The Advantages Of Turn-Key Real Estate Investment

This is a simple concept in which the investor buys, rehabilitates, and then resells a property at a profit. This is also known as "flipping" a home. This process usually happens remotely, because the investor remains in his or her own home, sometimes in a locale where flipping doesn't make sense, and utilizes the Internet to find and invest in opportunities. The goal here is to make the process of investing in real estate as easy as possible, so all the investor has to do is flip a switch or "turn the key."

Typically, then, you're purchasing a single-family home, fixing it up, in order to bring it in line with current codes as well as make it more appealing to buyers. Here's how it works:

A turnkey retailer or company purchases the property.

For more information on turn-key real estate investment where you rent instead of resell, check out our outline of that investment strategy.

If this sounds like a lot of work, that's because it is. With turn-key real estate investing, as little or as much of that work can be taken off your shoulders and put on someone else's. Let's look at the advantages of turn-key real estate investment.

The advantages of turn-key real estate investment

In a full-fledged turn-key real estate investment situation, you are an investor, not a flipper or landlord. You're hiring someone else to manage the property for you, so all you have to do is collect on the profit. Here are some of the primary advantages of turn-key real estate investment.

Does not require your presence locally

With turn-key real estate investment, you acquire single-family properties in remote locations. This allows you the freedom to remain living where you want, while still maintaining a cash flow from a location that has excellent real estate values. You can continue living in your gated community in Florida, for example, where flipping houses might not make sense, while investing in flippable or rentable properties in Seattle or anywhere else that has a strong demand for such

Sure, you could do some basic research on an area, checking out the local school ratings, crime reports, and price ranges, but a turn-key provider will know all of that and more; they'll know the heart of an area, such as why people prefer one neighborhood over another.

The disadvantages of turn-key real estate investment

If turn-key real estate investing sounds like a sure-fire way to make money, you should be aware that there are disadvantages to the strategy. First and foremost, you will come across turnkey retailers that try to maximize their own returns at the expense of cutting corners, but beyond that there are other drawbacks.

The "middle man" needs to make money

The turn-key company is a business, and that business needs to make money. This means buying property at a discount and then selling it to you at a higher amount, of "flipping" the property, often for a hefty profit margin. Following that, the turn-key company can make an additional profit by managing the sale or rental of the single-property property for you. One thing to remember about this drawback, though, is that turn-key companies often have a marketing machine running at all times and can find incredible deals in their market, allowing them to give you a great deal even as the company makes its