A turn key property is one that is renovated, livable and already generating income when you buy it. For those looking to generate income immediately, turn key property investing can be a great way to do just that. But before you dive into this potentially lucrative market, keep in mind that this real estate investment approach has several notable pros and cons:
- Turn key property management offers an easy way to enter the property investment market. Such properties provide immediate income-generating opportunities.
- If you already manage properties independently, turn key property investing is a great way to diversify your real estate investment portfolio.
- No hands-on approach is required. When you buy a turn key property, you won’t have to worry about managing the property, making repairs or dealing with tenants.
- It’s easy to end up dealing with middlemen rather than the property’s actual owner, which drives up your investment costs.
- Turn key property investing typically generates lower returns than those you might see from a smart, independent investment on your own terms.
- The instant income generated by a turn key property investing strategy is exciting. It can also obscure long-term issues, such as the viability of the neighborhood in which the property is located and the likelihood that the current tenants will continue to rent.
- Renovations can be tricky to manage. Sellers may promise to renovate after you buy, then fail to do so. And properties that sellers claim have been renovated might not be quite as nice as you’re led to believe. Because sellers often own multiple properties and aren’t intimately familiar with all of their holdings, it’s your job to check.
Keep in mind that the pros and cons of turn key property management are largely in the eye of the beholder. Depending on your investment strategy, finances and expected return on investment, the disadvantages of these properties might not be deal-breakers. It all comes down to how much passive income you need and how much time you have to commit to real estate investing.