If you are considering investing in a turnkey property, good on you. Because many real estate investors focus on fixer uppers, they miss out on the unique investment benefits of turnkey properties. Before you take the plunge, though, there are a couple of factors to consider.
- The property
- The turnkey company you choose to invest with
Of course, the property you choose will likely have the most significant impact on the success of your investment. It is where your money sits (and hopefully grows.) However, not too far behind the quality of the property you purchase is the quality of the company that helps you acquire and manage it. Do your due diligence to protect yourself from a bad investment by vetting the real estate investment company before you become partners.
This blog will explore the most important questions to ask the turnkey investment company you hope to work with. Knowing what to ask helps you decide whether a potential real estate investment will bring the financial outcome you hope to achieve.
Questions For Turnkey Companies
If you are hoping to get passive income through rental property acquisition, you’ll need a well-run investment company. Before choosing to partner with any company, there are a number of important questions to ask.
How long has the company been involved in the turnkey market?
The longer a company has been working with turnkey investments, the better. They have an established track record with vetted properties, and their business is well-structured and geared toward your success—experience matters.
Can you talk with current or former clients about their experiences?
Talking with clients is better than just reading testimonials. The ability to ask your questions and get candid responses is a fantastic way to get to know the company. Were the clients satisfied with the process? How were problems handled when they arose? Problems arise no matter how great a company is, so knowing that your investment company competently dealt with those issues gives you confidence in their business dealings.
Is the property management company team in-house?
A solid property management company is the key to a successful rental property. Understanding how they handle vacancies, delinquent accounts, evictions, and maintenance issues will allow you to move on from worrying about the management of your units.
How are renovations and maintenance handled?
Is there a reliable guarantee that improvements will happen quickly, efficiently, and within budget? Who are the contractors? What needs fixing? How will this affect property values? An actual turnkey investment should not require much maintenance for the first few years of ownership. The purchase price will reflect this fact. The front-end costs are higher with the expectation that the property is move-in ready and able to start generating revenue immediately. Understanding how a company handles this portion of the contract is imperative.
How do you get paid?
As an investor, this is one of the most crucial questions: How and when will you get paid? Most turnkey companies pay their investors every month. These payments come from the rental income from the properties they own and manage. After deducting property management fees and other expenses, the property management company pays out the net profit. These monthly paychecks give investors a reliable income stream from the rented properties. Investors typically receive their shares based on their ownership stake in the company or the property they invest in.
Is the investment property currently occupied?
One of the best parts about turnkey investing is the immediate positive cash flow. Many turnkey companies offer properties that tenants already occupy. Occupied units make your investment even more profitable from the start. Once you have obtained ownership, the profits are yours, eliminating any money lost due to a vacancy.
What types of issues will they contact you about?
Each investor decides how involved they would like to be in managing their property. Communicating with the property management team about your expectations will allow for a smooth partnership. Do you want to know all of the details? Or are you more of the “no news is good news” type? Setting expectations about when to contact you and the kinds of issues they will contact you about will come in handy for you and your team.
Asking the right questions about a turnkey company is crucial to your investment as it allows you to fully understand their experience, business structure, and approach. Through this process, you will be confident in choosing a company well-aligned with your goals. This understanding and confidence will minimize potential risks and bring the positive investing experience you seek.
