The only time you should buy a property for more than it’s worth is if you are looking into investing your money on a property where you don’t have to do any work to it, you just sit back and collect the rent checks each month. So for you people out there that like to fix and flip houses for a profit, this article probably isn’t for you. If you are one of the many people out there that want to own real estate but don’t want to deal with the hassle of fixing a property before its put on the market, then this could be right for you. Continue reading to find out if this is what you are looking for.
Flipping an Overpriced Property
A lot of people that fix and flip houses for a living try to find the cheapest deals possible when buying a home to rehab, but for people that are looking to jump right into owning a property that is already up and operational you should consider looking at properties that are priced a little above the average asking price because those properties tend to have had all the updates done to them already. These properties are known as a turnkey property. They are fully renovated residential homes or apartment buildings that already have tenants living in them or are ready for immediate occupancy. This means you have no painting to do, no construction needs to be done to the property, and no renovations. With many of these turnkey companies they also offer a property management service to care for the property for the buyer so there is virtually no hands on experience for the buyer at all.
With a turnkey property you get what you pay for and value is what you are paying for. There is no harm in paying extra money when you purchase a property as long as you get a better product and better service in the end. Most people tend to look for the cheapest price they can get a home for but the cheaper the home the more work that needs to be done to it. With a turnkey property you should only pay more for it if you are getting the complete package including all the updates and a hands off experience. If all you have to do is wait for the rent check each month then the property is worth buying at a higher price. If you are looking
to buy a property for a long term period of time, then buying a turnkey property is the way to go. As inflation grows over the years, your rent will increase in value. Most people don’t understand the benefits to owning a turnkey property and will end up buying the cheaper properties thinking they are saving money in the long run, not realizing how much money it takes to fix those properties and maintain the upkeep on them.
More About Turn Key Properties
The turn key market grew substantially in popularity following the downfall of the housing market in 2007-2008. This type of approach is very appealing to people who would like to get into the real estate market but don’t have the time or ability to renovate and maintain the property. These types of homes are popular with executives or families with children. Basically, they are good for anyone that has a crazy busy life with their career, families with kids in sports, or anyone with a hobby. A lot of times these properties will attract investors who don’t want to update a property before collecting the rent check immediately.
There are downsides to every decision you make. With a turnkey property one of the downfalls is you can expect to pay just about as much for that property as you would for a brand new home. Buyers can pay between 5% to 25% for a turnkey property than a home similar to it in the same neighborhood that needs a little work. Make sure you go over the property before purchasing it to make sure everything they say has been fixed, was actually fixed. There are realtors out there that will list a property as a turnkey home and upon inspection, investors have found they have cut corners to cut down on cost. These properties should have all the amenities of a brand new home, not painted over kitchen cabinets, cheap carpet, old appliances, or anything else that doesn’t look brand new. Be on guard when you are looking at these properties and always check everything to make sure you are getting what you pay for.
Thinking about investing into a turn key property? Before you do, why not read about our latest article on rehabbing older homes and then make a decision that best fits your needs?