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A turnkey property is one that is in livable condition and is move-in ready, meaning that
it doesn’t require repairs. Turnkey properties often have tenants already in them and a
property manager already managing them. Investors most commonly purchase these
properties from turnkey real estate companies, but private individuals can also sell
these seasoned units.
If you want to purchase a turnkey property, check out Roofstock. They have custom
filters so you can find a property that works for your budget and desired location.
Membership on its site is free and investors can find single-family homes that are
already leased so you start making money from day one.
Visit Roofstock
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new owners. Turnkey properties are typically sold in good condition and have tenants.
They’re generally more expensive than properties that need rehabbing.
Turnkey properties are generally sold to the turnkey company’s network of investors or
to new investors who contact them through their website. The properties are usually
not listed on the Multiple Listing Service (MLS) or with real estate agents since the
turnkey real estate companies often have their own buyers.
Roofstock
Roofstock was started for investors by investors with a focus on ensuring each
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property is cash positive from the day it is sold. Roofstock doesn’t own the turnkey
properties they list, but they vet them based on specific property characteristics and
income potential. They o"er fully seasoned units with management companies in place
or on call.
Roofstock a great choice for investors who are looking throughout the U.S. for turnkey
properties, since they currently have listings in 23 states, and are a well-known,
reputable company. Most turnkey real estate companies don’t o"er properties in that
many states or only o"er properties in the state where they’re located.
HomeUnion
HomeUnion also doesn’t own the turnkey properties they sell. Instead, they find and
advertise properties through the Multiple Listing Service (MLS) and directly from
turnkey real estate companies. They focus on properties with up to four units and make
sure each property is carefully vetted before advertising it.
Howard Hanna
They’re a good choice for investors looking for luxury properties, which they refer to as
“Homes of Distinction.” Since they’re the third-largest real estate company in the U.S.,
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they have a division that is dedicated to finding and marketing luxury properties and
have expertise in this niche market.
Norada Real Estate Investments o"ers single-family homes, multifamily properties, and
condos in high growth areas. To help investors secure and maintain turnkey properties,
they work with a diverse network of lenders and property managers within the 15 states
where they operate.
Norada is a good choice for investors who are looking to minimize risk while maximizing
profitability within top real estate growth markets. They also o"er property appreciation
forecast and data on properties in the areas where they operate.
Maverick Investor Group focuses on single-family homes in areas with strong job and
population growth. They usually work with investors with down payments of at least
$50,000. They don’t manage properties but have a network of vetted property
managers who only rent to qualified tenants. Occasionally, Maverick Investor Group
o"ers discounts on property management if buyers purchase more than one property.
They are a good choice for socially conscious investors since they donate 10% of
company earnings to charities they believe in, including giving back to the communities
where they sell properties, creating jobs, and supporting the homeless and working
poor who cannot a"ord to rent a home, in addition to other causes.
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Multifamily and apartment complexes are considered turnkey when they meet building
and safety codes and usually have qualified tenants renting them. Even if these
properties are advertised as in turnkey condition, it’s best to have a full property
inspection to be sure all systems are working properly. In addition to building and safety
code standards, turnkey properties should have certain features such as updated
appliances, fresh paint, and flooring.
1. Do Your Research
As with any real estate purchase, it’s important to do your homework. During the first
part of your research, focus on neighborhoods and home prices using sites like Zillow.
Research how much comparable properties sell for to avoid overpaying. After your
initial research, you’ll need to visit the property. Drive through the neighborhood and
look for signs of distress, such as boarded-up properties, closed businesses, and
unkempt streets.
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For the second part of your research, investigate turnkey real estate companies. Look
for reputable companies with a known track record for selling cash-positive properties
with stellar property management services. Read turnkey real estate company reviews
to glean their level of experience, what fees they charge, who manages maintenance
requests, and how long it takes them to rent vacancies.
Gigi Luu, a real estate agent at Msquared Real Estate, who works with owner-occupants
buying turnkey properties in the D.C. area, says:
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Whether you work with one turnkey real estate company or many, vetting companies
beforehand is critical. It’s also important to find the right company to work with since
it’s a long-term relationship. Choose a company you have thoroughly researched before
looking at their inventory. Review the applications, background checks, and leases the
turnkey companies have of the existing tenants.
Many turnkey real estate companies have large inventories of properties in multiple
states. Less common, turnkey real estate can be found through local real estate agents
and the Multiple Listing Service (MLS), which can be searched by the property’s
condition, price, and neighborhood. Most real estate companies don’t manage the
properties and don’t sell outside of their area, so it’s best to interview before working
with them.
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Conforming Loans
Conforming loans are mortgages that meet certain criteria in order to conform to
Fannie Mae and Freddie Mac guidelines. As of 2019, the maximum loan amount for most
areas is $484,350. Fannie and Freddie o"er some of the best interest rates in the
market.
If you’re purchasing in an area that has above average housing prices and a high cost of
living, such as San Francisco, the conforming loan limits increase. The same is true for
properties with more than one unit. For example, if you purchase an owner-occupied,
four-unit property in San Francisco, the loan limit increases to $1,397,400.
Conforming loans o"er low-risk, long-term financing for owner occupants and
investors looking for single-family homes, condos, and multifamily properties with up to
four residential units. This type of financing typically equates to lower monthly
mortgage payments and less interest expense over the term of the loan, making it a
good choice for turnkey properties.
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In order to qualify for a conforming loan, borrowers must meet certain lending criteria.
This criteria is standardized and must meet federal guidelines. It includes a minimum
credit score, PMI (private mortgage insurance) for loans with less than a 20% down
payment, holding up to six months of cash reserves, and a down payment.
Minimum credit score of 620 (check your credit score for free here)
Mortgage insurance, which is required for loans above 80% LTV
Having three to six months of cash reserves for non-owner occupied properties
A down payment of 3.5% or more depending on the type of property, loan product,
and borrower profile
Conforming loans are readily available and can be found at local banks, credit unions,
and other lenders, except for private lenders. These loans are government-backed
loans that are guaranteed by the Federal Housing Administration (FHA), Freddie Mac, or
Fannie Mae. Most banks and credit unions have mortgage lending departments and will
be able to provide information about their loan products.
Portfolio Loans
Portfolio loans are o"ered by private lenders who lend to investors and hold the
mortgage in-house to receive interest income. Portfolio loans can be used to finance
single-family, multifamily, vacation rentals, and apartment buildings. They are often
used to finance more than one property at the same time, aiding investors in building a
real estate investment portfolio.
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Portfolio loans o"er higher maximum loan amounts than conforming loans. They can be
used to finance properties in turnkey condition and properties that need rehabbing.
Some portfolio loans may carry additional fees and prepayment penalties. Make sure to
understand how the variable interest rate works and be sure to understand all loan
features before borrowing.
Portfolio loan qualifications are more flexible than conforming loans. There are no
restrictions on the number of properties being financed at any given time. Portfolio
lenders consider the property’s value, debt service coverage ratio (DSCR), and the
investor’s experience over the credit score (though credit score may still be a factor for
some lenders). Portfolio loans o"er a wide range of lending solutions and qualifications
can vary.
640 credit score (check your credit score for free here)
Must be rent-ready
Cash reserves of six or more months of rental income and expenses
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Portfolio loans can be found through most private lenders as well as some banks and
credit unions. Real estate investors like portfolio loans for the more lenient lending
criteria, faster closing time, and the ability to finance larger projects that traditional
lenders typically won’t finance. Portfolio loans are great for investors who are buying
multiple turnkey properties, or building a mixed portfolio of properties.
If you’d like to review our top choices for portfolio lenders, check out our article on the
five best portfolio lenders.
Multifamily Loans
Multifamily loans are primarily used to finance residential properties with two to four
units. They can also be used to finance larger properties such as apartment buildings,
though commercial property loans are more typical for apartment complexes. There are
several di"erent types of multifamily loans, each with varying rates, terms, and
borrower qualifications.
Multifamily loan rates and terms vary depending on the type of loan and the property’s
condition. There are both short- and long-term loans available to investors. Multifamily
loans do not have to be owner-occupied. As with any loan, the property will have to
appraise at or above the sale price, and typically, the debt to income ratio (DTI) will
range between 70% and 80% depending on the property’s condition.
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Multifamily loans have di"erent qualifications depending on the lender and type of loan.
A higher credit score is generally needed to qualify for a multifamily loan and the
property needs to be in livable condition for most loans, making them suitable for
multifamily turnkey properties, since the rehab work is done. Some multifamily lenders
will include some of the rental income from the property in their income qualification
guidelines.
A credit score of 640+ (check your credit score for free here)
Six months of rental income and expenses as cash reserves
Two- to four-unit building
Property that is in good condition
Multifamily loans can be found through banks, credit unions, and other lending
institutions. Private lenders like Lima One Capital also o"er multifamily loans. Rates
start as low as 6.99% for a turnkey multifamily property with a 25% down payment and
no prepayment penalty.
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Apartment Loans
Interest
Loan Type Term LTV/LTC Property Value
Rate
Apartment loans are loans that are used to finance buildings with five or more
residential units. In order to obtain an apartment loan, there are specific loan
requirements that must be adhered to. Interest rates, terms, and qualifications vary
depending on the loan. Traditional and local banks treat apartment loans as a
commercial loan product. Qualifications are more stringent with these lenders.
Apartment loan rates and terms vary depending on the lender and the property’s
condition. There are three major types of apartment loans: permanent government-
backed apartment loans, permanent balance sheet loans, and short-term loans. Each
loan has its own criteria, qualification guidelines, and loan-to-value (LTV) or loan-to-
cost (LTC).
Apartment loans are geared towards investors looking to finance multifamily dwellings
or apartment buildings. They have strict qualifications that must be met in order to
qualify, such as higher credit scores, a liquidity requirement, high occupancy rates, and
a time period for how long the units have to be occupied prior to funding.
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A minimum credit score of 650 (check your credit score for free here)
Nine or more months of liquidity
Occupancy rate of 90% to obtain permanent financing
Seasoned 90 days prior to funding
Apartment loans can be found through local and national banks, credit unions, and
government agencies. The most common apartment loans are guaranteed by
government-backed agencies such as Fannie Mae, Freddie Mac, and the Federal
Housing Administration (FHA). These government agencies do not lend money, but they
will guarantee, or “back,” a loan, lowering risk to the lender.
If you decide to buy turnkey real estate and need to season it before refinancing,
contact LendingHome. They provide competitive rates that start at 7.5% and they
qualify you online within minutes.
Visit LendingHome
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Turnkey properties aren’t ideal for investors who enjoy DIY repairs or want to rehab a
property with a fix-and-flip loan. They’re also not suited to investors who want to use a
rehab loan to purchase and restore a buy-and-hold distressed property. Landlords who
prefer a hands-on approach and want to engage with their tenants also aren’t a good fit
for turnkey properties since most of them have a management company.
For those landlords who want to manage their own properties, check out our landlord
tips article. If you don’t want to deal with the turnkey real estate company and are
instead looking for a deal, you can buy properties at auction or purchase a bank-owned
property.
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Investing in turnkey real estate can be a great wealth building strategy, but it has pros
and cons. For example, buying turnkey real estate is generally a long-term investment
with fewer risks, but the returns aren’t typically as quickly realized as they are with
fixing and flipping properties. Still, turnkey properties are easier to buy, maintain, and
manage since they often have a management company in place.
No rehab costs: You won’t have to spend more money or time on renovations
since the work has already been done for you.
No contractors: You don’t have to find and deal with contractors and a rehab
timeline.
No tenant searching: These properties are often fully rented with qualified
tenants, so you don’t have to locate and screen applicants.
Built-in property management: If you hire a turnkey real estate company, you
don’t have to spend time managing the property, since many come with property
managers.
More expensive properties: You will spend more money to acquire the property
since it doesn’t need to be fixed up.
Can’t choose first tenants: Your cash flow depends on tenants, who you did not
choose, to pay the rent.
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Giving up control to property managers: You have less control over the property
if you use a management company.
Limited locations: Turnkey investment properties aren’t as easy to find and
turnkey real estate companies don’t operate in every state.
Bottom Line
After reading this article, you should have a better understanding of what turnkey
properties are, what features to look for, and where to find them. You also have the
tools to evaluate turnkey real estate companies and choose one that is right for you.
Turnkey financing can vary, so check with various lenders for property types and loan
qualifications.
If you want to purchase turnkey real estate from a reputable, nationwide company,
check out Roofstock. They were created by investors for investors and they exclusively
invest in single-family homes that are generating positive cash flow and already rented
to qualified tenants. Sign up for an account for free.
Visit Roofstock
Melanie Patterson
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