Tips for Making Your First Turnkey Investment
Turnkey investing is one of the most passive forms of real estate investment that’s out there, but that doesn’t mean you’re off the hook completely when it comes to work. Before making your first purchase, there are certain steps you must take to ensure you’re winding up with a good deal. There are things you need to do after buying the property, too, but for this post, I’m going to focus only what needs to be done before you sign on the dotted line. Use the tips below for a smooth buying process and long-term successful investment.
Do your own market research
One of the best things about using a turnkey company is that they provide a TON of market and property statistics for you to review and shop around with. This takes a lot of the legwork away from you…or so you would think. The truth is, you should always do your own market research to back up what they’re telling you. If you’re working with a reputable company, then the data they’re giving you should be accurate. However, what if you only think you’re working with an honest and experienced company? What if their numbers have been inflated, or some of their stats seem a little off? It doesn’t hurt to verify that what you’ve been presented with is an accurate depiction of the local housing market, and in fact, it can save your butt if something shady is going on.
Ask for references
Along these same lines, it’s important to ask for references from any turnkey provider you’re considering. Talking to other investors who have worked with them will not only back up what they’re saying about themselves, but will also give you an idea of what to expect throughout the process. When you talk to the providers themselves, of course they’re putting their best foot forward, and there’s nothing wrong with that. But you need an objective opinion, so make sure you ask for a few references who can attest to the turnkey provider’s claims of awesomeness.
Prioritize property management
Major pro tip here: make property management a priority. If you’re using a turnkey strategy, property management is probably a decision you’ve already made because you want more of a hands-off investment. Plus, many turnkey companies offer in-house management services, so it’s easy and convenient to just contract with them for handling day-to-day management details. Before you do, though, make sure that their management services are up to snuff. You need a person who’s on top of things and who knows what they’re doing. If things start to slip, your tenants are going to get unhappy pretty quick, and vacancy is not something you want to deal with.
Turnkey is an excellent investment strategy that is perfect for the investor who’s looking for something a bit more passive. That said, it’s still a major step to buy a new rental property, and it’s not something to take on lightly. Don’t let success slip from your hands because you neglected these key pre-purchase actions.