When it comes to investing, you should always start with the basics like one or more of the available retirement accounts. Those help ensure that you’ll find retirement manageable. Once you max out those investment options, though, where do you go next?
Some people look to investing directly in the stock market, but it’s a more volatile investment that many people want. Others turn their attention to real estate and will look for a turnkey rental property.
Not familiar with this kind of investing? Keep reading and we’ll cover the pros and cons of a turnkey rental property.
What Is a Turnkey Rental Property?
The idea of investing in a turnkey rental property may sound scammy if you don’t know what it actually means. A turnkey property isn’t especially unique. It’s also not scammy.
What makes a property turnkey is that it’s ready to go as a rental property from the minute you buy it. In many cases, the property is new or has recently undergone extensive renovations. It doesn’t need any work or alterations on your part before you can settle a tenant in it.
You can head over here if you’re still asking, “What is a turnkeyproperty?”
Pros of Turnkey Property Investing
A turnkey rental property offers several key benefits. It’s an ideal hands-off investment because you don’t need to oversee or schedule any work on the place. You can even turn over management to a property management company to reduce the workload even more.
It helps you create a more diverse portfolio. Since it’s ready to go, you can invest beyond your local community. That insulates you somewhat from regional downturns in property investments.
You also see a faster return on investment because you can advertise the vacancy immediately. That lets you get a paying tenant in place faster.
Cons of Turnkey Property Investing
Turnkey properties do come with some disadvantages. Since the property is new or recently renovated, you can’t really put a personal stamp on it without undertaking a new round of renovations.
Turnkey properties are typically more expensive than fixer-upper properties. They’ll sell for the going rate of similar properties in the area. That can extend the payback period for your investment.
Turnkey properties beyond your local areas often demand more administrative oversight from people other than yourself. If you own property halfway across the country, it’s difficult to operate as a hands-on landlord.
Is a Turnkey Rental Property for You?
A turnkey rental property can prove an attractive option for people looking for investment opportunities beyond their Roth IRA or 401k. They can diversify your portfolio and provide a quicker ROI. They can also function as a passive income stream if you want them to.
You will often pay a premium price for the property, which can turn off some investors since it extends the payback period. It can also force you to employ a property management company.
Looking for more business ideas or tips? Check out the posts over in our Business section.