Buying a turnkey investment might seem simple, but there are a few things you should know before you sign on the dotted line! Learn more turnkey properties in our latest post!
Investing in turnkey real estate might seem like a no-brainer, but there are a number of things to be aware of. This is especially true if you are buying a property out of state or sight unseen. We have extensive experience in just that, and the first piece of advice we’d offer is not to rely on pictures alone. Try to see the house for yourself, or have someone check it out on your behalf. The house in most instances is a substantial investment and likely goes without saying it should be treated as such!
Make Sure Turnkey Means What You Think It Means
Many companies will call a property turnkey, however, there are a number of cosmetic repairs and renovations required in order to rent it out at the price you need. Some people consider any property that isn’t completely dilapidated “turnkey” however, it may not be the move-in ready property you were envisioning. For example, there might not be any bathroom mirrors, or maybe the windows let in horrible drafts or hardware throughout the house in inconsistent. Fixing these kinds of minor but noticeable annoyances can add up quickly, and will quite possibly make the deal less valuable than you thought.
Check Out The Neighborhood
What does the data have to say? Check the crime rates, vacancy rates and recent sales history of the area. Don’t try to save time on this part of the process. And don’t fall prey to ads that glorify the condition of the house. Drive the area yourself and talk to any residents you come across. In our experiences, neighbors love to talk to prospective buyers. And don’t just drive by during the day, make sure to check out the area at night or when school is letting out too. Unless you live in the neighborhood yourself, you will not know what the area is like until you do your homework. Talking to people and exploring the area for yourself will give you the best insight. When that’s not an option, experienced eyes who’s goals are aligned with yours is the next best thing.
Cheap Renovations and Repairs
Some investors will renovate a property, calling it “turnkey” but the repairs are shoddy and done as cheaply as possible. You don’t want to live in a house that requires you to replace things right away. Nor do want this if you are having renters in the house. Renters are typically tougher on a house then owners are, and you don’t want to have to continually replace things or increase the frequency in doing so because your contractor cut corners. Some investors will spend as little as possible renovating the home. These investors likely haven’t done the analysis that involves “dollarizing” the time that attention to these matters will cost them. Make sure the repairs have been done correctly, by a licensed Phoenix contractor, or by a reputable company that stands behind the work of its teams.
Actual Vacancy Rates
The seller might tell you one thing, but be sure to look at the data yourself. There’s no shortage of data available today. In fact, we believe there’s more data than there is time to digest it for most people. When talking with a motivated seller, sure they might have tenants currently, but when is there lease up? What are other properties renting for in the area? Is there a demand? Are large employment facilities closing?
Being stuck owning a vacant property can cost you big time. A single month of vacancy can wipe out a year’s buffer if you’ve bought a skinny deal. And with vacancy, you will not only be losing money on the rental income, but you will need to take on the utility costs a renter would likely be paying. Make sure you will have a renter in place, paying you a fair rent before making your purchase of a rental property in Phoenix.
Buy From An Experienced Investor
When you purchase a turnkey investment property from Property Cartwheel, you can rest assured it is actually turnkey. Our portfolio of finishes will give you a good idea on our philosophies and finish, even at lower price points. We work hard to revitalize properties, never using cheap or poorly reviewed materials or inexperienced labor. Our properties are move-in ready, whether you are planning on living there yourself or renting it out to someone else you can be sure you are finding a high-quality house in the Phoenix area.