This is a simple concept in which the investor buys, rehabilitates and then resells a property with a profit. This is also known as "flipping" a house. This process usually occurs remotely, because the investor remains in their own home, sometimes in a place where the change of direction makes no sense and uses the Internet to search and invest in opportunities. The goal here is to make the investment process in real estate as easy as possible, so all the investor has to do is turn on a switch or "turn on the key".
Typically, then, you are buying a single-family home, repairing it, to align it with current codes and make it more attractive to buyers. Is that how it works:
A seller or turnkey company buys the property. One or more investors buy a part or all of the shares of the house.
The retailer or company "fixes" or rehabilitates the property so that it is current and attractive to buyers.
Once the property is rehabilitated, it is put back on the market for resale.
As soon as a sale is closed, the investor obtains his money plus any profit that has been obtained, according to the part of the investment he owns.
If done correctly, this can be a very solid investment strategy.
You, as an investor, have obtained benefits from changing the home, and may have the least or the greatest possible participation. You can get involved or not get involved in the investment process if you wish, helping to supervise contractors who rehabilitate the home or leaving the entire process to the retailer turnkey.
Why not just buy a house and change/rent it?
Maybe you think you can simply eliminate the intermediary, the retailer or the turnkey company, and you can do all the work yourself. While many investors do exactly that and do it, there are some drawbacks. In most cases, you will end up doing a lot more work than you would as an investor. This is what you would have to do if you became a fin, instead of using a turnkey solution and having the turnkey retailer handle the process for you.
Find the property: First, you must locate an appropriate property, which means knowing which neighborhoods will attract buyers or tenants.
Rehabilitation of the property: then, you must renovate and rehabilitate the property, make it adhere to the current codes and also be an excellent property for a single family. This requires an adequate budget and attention to contractors and workers, something that requires a presence on the site.
Market the property for sale or rent: once the house is ready to move, you must find a buyer or a tenant who pays to move to the location.
If you decide to rent the property, you would be entering a completely new dimension. For more information on the turnkey real estate investment in which you rent instead of reselling, see our outline of that investment strategy.
If this seems like a lot of work, it is because it is. With the investment of real estate turnkey, you can remove much or little of that work from your shoulders and put it in the hands of another person. Let's look at the advantages of turnkey real estate investment.
The advantages of real estate investment turnkey
In a complete real estate investment situation and turnkey, you are an investor, not an investor or owner. You are hiring another person to manage the property for you, so all you have to do is collect the benefits. These are some of the main advantages of the turnkey real estate investment.
Does not require your presence locally
With real estate investment turnkey, you acquire single-family properties in remote locations. This allows you the freedom to continue living wherever you want while maintaining a cash flow from a place that has excellent real estate values. You can continue living in your gated community in Florida, for example, where flipping homes might not make sense while investing in properties that can be changed or rented in Seattle or anywhere else that has a high demand for such properties.
Easy diversification of your investment portfolio
Turnkey real estate investment can be a success if done correctly. One aspect of correctly executing a smart real estate investment strategy is to invest properly in multiple markets, something that is easy to do since it requires little or no time. The benefits of investing in multiple markets are simple: it provides protection against an unexpected slowdown in an economy. For example, an investment in single-family properties in Seattle might seem like a guaranteed cash flow scenario, but what happens if Boeing announces major layoffs? If that happened, housing prices would fall and properties would be harder to sell, negatively affecting their profits.
Because the turnkey investment in real estate makes it so easy to have multiple properties, this is a significant advantage of the investment strategy if you do it right. In other words, do not put all your eggs in one basket.
It is not necessary to be a real estate expert
When it comes to a reputable turnkey real estate company or retailer, that supplier knows the real estate markets much more accurately than a stranger would. Sure, you could do some basic research in one area, checking local school qualifications, crime reports and price ranges, but a technical assistance service provider will know all that and more; They will know the heart of an area, such as why people prefer one neighborhood over another.
The disadvantages of real estate investment Company
If the turnkey real estate investments sound like a sure way to make money, you should keep in mind that there are disadvantages in the strategy. First of all, you will come across turnkey retailers that try to maximize their own returns at the expense of cutting corners, but beyond that, there are other drawbacks.
The "middleman" needs to earn money
The turnkey company is a business, and that company needs to make money. This means buying a property at a discount and then selling it to a larger amount, of "flipping" the property, often for a considerable profit margin. After that, the turnkey company can obtain an additional profit by managing the sale or rental of the individual property for you. One thing to remember about this drawback, however, is that turnkey companies often have a marketing machine running at all times and can find incredible deals in their market, allowing them to offer you good business even when the company gets its profits.
You have to trust someone
There are key "turbid" companies out there. These companies will encourage a foreign investor to buy a bad property in an incorrect location, which means that more money escapes from the investors' pockets than from the entrance. You must rely on the knowledge, experience, and credibility of the turnkey operator. to really make you a good business. This means that you must deal with someone you can truly trust.
conclusion
There are serious benefits for turnkey real estate investment, and it can definitely be an attractive cash flow strategy. However, there are also drawbacks to keep in mind before continuing with the offers. You should investigate the supplier turnkey and ensure that they are respectable and profitable, and make sure that the cash flow opportunity offered to you is really feasible and realistic. Turnkey real estate investment is a fantastic way to make money, provided you are smart about it and take charge of your own due diligence throughout the process.