SHARE is the easiest way to build a portfolio of U.S. single-family rental homes with no real estate experience or landlord duties required. How? Our properties are Turnkey+ , meaning after we source the property that fits your investment criteria, we renovate, tenant, and professionally manage it for you. As with all types of investments, there are advantages and drawbacks to consider before determining whether turnkey real estate investing is right for you.
Let us start with the definition of “turnkey”.
Turnkey real estate is a type of investment strategy that allows investors to purchase properties that are already fully renovated, and ready to rent to tenants. In SHARE’s case, our properties are already tenanted prior to being listed for sale, so your investments are cash-flowing from day one.
There are four key questions to consider when deciding between turnkey or Do-It-Yourself (“DIY”) properties:
- How much time and effort can you dedicate to the investment?
- How long are you able to afford to keep the property vacant?
- What is your appetite for additional risk in an otherwise relatively safe and stable investment?
- What are your long-term investment goals within the rental real estate space?
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1. How much time and effort can you dedicate to the investment?
When deciding between turnkey vs. DIY properties, investors should consider the amount of time and effort they can afford to sink into the investment.
Some investors prefer to handle both buying and property management themselves to keep costs low. This DIY approach is tried and true for some experienced investors, however, it is a lot of work!
It can take upwards of nine months from start to finish on the purchase alone, with time and effort needed at each stage of the process and beyond:
- Evaluating all the various investment homes
- Finding the desired home and being successful in the bidding process
- Sourcing and vetting of third-party providers, such as brokers, lenders, inspectors, and title agents, to purchase the home
- Sourcing materials and/or trusted contractors for any required renovations
- Finding the right long-term tenant for the home
- Managing the home, or sourcing a managing partner and overseeing them, throughout the entire ownership period
Arguably the biggest advantage of owning turnkey real estate is the time and effort you save on almost every aspect when buying and owning a rental property.
2. How long are you able to afford to keep the property vacant?
The benefit of turnkey real estate is that properties are move-in ready. In SHARE's case, we tenant your property for you. For DIY investors, it may take upwards of three months from closing on the home to collecting rental income. In some cases, the vacancy period is even longer if you run into requiring special permits for renovations, thus delaying your cash-flow potential and Return on Investment (“ROI”).
As such, investors should always consider their ability to maintain the expenditures associated with the home during this time, which can be rather meaningful if the investment was purchased with financing.
3. What is your appetite for additional risk in an otherwise relatively safe and stable investment?
Due to the reasons outlined so far, turnkey properties can be a great option for investors with a low appetite for risk as they provide a lower degree of uncertainty. This approach may be appealing to newer investors, or out-of-state/country investors. However, turnkey properties typically require a larger initial investment to cover the upfront costs of renovations and thus reduce potential returns on your original outlay.
At the same time, the DIY approach can provide a higher potential for ROI but carries a much higher degree of risk. As the investor is responsible for the cost of renovations and potential cost overruns, these factors could diminish any potential gains one may have expected when investing. Additionally, investors will only know whether they’re profitable at the end of the process (when it’s tenanted, or when it’s sold). This approach is typically more appropriate for those with a higher appetite for risk and more experience in real estate investing.
4. What are your long-term investment goals within the rental real estate space?
Scaling rental properties and diversifying investment portfolios are essential goals for real estate investors. Managing a growing portfolio of DIY properties can be exponentially more time-consuming and resource-intensive, and diversifying into different markets only adds to the complexity of the task.
SHARE’s Turnkey+ approach, on the other hand, offers a much easier and more streamlined way to grow your portfolio. By working with SHARE, the investing process is de-risked and property management is taken care of. Additionally, SHARE provides accounting, tax, refinancing, and resale support to investors. This frees up your time and resources, allowing you to scale and diversify into multiple markets at once.
In conclusion, turnkey properties offer a unique opportunity for investors looking for a low-maintenance, hassle-free investment without the headaches. As SHARE renovates, tenants and professionally manages your properties, investors - whether a beginner or a pro - can reap the benefits of remote investing and unlock new geographies and markets. Schedule a call with us to learn more today!
