Turnkey Meaning 101: What Does Turnkey Mean in Real Estate?

When you're in the market for a new home or looking to add an investment to your existing portfolio, you can buy a "turnkey" property. When considering the turnkey meaning, this word refers to a home that's move-in ready, which means that you won't need to pay for renovations or repairs. By adding a turnkey property to your portfolio, you'll benefit from instant cash flow, a higher resale value, and easier financing. 

Turnkey Definition

Turnkey refers to a product or service that’s immediately ready for use after purchase. In real estate, a turnkey home is a property that is ready to move in or rent out as soon as you close. For rental properties, this often means the property is rehabbed or newly renovated, already leased and managed, or immediately ready to rent out. Hence, all you need to do is “turn the key” to invest. 

Any property can be classified as turnkey. If you prefer to invest in single-family homes that can be turned into rentals, you shouldn't have a problem finding dozens or hundreds of properties to invest in. You'll discover that multi-family properties, duplexes, and condos can be turnkey as well. This investment strategy is suitable for nearly every type of real estate portfolio.

Some real estate listings display the word "turnkey" as a means of appealing to investors even if the property isn't move-in ready. To that end, it's a good idea to partner with a turnkey provider like Rent to Retirement that can show you true turnkey properties that you can confidently add to your investment portfolio.

Who Should Buy a Turnkey Home?

Turnkey real estate isn't necessarily for everyone. However, homebuyers and investors alike can benefit from purchasing a turnkey home. 

1. Homebuyers Who Want an Easy Move

If you wish to buy a home that you can move into immediately without needing to add furnishings and appliances, your best option is to search for a turnkey property that offers these advantages. Turnkey properties are useful because you don't need to drop everything you're doing just to negotiate with the seller to make certain renovations before the sale closes. If you have the budget needed to make an offer on a turnkey home, there aren't many drawbacks that come with making this type of investment. 

2. Investors Who Want Fewer Headaches

When an investor buys a traditional home on the market, they may need to perform numerous repairs and renovations just to make sure the property is move-in ready. They must also spend time searching for a property management company that will handle everything from maintaining the home to collecting rent every month. Turnkey properties avoid these headaches altogether by having the company that sells the home repair and manage it. And that’s just the start of the big benefits of turnkey rentals…

Why Buy a Turnkey Rental Property?

From faster cash flow to fewer repairs, there are plenty of reasons to buy turnkey properties. Most of these benefits are available immediately after you buy the property.

1. Faster Cash Flow

Since turnkey properties are move-in ready, you often get cash flow in month one. In comparison, it can take several months to start earning back your investment when you buy a traditional rental property. If extensive repairs and renovations are required with a traditional rental, it could take even longer for you to gain positive cash flow.

2. Fewer Repairs

Since the properties are newly renovated and repaired, you have fewer expenses and more cash flow! You won't need to paint the walls and select renovations that will add value to the property, which ensures that you can immediately focus on bolstering your portfolio. Since repairs have already been made, your initial expenses should mainly be limited to the amount you spend to buy the property itself.

3. Easier to Finance

If you need to buy a home with the help of a loan, banks should be more confident in lending to you for a property that's already producing income. You'll be able to prove to the lender that you'll start earning income almost immediately after the sale goes through. 

4. Better Resale Value

As stated above, since the property is newly repaired/renovated, it will age better and be easier to sell at a future date. If you bought a traditional home, you'd be responsible for making renovations that come in at a sizable cost to you. Thankfully, with so many repairs and renovations done FOR you, you can invest knowing that some significant repairs are already taken care of, making it easier to sell if and when you decide to exit. 

5. Income Is Passive

Investing in turnkey properties gives you the opportunity to earn passive income that will accumulate in your bank account without requiring you to do anything. The company that sells you the property will likely be the one that manages it. Since you don't need to manage the property yourself, you'll have time to start looking for additional turnkey homes to add to your portfolio.

6. You Can Invest Anywhere

Because turnkey homes are passive investments, you don't need to visit the ones you buy to vet potential tenants, perform walkthroughs, clean up, and make repairs. If you want to invest in a home that's hundreds of miles from where you live, you shouldn't experience any significant hurdles. To ensure you invest in the right property, obtain an inspection before the sale closes. 

What to Look for in a Turnkey Rental

Before you make a turnkey investment, there are numerous things you should be on the lookout for. While turnkey investing is often easier than the traditional method, you still need to perform ample research when trying to find the perfect property. 

Plugged-in Property Management

Buying a turnkey property isn't just about knowing that it's move-in ready. When doing your research, make sure that experienced management is already in place. You should be able to find online reviews from past customers that give you a better understanding of what to expect. If you see any red flags, it's a good idea to consider other properties. 

Strong Market Demand

You want rentals in areas with a lot of renter demand and good market fundamentals. Rent to Retirement does the market research for you by providing homes in some of the best rental markets in America! Investing in the right location makes it more likely that property values will increase consistently and finding tenants will never be too challenging.

Headache-reducing Home Improvements

From a new or repaired furnace and air conditioner to a water heater and roof, you'll benefit from renovations that will make your investment much easier. Before you even make an offer on the property, these upgrades will have already been installed. You can get the most out of the property without doing any of the work yourself.

Start investing the passive way. Schedule a free call with Rent to Retirement’s team to see if turnkey rentals fit your investing goals.

How to Find a Turnkey Rental

Finding the right turnkey rental is possible if you know what you're doing and get help when necessary. You can either search for these properties yourself or view turnkey rental properties for sale through Rent to Retirement.

1. Search for Them Yourself

If you're interested in finding turnkey rentals yourself, you'll need to do all the market research, contact hundreds of sellers to see if they'll sell to you with tenants in place, and get your own property management company. 

It's extremely difficult to find a turnkey rental on your own without having years of experience. Even if you know what you're looking for, you'll still spend a lot of time and money handling a process that's best left to the professionals.

2. View Turnkey Rentals through Rent to Retirement

Rent to Retirement has all the turnkey rentals you need, which are already analyzed and ready for purchase in top markets across America. You'll be able to filter by your preferred price range as well as other variables like ROI, cash flow, city, and state. 

All the information that's needed to make a turnkey investment is presented to you with each property. Since turnkey properties are already easier to invest in than traditional rentals, buying with Rent to Retirement simplifies the entire process and allows you to remain stress-free.

Now You Know Turnkey!

Now that you know the turnkey definition and the many reasons why it's a good investment strategy, you should be ready to start searching for the next property to add to your portfolio. Buying a turnkey property allows you to get a jump on your cash flow, earn passive income, and avoid performing extensive repairs and renovations. Schedule your free Rent to Retirement turnkey investing consultation here!

Turnkey Meaning FAQs

What Does Being Sold Turnkey Mean?

When a home is listed as being sold turnkey, this means that it's move-in ready, which makes it perfect for investors. When a home is advertised as turnkey, you'll know that every appliance is in working condition and that the home doesn't have any notable electrical or structural issues that need to be fixed. In most cases, a property management company is also in place, which ensures that you don't need to spend your time collecting rent payments, screening tenants, and maintaining the home. 

Why Is It Called Turnkey?

The word "turnkey" refers to a scenario where a customer receives a product and simply needs to “turn the key” to make it operational. For example, turnkey software doesn't require additional development or customization to make it work. The software solution is immediately ready to use upon purchase. While turnkey products are often more expensive than ones that require more customization, the benefits usually far outweigh the higher upfront costs.

Does Turnkey Mean It Comes with Furniture?

When you purchase a turnkey property, you may be wondering if it's already furnished. While this is often the case, there are times when turnkey properties don't contain any furniture. A home doesn't need to have furniture for it to be turnkey. If this feature is important to you, thoroughly read the property listing to make sure the right amenities are provided.