In the aspect of passive real estate investing, turnkey property investment is a popular and lucrative way of making money from real estate. Turnkey properties for sale are springing up on a daily basis and it is important to understand what the process is all about before going into it.
What Is a Turnkey Property?
A turnkey property is a property that has been fully renovated and is ready for immediate occupation. Investors can purchase such property with the intent of renting it out immediately. Turnkey properties are usually a product of renovation or the fix and flip process. Real estate development companies which sell turnkey properties may also be involved in property management which makes it all the easier for the buyers of the property.
A turnkey property is a renovated property that saves potential investors the trouble of having to carry out the renovation by themselves. This may be due to a busy work schedule, or a lack of expertise to conduct the process. The kind of repairs involved in getting a turnkey property ready range from plumbing repairs, and electrical repairs to painting to give the house a fresh new look.
Pros and Cons of Turnkey Properties
Turnkey properties have their benefits which many investors consider before delving into them. Some of the benefits include:
- They help you diversify your investment portfolio: The nature of turnkey property investment allows you to be a passive investor while you’re still making your money from it. This means that you can also be an active investor on any other profitable real estate investment platform.
- They are more affordable: When compared to building a property from scratch, turnkey properties are cheaper to invest in. This is why they are usually carried out by beginner investors who are new to the industry.
- Saves you stress and time: Turnkey property is ready for immediate occupation once they are listed on the market for sale. So as an investor you do not have to worry about renovation or any further repairs after the property has been bought. Moreover, it is advisable to work with the best real estate investment companies to ensure the property is just as promised. MKH Investment is a real estate company setting a track record for providing reliable and profitable investment opportunities.
On the other side, investing in turnkey properties could also have its downside.
- Lower returns than expected: Turnkey properties could yield lower returns than expected making it more difficult for the investor to get the capital back. Low returns could spell trouble if the investor took out a loan to raise capital. This is why investors should thoroughly research the property, its location and market trends before investing.
- Lack of quality tenants: Getting the right crop of tenants for your turnkey rental property might not be as easy as you think. The investors’ lack of absence in the investment process could result in tenants who are not reliable or refuse to pay their rental fees on time. One way to prevent this is proper screening and creating a tenancy agreement form.
- Mismanagement: The concept of turnkey property investment could be detrimental if the property is not being managed by the right hands. Mismanagement of the property could lead to more major losses than ever expected. As such, investors should thoroughly vet the property management company or manager they would like to work with before concluding. Investors should also try as much as possible to be involved in the investment process to avoid mismanagement.
Read more on Tenancy Agreement In Nigeria
The term “turnkey property” means a variety of things to different real estate companies. But to sum it all up, the property has to be fully renovated and ready for people to occupy. With the benefits listed above, it is up to the investor to weigh in on the options and decide if it’s a good investment to go into.
MKH Investment can help you get started on your real estate journey with its various investment opportunities available for you. You can contact us here for more information.