One of the easiest ways to get involved in the real estate market is investing in turnkey real estate. Buying turnkey real estate means you can either:
- Move in immediately.
- Become a landlord and start receiving rental income shortly after you close on a property and find a willing tenant.
Here’s what you need to know about turnkey real estate so you can get the right property for your needs.
Turnkey Real Estate: Simply Put
Turnkey real estate is property that’s ready to be occupied or rented out immediately by the purchaser. The common term arose because you just have to “turn the key” in the property’s lock to open the front door.
The big advantage of turnkey real estate is that you only have to put up the purchase money for it. This means you don’t have to waste any valuable time or invest any additional funds into making renovations to get the turnkey property into an occupiable or rent-ready state since it is sold in that condition.
Investing Platforms for Turnkey Real Estate
Instead of shopping around for properties with your local real estate agent, the modern and far more convenient way to invest in turnkey real estate involves using a web portal provided by a major real estate investing platform. Here are Benzinga’s picks for 3 different and popular property investing platforms that you might find suitable to make real estate investments.
DiversyFund provides a crowdfunding platform that lets you add real estate investments to diversify your portfolio. The company is a conscientious developer that helps you mitigate your real estate investment risk by providing strong expert vetting of each property purchased.
Anyone interested in finding out how to invest in REITs (real estate investment trusts) could find DiversyFund an uncomplicated way to invest in property in much the same way you might already invest in stocks.
Among its offerings, DiversyFund includes a multifamily REIT called the DiversyFund Growth REIT. The primary objective of this REIT is to boost your cash flow and the fund’s resale value. You can purchase an interest in this fund to access high-quality multimillion-dollar property assets to let you invest in the same sort of real estate as billionaires.
DiversyFund tends to make a good choice for those who are not accredited investors and still want to diversify their investments beyond securities like stocks and bonds. It can also suit those who want to avoid all of the stress involved with being a traditional landlord.
You just need $500 to start investing in real estate without costly broker fees. You can also invest in DiversyFund’s offerings from anywhere.
The downsides: DiversyFund’s investments are limited to its Growth REIT, which is a blind investment pool where you cannot avoid properties you consider undesirable.
For more information, read Benzinga’s detailed DiversyFund review.
CrowdStreet offers a commercial real estate investing platform that allows you to directly invest in commercial properties and projects. It does not act as a broker, but instead as a marketplace where you can select the deals that seem best given your investment strategy and preferred time horizon.
In general, CrowdStreet is best for investors looking for new opportunities to diversify into real estate assets from the usual security investments. You will also need to be an accredited investor with plenty of capital available to invest in real estate.
Membership in CrowdStreet is free and allows you to access deals via its online platform. You can use this service to invest in family residences, office buildings and storage facilities, although you can only invest in the properties currently shown as “live” on its Marketplace.
The benefits of using CrowdStreet for real estate investments is that it provides unique opportunities that are both accessible and easy to understand. You can also allocate your investment capital to equity and debt offerings. To help you get started, the company provides good learning materials and a comprehensive FAQ to answer common questions.
Keep in mind that real estate is not a liquid market like stocks and bonds, so it may take you quite some time to get back into cash after making an investment via CrowdStreet. Many of CrowdStreet’s projects also require you to make a minimum investment of $25,000 so you will need to have a decent amount of cash on hand to get started using its platform.
Roofstock offers a very useful service to real estate investors looking to connect directly with sellers. It acts as a real estate broker and provides a marketplace that specializes in listing single-family rental properties. Roofstock is especially useful if you’re a non-accredited real estate investor who has limited capital, especially if you’re looking for income from renting out properties they own.
Each of the properties listed on Roofstock’s marketplace are first carefully checked out by a home inspector. The properties also have a rental income guarantee so you get paid rent by Roofstock even if your property remains empty. You can also specify turnkey real estate in your search to make sure the property you select is immediately occupiable.
You can research financial data about each property even if you are not a member and you can join Roofstock without charge or minimum investment. Roofstock provides you with an easy way to stop for investment properties. Its fees are quite reasonable compared to other brokers it competes with. You also get a 30-day money-back guarantee in case you change your mind after you purchase a property.
You can pay for properties with cash or select among various financing options, but keep in mind that Roofstock will add its fees and charge closing costs like any real estate broker. Since you will be the property’s owner, you’ll also need to pay for and make any needed repairs and deposit the funds required for a down payment.
Is Turnkey Real Estate Right for You?
Turnkey real estate is typically best if you have the money and credit to purchase a property with but spare little time or the skills needed to fix the property up. Furthermore, if you want to buy a home to move right into or a property that can be rented out immediately, then turnkey real estate could be exactly what you are looking for.
If you plan on renting the turnkey property, you can set aside some of the rental income in a savings account to make needed repairs so that the property stays well-maintained. If you intend to occupy the property yourself, remember to keep up with necessary maintenance and have a savings fund for larger expenses like roof or furnace replacements.
One of the downsides of buying turnkey real estate is that the property tends to depreciate somewhat or rise less quickly in value over time, depending on real estate market conditions as repairs become necessary.
Buying a turnkey property means you will probably not get the greater value boost that those who buy properties in need of repairs often benefit from when they fix the property up and then go to sell it. You may also be required to pay more in property taxes and insurance to reflect the better initial condition and value of the turnkey property.
Assess Whether Turnkey Real Estate is Right for You
Buying turnkey real estate as an investment is not for everyone, so make sure it’s right for your unique situation. This is an especially important step since you might give up some capital appreciation by selecting that option.
Buying a turnkey property will let either you or a tenant move in right away so that can definitely be the right choice in certain circumstances. On the other hand, if you already have well-developed home improvement skills and the time to use them to improve a property, then you might consider buying a fixer property rather than a turnkey property.
In any case, keep in mind that a property’s location is one of the primary determinants of its current and future market price. That should also factor prominently in any real estate purchase decision you make.