What You Need To Know About A Turnkey Property
A turnkey property is a term frequently used by real
estate investors. It refers to an apartment, condo, townhouse, or single
family home that is completely renovated, fully furnished and can be rented
out immediately upon purchase of the property.
It's common for companies who specialize in the restoration of older
homes to purchase potential turnkey properties. They perform the renovations,
make the home over entirely, design and furnish it from top to bottom.
Every detail is thought out and brought to life. These same kinds of
companies typically offer property management services to buyers.
This service is a fantastic option for those buyers who don’t have a lot of
time to spend maintaining and renting out their turnkey property.
The History Behind 'Turnkey Property'
The concept of turnkey properties became popular after the 2007-2008 downfall in the global housing market. For the majority of housing markets in the United States, it became cheaper to buy than it did to rent. From this point forward, the appeal to buy a turnkey property also grew in popularity in many markets around the world, including the real estate market in Riviera Maya, Mexico.
Although turnkey properties are common among seasoned investors, many first-time real estate investors also pursue this investment strategy when seeking a passive income stream. It’s a viable option and doesn’t take a lot of effort, nor does it consume a substantial amount of time. As mentioned earlier, the investor generally hires a property management company to take care of all logistics and responsibilities involved in renting out a home.
Let's not forget to mention that in competitive rental markets, such as the Riviera Maya, owning a turnkey property is advantageous because it draws the attention of many potential tenants.
How a Turnkey Property Can Generate Revenue Quickly
With the purchase of a turnkey property comes the expectation that it can be rented fairly quickly to a new tenant. Given that the home is move-in-ready and doesn’t need any major work, a simple cleaning of the home and small preparatory steps are all that’s required to rent out the property immediately.
In cases where the home falls a bit short of turnkey status, then a fresh coat of paint, new lighting fixtures, brand new towels and bedding, and some new kitchen appliances may be the simple solution to get the home completely ready. The sooner the property attracts its first tenant, the sooner you’ll be able to generate revenues.
Why Renovations Are Better Suited for Renting vs. Selling
When you make renovations to a property with the intention of renting the home, you will likely see returns on that money through a higher monthly rental price point, compared to a home in the same building or neighborhood that isn't renovated.
On the flip side, if you spend thousands of dollars in renovations on a home you plan to sell, it could help increase your asking price, yes. However, those dollars spent don’t yield you returns over a long period of time, as you could earn through continuous rental income. Also, more often than not, the buyer of a home wants to add their personal touches and make design or layout changes the way they see fit. So adding hardwood flooring, or painting the kitchen cabinets may all be for not if the new buyer plans to install tile flooring and fully gut the kitchen.
With this article, I hope you have a much better understanding of the term turnkey property. If you would like any further clarification or want to explore turnkey properties in the Riviera Maya, feel free to send us a message.
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Ryan Gravel
Ryan Gravel is an American real estate broker and developer. He began his career at a young
age working for his family owned construction company.
After graduating college at the University of Central Florida with a degree in business,
Ryan set out to find untapped prolific markets around the world. His search landed him in
Playa del Carmen, Mexico where he founded Virgin Realty Mexico and co-founded the Saatal
Development Group one of the fastest growing development companies in the Riviera Maya.
With extensive market knowledge, professionalism, etiquette, innovation and integrity Ryan
is known as one of the most highly respected real estate advisors in the region.
