What are Turnkey Investment Properties?
- A turnkey property is ideal as a Buy-to-Let property, reducing the amount of effort needed by the investor
- Turnkey investment properties are popular with international investors that want opportunities in foreign markets
- Benefits of a turnkey property include a fully-managed service and the expertise of a third party
- Due diligence and a trusted partner is vital when investing in a turnkey property
A turnkey property is generally defined as a property that is renovated and bought by an investor with the goal of renting it out as a Buy-to-Let property. Turnkey investment properties are traditionally renovated and managed by a third-party company before being purchased by an investor, vastly reducing the amount of effort necessary from the side of the investor.
This is what gives ‘turnkey properties’ their name – all you need to do as an investor is ‘turn the key’.
As you can imagine, turnkey investment properties are particularly popular with international investors that recognise opportunities in other markets and want to take advantage, streamlining the process as much as possible. In fact, many turnkey properties generally have a tenant moved in before the sale closes.
This takes a huge amount of pressure away from the landlord who have plenty of responsibilities, allowing them to simply enjoy the benefits of a steady stream of rental income. The property management typically offered by these companies also means that if there’s a tenant issue, the company will receive the call first – not the landlord.
While turnkey properties are generally considered one of the more ‘low-maintenance’ investments you can make, the amount of work required to make the investment successful shouldn’t be underestimated.
Benefits of a Turnkey Property?
Having a fully-managed, turnkey property comes with many benefits over doing everything yourself:
The first and most obvious benefit of a turnkey property is the opportunity to invest in markets much further away. Increasingly, Indian investors are turning to the UK market to invest because of the excellent potential returns available. This is a trend largely motivated by the popularity of ‘turnkey properties’.
While experts will always tell you to perform your own research, there’s no denying that many turnkey property investment companies have an excellent knowledge of the local market. Information regarding a general location is easily found on the internet but a trusted partner will be able to tell you about the ‘heart’ of the area, giving invaluable advice and figures from an expert insiders’ perspective.
Management Experience & Simplicity
Property is often considered one of the most popular forms of investment because of its relative simplicity to get started in. As a tangible asset, it’s fairly secure and easy to maintain. For landlords that want to be even less ‘hands-off’, turnkey properties and the companies that manage them add another layer of simplicity and expertise. Many of these companies deal with multiple properties day-to-day, giving you the peace of mind that everything will run smoothly – provided you’ve invested in the right area.
What are the risks or downsides of Turnkey Properties?
As always, there can be downsides to turnkey property investment depending on your personal experience and circumstance. These properties often require a significant initial investment, when deposits and management fees are taken into consideration.
Secondly, a high-degree of trust is necessary between both company and investor. In many cases, you’re relying on the company to provide the information you need to make an informed decision. This is why performing the necessary research is vital.
How to Make a Turnkey Property Investment Successful
Due diligence is still a vital part of any property investment. Although you won’t necessarily need to spend your time finding tenants or dealing with maintenance issues, performing the proper research and ensuring your property is in an area with plenty of demand is crucial for long-term success.
If you are dealing with a renovated property, get a full inspection to make sure that everything is up to the industry standard. While you might be impressed with the living spaces, it’s just as important to look at the smaller details that might go unnoticed until the tenant is living in the property.
During this time, also get to know your property manager. Having trusted partners during the process can make everything less stressful, meaning you’re free to enjoy the fruits of your investment. Do your homework on the following:
- How much experience does the firm have?
- On average, how long does it take to find a new tenant for its properties?
- What fees does it charge?
Finally, get to know your ownership situation. While in most cases you will be the sole owner of the property, some companies may ask you to become a partner within an LLC as this method can provide its own benefits. While this is more uncommon, be sure to check your ownership situation during the investment process.
With the UK quickly becoming a leading target for investors across the globe, it’s no surprise that many new investors are asking the question: what is a turnkey investment property? Fundamentally, it’s a fully-managed property that offers investors the opportunity to enter the property market for as little effort as possible. As a concept, it creates huge potential for investors and landlords around the world that want to expand their portfolio to new heights.
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