Find Tenants
You must find the right people for your house. Finding and screening potential tenants can take weeks. Moreover, time is money. You are not getting paid for showing the property. You will get money when people start living in your house.
Probably, the best advantage of a turnkey real estate is that people have rented your place. Turnkey investment saves time and provides immediate cash flow. Without spending months on research, you walk into a fully remodeled house with a property management system to help your tenants whenever they need it.
Invest in Profitable Markets
Turnkey management companies do the heavy lifting to invest in stable & growth oriented markets. They employee researchers, agents, and attorneys to find the best spots for their business ventures. After all, real estate is a location business. If you cannot find at least one turnkey company in a particular area, then it is a good reason not to invest in that site. Furthermore, if you can spot more than 3 turnkey management firms then, rest assured, you are investing in the right place at the right time.
Conclusion: Investing in turnkey real estate offers a new world of opportunities. You do not have to worry about the cash flow. The mathematics is done for you. The rehabbing crew, construction team, real estate attorneys and property management have done the hard work for you. Now, you can focus on your job, “investment” instead of spending time and money on micromanaging your properties.
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