More Challenges and Risks in Turnkey Investing<\/b><\/h2>\nWait, there\u2019s more? Right, although turnkey properties may seem like a dream come true, they\u2019re not without their pitfalls. <\/b>Here are some challenges and risks to watch out for:<\/span><\/p>\n\n- \n
\n- Inflated Numbers<\/b>: Some unscrupulous turnkey providers might exaggerate potential rents or underestimate expenses to make a property look more attractive. <\/span>Always verify the numbers independently.<\/li>\n
- Lipstick on a Swine<\/b>: Not all renovations are created equal. Some turnkey companies focus on cosmetic upgrades that look great in photos but ignore underlying issues. <\/span>That fresh coat of paint might be hiding serious problems.<\/li>\n
- Quality of Tenants<\/b>: Remember our earlier warning about tenant screening? It\u2019s worth repeating. <\/span>Some turnkey sellers might place any tenant just to show occupancy, regardless of their long-term suitability.<\/li>\n
- Market Knowledge Gap<\/b>: When investing long-distance, you\u2019re disadvantaged in understanding local market dynamics. <\/span>This can make it harder to spot overpriced properties or declining neighborhoods.<\/li>\n
- Reliance on Third Parties: <\/b>With turnkey investing, you\u2019re putting a lot of trust in the seller and property management company.<\/span> If either drops the ball, your investment could suffer.<\/li>\n
- Higher Entry Costs<\/b>: The convenience of turnkey properties comes at a price. <\/span>You\u2019re likely paying a premium compared to finding and renovating a property.<\/li>\n
- Limited Customization<\/b>: If you have specific ideas about how your rental property looks or functions, a pre-packaged turnkey property might not meet your needs.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Due diligence is as important to mitigate these risks. <\/span>Always get a professional inspection, even if the property is supposedly \u201cfully renovated.\u201d<\/b> Just because it\u2019s called \u201cturnkey\u201d doesn\u2019t mean you can turn off your brain.<\/span><\/p>\nStay engaged, ask tough questions, and don\u2019t be afraid to walk away if something doesn\u2019t feel right. Your future self (and your bank account) will thank you!<\/b><\/p>\nTurnkey Property Management<\/h2>\nAs mentioned above, one advantage\u00a0of out-of-state real estate investing through\u00a0Roofstock<\/a> is that they vet and certify local property managers to recommend them<\/span>.<\/strong><\/p>\nHowever, as the owner, you are not obligated to use one of their certified property managers. You can choose another property management firm or forego property managers and use our online landlord app<\/a> to automate your management!<\/strong> (Shameless plug? Yeah, well, we are a business, after all!)<\/p>\nYou can also deduct the rent from the tenant\u2019s paycheck for even more assurance of on-time rent.<\/strong><\/p>\nOf course, the inverse is also true. You don\u2019t have to use Roofstock for your long-distance real estate investing, but you could still find out which property management firms they\u2019ve certified in that local market.<\/p>\n
Hiring people who have already been vetted for you is always nice!<\/strong><\/p>\nAs a final note, it\u2019s worth mentioning that Roofstock does not receive a commission or other financial gain from its certified property managers. There\u2019s no conflict of interest\u2014it truly wants to work with the best in any given market.<\/strong><\/p>\n\u00a0<\/p>\n
Financing a Turnkey Property<\/h2>\nOne of the great advantages of turnkey property investing is that it\u2019s easy to finance since it typically doesn\u2019t require repairs.<\/strong><\/p>\nInstead of getting a short-term renovation loan and refinancing once the repairs are finished, you can buy the property with a permanent long-term mortgage.<\/p>\n
We\u2019ve vetted several investment property lenders; see our investment property loans<\/a> comparison chart for details. To compare today\u2019s rates on conventional loans, check out Credible<\/a>.<\/strong><\/p>\nRoofstock<\/a> also vets local and nationwide lenders and can offer a few recommendations.<\/p>\n\u00a0<\/p>\n
Firsthand Experiences with Roofstock<\/h2>\nI have not yet bought a property through Roofstock. So to bring some firsthand perspectives, here are a few case studies from real estate investors on BiggerPockets<\/a>:<\/p>\n![\"\"](\"https:\/\/sparkrental.com\/wp-content\/uploads\/2018\/11\/rooftstock-turnkey-property-review-1.jpg\")
\u201cOverall, I would say the process has been pretty painless. I think that Roofstock has a really great tool\/system and does a great job of what they have set out to do.<\/strong> I was a little frustrated by the miscommunication and phone tag at the end, but that isn\u2019t Roofstock\u2019s problem, and I know that generally, last minute changes right before closing aren\u2019t terribly uncommon. I would definitely use Roofstock again \u2013 in fact I plan to.\u201d<\/p>\nJon Krombein<\/strong><\/a>, Rental Property Investor from Seattle, WA\u00a0<\/em><\/p>\n\u00a0<\/p>\n
![\"\"](\"https:\/\/sparkrental.com\/wp-content\/uploads\/2018\/11\/Turnkey-property-investing-review-of-roofstock.jpg\")
\u201cA Roofstock representative was closely working with me while I placed the order and confirmed that the purchase went through fine and congratulated me on the first purchase.<\/strong> Following Monday, I got a one line text from Roofstock that the purchase was cancelled. Not sure what happened in between. In this case, I am guessing, the Seller did not act on any of\u00a0the offers and after the review period ended the Seller\u00a0went to Roofstock to allow him to pick previous offers. At least they should give a proper\u00a0explanation instead of apologies.\u201d<\/p>\n\u00a0Anandakumar Elumalai<\/strong><\/a>, Rental Property Investor Torrance, California<\/em><\/p>\n\u00a0<\/p>\n
![\"\"](\"https:\/\/sparkrental.com\/wp-content\/uploads\/2018\/11\/roofstock-turnkey-property-review.jpg\")
\u201cWould I Use Roofstock Again? Yes. I felt that even though I had issues with the certificate of compliance, the inspection\/appraisal report, and closing, I would use Roofstock again and would recommend it to others.<\/strong> Obviously, that recommendation may change as we move forward and have more experiences with Roofstock, and become more experienced investors, but as of right now I have been pleased with the experience, communication, and ultimate result of using Roofstock for our first out-of-state rental purchase.\u201d<\/p>\nJason Gines<\/strong><\/a>, Turnkey Property Investor from Long Island, NY<\/em><\/p>\n\u00a0<\/p>\n
Final Word<\/h2>\nWhether you use a corporate turnkey property seller, a mom-and-pop seller, or Roofstock<\/a>, turnkey rental properties can be an excellent avenue for long-distance real estate investing.<\/strong><\/p>\nIt can also be a convenient and simple way to buy your first rental property<\/a>.<\/p>\nAlways be doubly careful with your due diligence when buying properties unseen. Out-of-state real estate investing can help you pursue more profitable markets but also puts you at risk for buying properties with unforeseen problems.<\/strong><\/p>\nConsider finding a local partner to serve as boots on the ground when in doubt.<\/p>\n
Alternatively, you could visit in person \u2013 and perhaps write off the trip as a real estate investing tax deduction<\/a>!<\/strong><\/p>\n\u00a0<\/p>\n
Have you ever bought a turnkey property? What were your experiences with turnkey property investing or long-distance real estate investing?<\/em><\/h5>\n<\/div>\n
- \n
- \n
- \n
- Inflated Numbers<\/b>: Some unscrupulous turnkey providers might exaggerate potential rents or underestimate expenses to make a property look more attractive. <\/span>Always verify the numbers independently.<\/li>\n
- Lipstick on a Swine<\/b>: Not all renovations are created equal. Some turnkey companies focus on cosmetic upgrades that look great in photos but ignore underlying issues. <\/span>That fresh coat of paint might be hiding serious problems.<\/li>\n
- Quality of Tenants<\/b>: Remember our earlier warning about tenant screening? It\u2019s worth repeating. <\/span>Some turnkey sellers might place any tenant just to show occupancy, regardless of their long-term suitability.<\/li>\n
- Market Knowledge Gap<\/b>: When investing long-distance, you\u2019re disadvantaged in understanding local market dynamics. <\/span>This can make it harder to spot overpriced properties or declining neighborhoods.<\/li>\n
- Reliance on Third Parties: <\/b>With turnkey investing, you\u2019re putting a lot of trust in the seller and property management company.<\/span> If either drops the ball, your investment could suffer.<\/li>\n
- Higher Entry Costs<\/b>: The convenience of turnkey properties comes at a price. <\/span>You\u2019re likely paying a premium compared to finding and renovating a property.<\/li>\n
- Limited Customization<\/b>: If you have specific ideas about how your rental property looks or functions, a pre-packaged turnkey property might not meet your needs.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
Due diligence is as important to mitigate these risks. <\/span>Always get a professional inspection, even if the property is supposedly \u201cfully renovated.\u201d<\/b> Just because it\u2019s called \u201cturnkey\u201d doesn\u2019t mean you can turn off your brain.<\/span><\/p>\n
Stay engaged, ask tough questions, and don\u2019t be afraid to walk away if something doesn\u2019t feel right. Your future self (and your bank account) will thank you!<\/b><\/p>\n
Turnkey Property Management<\/h2>\n
As mentioned above, one advantage\u00a0of out-of-state real estate investing through\u00a0Roofstock<\/a> is that they vet and certify local property managers to recommend them<\/span>.<\/strong><\/p>\n
However, as the owner, you are not obligated to use one of their certified property managers. You can choose another property management firm or forego property managers and use our online landlord app<\/a> to automate your management!<\/strong> (Shameless plug? Yeah, well, we are a business, after all!)<\/p>\n
You can also deduct the rent from the tenant\u2019s paycheck for even more assurance of on-time rent.<\/strong><\/p>\n
Of course, the inverse is also true. You don\u2019t have to use Roofstock for your long-distance real estate investing, but you could still find out which property management firms they\u2019ve certified in that local market.<\/p>\n
Hiring people who have already been vetted for you is always nice!<\/strong><\/p>\n
As a final note, it\u2019s worth mentioning that Roofstock does not receive a commission or other financial gain from its certified property managers. There\u2019s no conflict of interest\u2014it truly wants to work with the best in any given market.<\/strong><\/p>\n
\u00a0<\/p>\n
Financing a Turnkey Property<\/h2>\n
One of the great advantages of turnkey property investing is that it\u2019s easy to finance since it typically doesn\u2019t require repairs.<\/strong><\/p>\n
Instead of getting a short-term renovation loan and refinancing once the repairs are finished, you can buy the property with a permanent long-term mortgage.<\/p>\n
We\u2019ve vetted several investment property lenders; see our investment property loans<\/a> comparison chart for details. To compare today\u2019s rates on conventional loans, check out Credible<\/a>.<\/strong><\/p>\n
Roofstock<\/a> also vets local and nationwide lenders and can offer a few recommendations.<\/p>\n
\u00a0<\/p>\n
Firsthand Experiences with Roofstock<\/h2>\n
I have not yet bought a property through Roofstock. So to bring some firsthand perspectives, here are a few case studies from real estate investors on BiggerPockets<\/a>:<\/p>\n
\u201cOverall, I would say the process has been pretty painless. I think that Roofstock has a really great tool\/system and does a great job of what they have set out to do.<\/strong> I was a little frustrated by the miscommunication and phone tag at the end, but that isn\u2019t Roofstock\u2019s problem, and I know that generally, last minute changes right before closing aren\u2019t terribly uncommon. I would definitely use Roofstock again \u2013 in fact I plan to.\u201d<\/p>\nJon Krombein<\/strong><\/a>, Rental Property Investor from Seattle, WA\u00a0<\/em><\/p>\n
\u00a0<\/p>\n
\u201cA Roofstock representative was closely working with me while I placed the order and confirmed that the purchase went through fine and congratulated me on the first purchase.<\/strong> Following Monday, I got a one line text from Roofstock that the purchase was cancelled. Not sure what happened in between. In this case, I am guessing, the Seller did not act on any of\u00a0the offers and after the review period ended the Seller\u00a0went to Roofstock to allow him to pick previous offers. At least they should give a proper\u00a0explanation instead of apologies.\u201d<\/p>\n\u00a0Anandakumar Elumalai<\/strong><\/a>, Rental Property Investor Torrance, California<\/em><\/p>\n
\u00a0<\/p>\n
\u201cWould I Use Roofstock Again? Yes. I felt that even though I had issues with the certificate of compliance, the inspection\/appraisal report, and closing, I would use Roofstock again and would recommend it to others.<\/strong> Obviously, that recommendation may change as we move forward and have more experiences with Roofstock, and become more experienced investors, but as of right now I have been pleased with the experience, communication, and ultimate result of using Roofstock for our first out-of-state rental purchase.\u201d<\/p>\nJason Gines<\/strong><\/a>, Turnkey Property Investor from Long Island, NY<\/em><\/p>\n
\u00a0<\/p>\n
Final Word<\/h2>\n
Whether you use a corporate turnkey property seller, a mom-and-pop seller, or Roofstock<\/a>, turnkey rental properties can be an excellent avenue for long-distance real estate investing.<\/strong><\/p>\n
It can also be a convenient and simple way to buy your first rental property<\/a>.<\/p>\n
Always be doubly careful with your due diligence when buying properties unseen. Out-of-state real estate investing can help you pursue more profitable markets but also puts you at risk for buying properties with unforeseen problems.<\/strong><\/p>\n
Consider finding a local partner to serve as boots on the ground when in doubt.<\/p>\n
Alternatively, you could visit in person \u2013 and perhaps write off the trip as a real estate investing tax deduction<\/a>!<\/strong><\/p>\n
\u00a0<\/p>\n
Have you ever bought a turnkey property? What were your experiences with turnkey property investing or long-distance real estate investing?<\/em><\/h5>\n<\/div>\n
- Lipstick on a Swine<\/b>: Not all renovations are created equal. Some turnkey companies focus on cosmetic upgrades that look great in photos but ignore underlying issues. <\/span>That fresh coat of paint might be hiding serious problems.<\/li>\n
- Inflated Numbers<\/b>: Some unscrupulous turnkey providers might exaggerate potential rents or underestimate expenses to make a property look more attractive. <\/span>Always verify the numbers independently.<\/li>\n