A turnkey property, when sold, is ready for the buyer to move tenants in or may even have tenants currently renting. Turnkey properties are wise investments because they allow buyers to quickly start making money without having to deal with the hassle of getting it in shape for a tenant. Buyers do not need to clean, fix, or go through lengthy processes of renting an empty home that requires maintaining it until renters can be found, tasks that can be highly time-consuming and costly.
A turnkey property will likely have tenants living in it already to cover the costs of maintaining the property until you can break even on your investment and begin making a profit. That is precisely why flipping houses isn't quite as popular today as perhaps it once was.
Just about anyone who invests in real estate do so because they want to make money on it after all. However, with flipping, you have to spend out of pocket before actually starting to make a profit on the project. This isn’t easy, even for experienced investors. When it comes to turnkey homes, however, this isn't the case. With the ability to obtain income through rentals or shorter-term projects, this is a great way to get involved in flipping, especially if you're a beginner. Turnkey homes can be a great way to get your feet wet when it comes to flipping properties.
Investment and ROI in Real Estate
Economists expect the average return on investment (ROI) to rise as much as 10% in the next year.
Other impressive stats include:
- Year-over-Year average ROI is 11.1%.
- As of April 2021, 6.9% is the year-to-date real estate price return
- The average 5-year ROI is 36.2%
- $8,190 is the average net return for an apartment unit.
- Low-rise apartment buildings are lucrative for investors with a 9.0% ROI.
- The market return in 2020 was -5.29%.
Entering Real Estate
Flipping houses doesn't always provide big profits, so more and more investors look into viable alternatives such as turnkey properties. Turnkey properties are designed for people who want to enter the real estate market but do not have enough capital available to cover the costs of completely renovating a worn-out property and ensuring it meets building standards for rental properties. Turnkey properties are often real estate investments that are finished or close to being finished, allowing investors to buy a "ready-made" home with the least amount of effort and cash investment possible.
Turnkey property investments can be advantageous. You won't need an extensive amount of money to buy the property, compared to other flips. Turnkey real estate investments are perfect for people who have spare money to invest and can't wait at least 10-15 years for an investment to yield returns. Turnkey properties might not be an immediate cash return. Still, they can certainly provide you with a long-term flow of income and give you some breathing space with a smaller cash investment than flipping houses. When investing in turnkey properties, the prices of real estate vary on your location. Expect to invest around 35% of the property value into a turnkey property initially, but know that cash flow should begin shortly.
Fixer-uppers may seem like a daunting task to take on, especially if you lack experience. Still, they have become increasingly popular in real estate investment in the last 20 years. Fixer-uppers can easily be found in your local newspaper, on websites dedicated to real estate, or through word of mouth, making fixer-uppers readily available to qualified buyers.
With enough renovation, a fixer-upper can be like a new home. Allowing investors to tailor properties to be unique in appearance. Adding a classic look or flair to a home, especially a fixer-upper, can differentiate your property from other homes on the market that have a cookie-cutter design. In turnkey real estate investment, where your profits come from people renting the home, this can be a helpful asset.
However, if this isn’t an attractive or viable option for you, a turnkey property is a great way to enter into the rental market. Instead of devoting time to flipping a property, turnkey lets you list the property for rent as soon as you acquire it if there isn’t a tenant already living there.
If you are interested in purchasing a turnkey property, Memphis Cashflow would love to help. The benefits of buying a turnkey home outweigh the risks and can provide you with many financial rewards. Memphis Cashflow has been assisting people for years with their real estate needs and has experience working on both sides of the transaction - from a buyer looking for investment properties or someone who wants to sell their own house quickly without any hassle.
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