ROI Wealth Watch

Turnkey or rent ready properties are almost always better for busy professionals, compare the Pro's and Con's:

Pro's
1. Don't take the risk on 10% interest rate loans that are the only funds available for distressed properties (outside of paying cash). If construction timelines go over by several months you can eat a huge portion of the equity you thought you were building.

2. Rehab is typically done by crews that work full time for the turn key provider and so they work at much more affordable rates than what you could get as an out of state buyer. Hopefully, this means that the market up the turn key provider is making is almost the same as if you had to manage a more expensive crew.

3. You don't have the hundreds of hours managing the rehab crew, checking for quality control and making sure the amount of work that you are paying for has actually been done.

4. Avoid the massive time commitments coordinating inspections and permits with city municipalities.

5. Avoid buying in bad neighborhoods by buying from someone who knows the market and only buys in areas that make good sense and are not high crime and low rental demand or are banned even by section 8 as being unsafe. (MAKE SURE the turn key provider owns properties in the area that they are selling to you. This makes sure they are not offloading their problem properties).

6. You may have tenants before closing or shortly after closing meaning you cash flow more quickly!

7. Most of the time turn key properties are renovated to cover most major systems so that you don't have major expenses soon. These expenses wrapped into the mortgage payment are much better than coming out of pocket two years later to replace a roof.

Disadvantages

1. You lose equity that might allow you to do the BRRRR method. Buy, renovate, rent, refinance, repeat.

2. You might be able to even have a better equity position if you could do the labor yourself.

3. If you deal with a shady operator they may pass off a D area as a B, so be very careful to verify crime rates, income levels, poverty levels, education levels and school quality to make sure that the property characteristics are what you are being told!

4. At times turnkey properties may not appraise for the purchase price. If this is because all plumbing, electrical, windows, hvac and the roof, flooring, bathrooms, paint, lighting, kitchens are all new and the comparable shape don't have all of that done this may be ok. Down the road you will have much less headache than the properties that really were not that comparable but were used in your appraisal anyway. If this is because the provider is making a huge profit and selling the property for more than it is worth, that's a problem.

Rob has developed many subdivisions and partnered with me on hundreds of properties. Good advice here! Please subscribe to our YouTube Chanel for more great advice and podcasts!

Rob Fuller: Add Value to Your Investments [PART 1/3]