If you’re approaching retirement, you may be considering real estate as a possible investment path for building your resources for the future.
U.S. News and World Reports has a great piece this week looking at what you should keep in mind if that’s a path you’re considering, especially when looking at turnkey real estate.
What is a turnkey property? Kevin Ortner, President and CEO of Renters Warehouse in Minneapolis, explains:
“A turnkey property is a property that has generally recently been remodeled or renovated and comes with a tenant already in place. This means that as an investor, you should be getting an investment property that will require less maintenance in the early years and you’ll be able to generate a return from day one since there’s a tenant already paying rent.”
A lot of work goes into renovating real estate, and depending on your time, your health, and your resources, you may not have the wherewithal to do all that it takes (unless you’re Chip or Joanna Gaines, then all bets are off).
Turnkey properties offer the alternative of purchasing a home that’s already ready to go. Of course, that means the expense will be higher, but the potential payoff of a spotless home in the renter’s market is considerable.
The report has five major factors to weigh when you’re considering turnkey investment. We’ll let you go there for the details, but there’s one we want to focus on in particular: “Fully Vet Rental Opportunities.”
The fact is, not all property is created equal. Even turnkey properties can vary wildly from home to home. Craftsmanship is a major consideration. Some homes are built shoddily. This can be true for a brand new home, where major neighborhoods are often made in slapdash fashion. And clearly, it’s a danger in recently renovated home.
There are two major ways to avoid investing in this kind of a money pit. First, do your background research on the seller. Is he or she a regular home flipper? If so, what’s his reputation? Does she have reviews from previous buyers? Can you find his other homes? How are those houses doing? If you can, contact the owners/renters of other properties and see how much upkeep they’ve had to do.
Of course, that still won’t expose every issue in the home you’re considering, which brings us to our second point: hire a professional home inspector. These are the people who make a living off of finding potential dangers and risks in your new home, and hiring them can be a lifesaver if you’re considering purchasing a turnkey home, especially as an investment opportunity.
Turnkey real estate can be very appealing as a potential investment. But you have to be careful and know what you’re getting into. Be sure to fully vet your rental opportunities, and don’t miss the rest of the report.