Are you considering purchasing a turnkey property in Boca Raton?
A turnkey property offers convenience, but it comes with some disadvantages as well; there’s a lot to consider when you’re deciding whether or not the purchase is worth the effort.
What is a turnkey property? A turnkey property is already completely renovated and available for an investor to rent out immediately after purchase. This process makes it easier for the investor, who pays the original owner or property manager for doing the legwork of prepping the home. Turnkey properties are more common in a market where buying is less expensive than renting because it provides an attractive way to earn passive income with less effort.
There are some downsides when purchasing a turnkey property compared to one that requires more involvement from the owner. As a property manager in Boca Raton, we know the pros and cons of turnkey properties and list several below to help you make a good decision.
Pro: Low Vacancy Rates
We’re kicking off our list of “pros” with one of the best reasons to purchase a turnkey property: low vacancy rates. The property is already prepared for the tenants at move-in, which means you don’t have to lift a finger. Beyond that, the property is ready even as tours and prospects are coming through, meaning that you don’t have to pay up-front for costs before you can cash in on rent payments. No need to worry about repairs, replacements, or upgrades. All of that is done for you, making your life easier.
Not sure what all you need to do to prepare your property? Check out our property management services in Boca Raton if it feels overwhelming.
Pro: Immediate Cash Flow
Without the maintenance costs that you typically have to worry about to get a property ready, you’ll see an instant boost in cash flow that you wouldn’t get with a home that needs some work.
Additionally, as a turnkey property owner in Boca Raton, you don’t have to worry about any of the other initial costs that go into getting a property ready such as screening lots of tenants or the lack of rent while you’re searching for residents. Instead, the property is ready to live in which means you’ll have tenants in no time. Another financial “pro” to note is that, as a turnkey landlord, you might qualify for extra tax deductions.
Pro: Easier to Manage
Turnkey properties are easier to manage. You save yourself all the work that goes into renovating a property or even just prepping one to be more livable. While you may not have any large projects like completely replacing the flooring, think of all the details that go into making a home comfortable. The appliances need to work, there can’t be any visible damage, and every nook and cranny needs to be taken care of.
Another perk of a turnkey property is that you don’t need to be as present and available like you do with other properties; you can even manage it outside of Boca Raton.
Con: Less Autonomy
One con to turnkey properties is that you, as the owner, will have less control over the home you are leasing out. This means you have don’t have a say in how things look, which utilities and materials are used and, in some cases, you won’t even pick the tenants.
Turnkey companies may also pick the property for you after you hire them; in this situation, you may not be as happy with the home as you would have been if you could have picked it yourself. If you want someone to help with all the tasks that come with managing one or more properties but you still want some autonomy, consider hiring a property manager in Boca Raton.
Con: Higher Costs
Another downside to turnkey properties is the added costs. While one of the upsides is that you will make more immediate money than you would if you had to fix up the place, keep in mind that turnkey properties come at a higher initial cost. This is because the turnkey company already put all the labor and materials into the home so that all you have to do is purchase it and start renting it out. While you may be saving by not paying for work to be done, you still may end up paying for the work that the turnkey company did for you.
In addition to this, they likely will mark up any repair costs. For example, let’s say they paid a contractor to fix something in the home. If they charge you the same price, they won’t make any money. If they charge more, though, they can make a profit when they sell you the completed home with the idea that they saved you the time cost of having to manage the labor yourself.
Con: Unpredictable Tenants
A final “con” to turnkey properties is that you may not have as much say in the tenants who move in. The turnkey company may offer screening as part of the deal; while this is convenient, it leaves you with the person they pick. If you don’t want to deal with the hassle of screening them yourself, at least make sure the company has a proper process in place to ensure that tenants are reliable.
Even if you are more involved in tenant selection, don’t let yourself get blinded by someone who can move in quickly and pay rent but doesn’t meet certain criteria with employment, credit score, or rental history. It’s easy to want to move fast when it comes to turnkey properties; after all, you’re usually able to charge more for rent since the property is completely ready to go and maybe even furnished. Plus, the whole reason you’re investing in a turnkey is that you want a more efficient, hands-off option. Still, make sure to do your due diligence and properly screen your potential tenants.
Not sure about a turnkey property but you’d like to talk to a property manager in Boca Raton about some things? We’re here to help however we can! Start the conversation today.
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