Turn-Key Income Investment Property
May Not Be All It's Cracked Up To Be!

A "turn-key" income investment property, is one that meets the criteria of “done for you convenience” in the following important real estate investing “need” categories:

1. Income investment property sourcing
2. Rehab and construction
3. Property rental or income
4. Rental home Financing

So the typical pitch might go something like this:

"For those who qualify, we will take the stress out of the
finding you excellent income real estate buying opportunities, we take care of all construction and repair, we make sure that properly screened and qualified tenants are already in place, and we have a large list of conventional and alternative lenders who are comfortable working with investors like you and properties like this. All you need to qualify is…”

Another variation under the moniker of “turn key” deals, is that they might offer to source good bargain property deals, and provide you with exclusive access to estimates from pre-screened and ready-to-go contractors, as well as access to financing and lending options.

These types of offers are naturally very attractive to most beginner investors, but I would argue that many of these investors are actually not well served by these turn key investment properties.

What is the additional cost of the “done for you” investment property solution? Do you know how to assess the investment to ensure that you have a good deal 6 months after you have purchased the property?

I have a specialist physician friend who is currently so busy with his practice that he has a wait list of patients that stretches out for months. High net worth individuals with more money than time may have no choice but to seek out “done for you” real estate solutions.

Every one else can afford to spend the time to educate themselves deeply (which I recommend for everyone anyway), should spend the time and money to do so.

Another friend of mine, a very experienced real estate investor, recently showed me examples in his local market, of buyers jumping on houses worth over $250,000 dollars, when there were tons of comparable REO homes (bank owned homes) available for sale in the multiple listing service for just $50,000 to $60,000 dollars. He estimates that most of those houses needed just $30,000 to $50,000 dollars in repairs.

While presumably inexperienced real estate agents and their hapless buyers are pouncing on these expensive "turnkey" income investment property, he and other savvy agents and investors in the area, are making a bundle rehabbing "less-than-turnkey" deals.

The fact is, for just a bit more investigation, some of those buyers could obtain access to contractors and financing to create a huge value for themselves.

1. When there is a credit crunch, or economic downturn, bargain properties are all the much easier to find. Cast as wide a net as possible in your searching for properties, and be as conservative as possible in your purchasing.
2. Link up with a landlord club or REIA (Real Estate Investor Association) in your area for detailed knowledge (from fellow club members) on contractors, valuation and financing options in your area
3. Even when working with real estate specialists who come highly recommended, demand that they be your teacher, and drop them if they do not see themselves in that role.

You do not want to be that investor who’s buying a home for three times what REOs are selling for, especially when many investors and industry watchers know that the banks still have tons and tons of bad loans on the books.

Why would the banks/lenders so many bad loans on the books?

Hint: Stock price doesn’t do well when you have to write off billions of assets in “toxic assets”.