There are more than a few ways to invest in real estate. Deciding the best strategy for your financial goals, your personality type, and your desired level of involvement can be overwhelming. You’ll hear talk of BRRR and FIRE, buy-and-hold, flipping, and wholesaling.
There will be decisions between residential, commercial, industrial, or land. Multifamily properties versus single-family properties. And even within your strategy, there are big decisions to make.
Will you manage your properties yourself or rely on a management team? Will you partner with a turnkey investment company or will you try to find your own deals?
There are a lot of big questions to ask. We want to address one of those pivotal questions today...is buying turnkey rental properties worthwhile?
What the Critics Say…
There are critics of the turnkey investment method, just as there are for every method. However, rather than dismiss the critics, we want to clarify a few things about turnkey real estate so that you can make a more informed decision based on your individual investment goals.
Here are the top criticisms regarding turnkey real estate:
- Turnkey real estate is too expensive!
- I can’t guarantee quality from a distance!
- If I don’t place a resident myself, how can I know they’re good?
- I don’t feel like I have any control over my properties.
The Truth About Turnkey Real Estate
The first three of these criticisms can be answered in one point, so we’ll hit that first. When looking at turnkey real estate for the first time, you might experience some sticker shock. There’s no getting around it: you do pay a premium for turnkey real estate.
Value, however, is not found solely in the price of the property nor its potential for cash flow. We find that many of our investors focus on using any cash flow, not for its own sake, but to pay down the principal on their mortgages.
Alone, a resident can pay 10% of the owner’s principal in just five years. If an owner focuses solely on paying down that principal, the rate can be as high as 25-30% in five years. This adds value for an investor in the long run, which is to be expected in a buy-and-hold strategy.
Effectively, an owner can use leverage from financing to purchase a property using a fraction of their own money. Then, over time, the residents pay off that mortgage for you. When a property is mortgage-free, not only does cash flow suddenly jump, but you truly have maximized equity in that property. Then you have both monthly cash flow and the opportunity to capitalize on a sale or further appreciation.
The Reason for a Premium Price
With that said, some would-be investors will still wrestle the premium cost of a turnkey real estate property. While we can’t speak for other turnkey companies or their management teams, we know that in our case, REI Nation investors find value far beyond simple equations of cost and cash flow.
We’ve talked about the real value of this type of investment before.
Understandably, an investor would look at the price tag of a turnkey property and say “no way!” However, the price, in our case, comes with a standout experience, unmatched expertise, and personal ease. When we prioritize the experience and satisfaction of our residents and investors, we provide unmatched value to you, the owners.
Our renovations team ensures that properties are renovated effectively and efficiently, meeting our standards of quality. Our management teams ensure resident satisfaction and sustained property conditions (and thus, value). Our advisors help you build an effective portfolio that you want.
This element of convenience and peace of mind cannot be over-emphasized.
When an investor knows that resident retention is being prioritized, when property quality is essential, and their interests are kept top-of-mind, the value is priceless — particularly where long-term investments are concerned.
You are saved from the headache and hassle of hunting for your own deals, waiting for renovations, finding great residents, or dealing with the headache of vacancies, repairs, and day-to-day problems.
When you’re looking to build a streamlined, passive investment portfolio:
No one competes with REI Nation.
Who Should Be a Turnkey Investor?
We recognize that the turnkey model is not for everyone. For investors who want to be more hands-on or see a quick return on their investment? Turnkey investing is probably not for you. Our model is best suited for investors who:
- Do not need to rely on monthly cash flow from investments.
- Intend to invest for a minimum of 5 years (Ideally, much longer!)
- Prefer a passive approach rather than a hands-on experience.
- Want access to more affordable, growing investment markets.
- Value the quality of service and overall investing experience.
Investing in turnkey properties is best suited for buy-and-hold investors who have their sights set on the next ten to twenty years and beyond. Our model won’t make you rich quick, but it will build lasting wealth and equity through real estate.
So ask yourself...is that worth it for me and does it best serve my investment portfolio?
If the answer is yes, you’re in luck. Your REI Nation advisor is waiting for your call.