Love the idea of investing in real estate but not the hassles of negotiating, rehabbing, tenanting, and managing the property? Turnkey homes provide an excellent alternative for investors that prefer low-involvement projects. They offer convenience as you do not have to deal with managerial or administerial work for the property.
Statistics from the National Association of Realtors show that 59% of home buyers under the age of 29 do not expect to live on the property for more than ten years. It provides an attractive option for real estate investors to access turnkey homes that they can invest in.
While turnkey properties are often advertised as ‘hands-off,’ there are not flawless, and some investors may burn their fingers investing in the wrong rentals. Here are four mistakes to avoid when searching for turnkey homes to invest in.
1. Not Researching Your Turnkey Property Provider
One of the best parts of investing in turnkey homes is that you do not have to manage the properties yourself. However, you may need to find the right partner for the job. Start by conducting in-depth research on the home and the business that you are buying from. Most times, the provider is a cash home buyer that refurbishes the property. You may need to ensure that rehab work done by the Cleveland home buyer was done correctly, with all paperwork on permits and contractors used available. Check their reviews and inquire about how long they have been in business.
2. Not Getting Eviction Insurance
All real estate property should have an insurance cover, but more so when you are dealing with tenants. Part of the ‘hands-off’ advertisement may present a situation that your current tenants will not be evicted. However, you may need to conduct due diligence on the current tenants and those coming in. You cannot 100% guarantee that you won’t have to evict, and eviction insurance is a safety net for you as an investor.
3. Overestimating Returns
Turnkey homes are often clean, rented, managed, and with an existing cash flow by the time you pour in your money. You may need to run by the numbers to get a clearer picture of the estimated potential returns. Far too many new investors underestimate or ignore vital expense factors such as vacancy rates, property management, and maintenance. Take time to determine accurate figures for rent income.
4. Confusing Turnkey Rentals with New
The meaning of the phrase ‘turnkey’ varies a lot to most real estate investors. The most basic being that there is no construction, renovations, or improvements, and you only have to walk in and start living. Just because the property is in perfect condition does not mean the appliances and features in the home are new. While the seven-year-old HVAC unit may be functioning excellently, it does not mean that it may not require ongoing repairs and maintenance. As an investor in turnkey homes, you may need to determine long-term ongoing expenses to predict your returns accurately.
Turnkey properties in Cleveland, Ohio, provides an excellent investment opportunity for investors that may not want to engage in negotiations, construction renovations, and management of their rentals. Looking for turnkey homes? Reach out to Sell My Home Cleveland to have a look at our inventory.