How Does Turnkey Property Management Work?
Turnkey property management works in many of the same ways as traditional property management. If you already manage a homeowners association (HOA) or condominium association (COA), your management skills and experience will easily transfer to a turnkey property. You can also use association management software such as CINC Systems to help you manage turnkey properties.
As with any other type of property management or HOA/COA management, your job as a turnkey property manager may include collecting rent or association dues, processing work orders, communicating with residents, general maintenance, and various accounting duties. Managing a turnkey property can be a big responsibility, but it’s also very rewarding.
Additionally, if your association management company can offer services for turnkey properties, you’ll be able to expand your business to include a wide variety of new clients. Turnkey properties can be a great real estate investment. By learning how turnkey properties work, you can also assist any existing clients who may wish to invest.
If you’re wondering how turnkey property management works, the information provided below will give you a solid foundation of knowledge. Learn the basics of turnkey property management and watch your management business grow!
What Is a Turnkey Property?
A turnkey property is a home, housing complex, or apartment building that is “move-in ready.” This means that the property doesn’t require repairs, inspections, permits, or anything else that would require a landlord’s attention before tenants can move in. In fact, many turnkey properties even have existing tenants.
Whereas other properties may require construction, upgrades, and approval from local civil authorities before an owner can rent them out, turnkey properties are ready to rent or lease out immediately. This allows the owners to begin generating income from the property right away.
Generally, turnkey properties are sold by real estate firms that specialize in this type of housing. The company will purchase a property and perform any necessary upgrades, such as painting, landscaping, roof repairs, or installing new kitchen appliances. They may also begin accepting applications for tenants. Then, the real estate company will sell the property to its new owners.
Because they require minimal effort, turnkey properties are a very appealing prospect to investors and housing companies. As a professional association manager, you may be able to assist your clients by helping them acquire turnkey properties and subsequently managing their new investments.
Turnkey properties have many advantages over other types of real estate. As mentioned above, the unique feature of a turnkey property is that it’s already in livable condition without requiring any additional work. This can save the new owner a tremendous amount of time because there’s no need to wait for construction projects to be completed.
Additionally, it’s common for new owners to “inherit” tenants when they purchase a turnkey property. As a result, the property is already accruing profits from rents, fees, and dues. There’s no need to spend the time and money acquiring new tenants through rental listings. Similarly, owners won’t need to process applications, credit checks, background checks, verify a potential tenant’s employment, or take any additional measures required when renting.
Purchasing a turnkey property from a real estate firm also offers advantages. The firm will have a clear trail of any records the new owner might need, such as repairs, inspections, permitting, and other documentation. A “fixer-upper” property may not have this information readily available. Plus, the firm selling the turnkey property will have taken professional photos that new owners can use when they need to attract new residents to the property.
However, if you or one of your clients is considering a turnkey property, it’s important to consider the pitfalls associated with this type of property. As with any investment, turnkey properties always carry a certain amount of risk. Potential buyers need to be aware of these risks in order to make the most informed decisions about their investment.
First, a potential buyer has to trust that the seller used a good contractor and high quality materials on any construction work that was done to the property. If the seller cut corners, it will be the new owner’s responsibility to fix their errors. For example, if the property wasn’t properly weather-proofed, the new owner may discover a leaky roof.
Second, there may be “unknowns” about the property’s tenants. The old owners may have approved tenants you wouldn’t have approved. The lease agreements may also include provisions that you wouldn’t have allowed. If tenants are problematic, it can be more difficult to remove them because they were approved by the property’s previous owner.
Finally, turnkey properties are usually more expensive than other properties. It can also be more difficult to obtain financing for these investments and interest rates may be higher.
How to Invest in Turnkey Properties
To invest in a turnkey property, begin by researching the real estate market in your region. Find desirable neighborhoods, choose what types of turnkey properties you’re interested in (homes versus apartments), and determine your budget. Then, find a real estate agency that specializes in turnkey investments. Working with a real estate firm will help you find the perfect property.
When you find the perfect property to buy, there are many ways to finance your investment. Some turnkey property investors prefer cash while others take out home loans or leverage other investments. Your CPA or financial planner can assist you with this.
Using Management Software for Turnkey Properties
When it comes to the question of how turnkey property management works, one of the best answers is management software. If you manage a turnkey property for yourself or clients, software like CINC Systems will enable you to manage the property easily and efficiently. CINC Systems offers multiple turnkey management solutions to streamline and automate everyday tasks.
Without the right software, managing a turnkey property can be a big headache. CINC Systems gives you the ability to manage turnkey properties remotely via the cloud. It also includes useful accounting features for turnkey properties. To find out how CINC Systems can help with turnkey property management, click here to request a free demo.
Related Frequently Asked Questions
- How Can Association Management Companies Working with HOA/COAs Benefit from Association Management Software?
- Top 10 Tips When Managing HOA Accounts
- How Association Managers Benefit from CINC’s Accounting Software
- What Is Association Management Company Accounting Systems?
- Is My Association Management Accounting Data Safe When Using Software Tools?