If you are considering investing in real estate, there is a not-so-secret trick which investors have been using to grow their portfolio quickly, easily, and with little to no work on their part — turnkey rental properties.
Turnkey Rental Properties
Turnkey Rental Properties work for many types of real estate investors. They’re great for those overly-busy investors who aren’t able to give a lot of their time to the process of acquiring real estate. They’re great for those investors who live out of the area they wish to invest in. They’re also great for the beginner investor who isn’t really sure of how to go about the process and needs a little help.
The best thing about investing in turnkey rental properties is the fact that they are essentially a passive source of income. By passive, that means it generates a profit with little to no input from you. While there is a little leg-work in the beginning while you research which turnkey property provider to go with and which are you want to invest in, from there—it’s a walk in the park. Investopedia lists Real Estate as the number 1 source of passive income.
In most cases, turnkey rental homes are purchased from a turnkey property provider. These providers generally offer property management services for after the sale, allowing you to remain hands-off.
The greatest thing about investing in turnkey rental properties compared to investing in the stock market is that it is a tangible investment. That means it is a physical investment that you can see and touch versus a stock or bond, which is merely a piece of paper or numbers on a screen.
Turnkey Properties make it easy to purchase real estate in areas that you do not reside in, as they are generally managed by a property management company. This gives you the ability to be choosey with the area you invest in. With a little research, you can find areas that have high appreciation potential and increase your investment significantly over the lifespan of the investment.
Real estate is considered to be one of the safest investments available to date. Unlike stocks, bonds, and other such investments, real estate properties aren’t held hostage by the small ups and downs of the economy. While it can have some effect on the value of a property, the small hiccups generally don’t make much difference as they do with the stock market.
Another really neat factor about purchasing turnkey rental homes as investments is that they are essentially inflation-proof. As the value of the property can rise with inflation, so too do the rental payments. This allows the property to keep in line with the general prices of other markets across the economy. As the general prices rise, so too does the income generated by your investment.
Perhaps one of the lesser known factors about owning turnkey rental property is that you can actually spread the tax advantages out across the life expectancy of the property. Click To Tweet If the property purchased is solely used to generate an income, it qualifies for a tax deduction called Depreciation. Depreciation takes the cost of the purchase and spreads it across the years the IRS deems the property to be “serviceable.” For residential real estate, this equates to 27.5 years. In addition, anything deemed as improvements to the property, such as a complete new roof or new flooring throughout, can be added to the Depreciation deduction.
National Shift to Tenancy
When it comes to deciding between investing in turnkey real estate over other forms of investments, there is a big pro that goes under the turnkey column—the national shift to tenancy. Across the US, there is a new trend of people opting out of home buying and instead trading mortgages for rental payments. The high rental demand which once seemed heavily focused in large urban areas has now spread across the entire nation, as more and more Millennials seem to be pursuing careers and traveling over settling down.
With high rental demand comes higher rental prices as available rental properties become scarcer. As the demand skyrockets, the perks of being a landlord do too. Vacancies become rarer and waiting lists tend to grow.
When deciding whether to invest in turnkey real estate or not, the pros far outweigh the cons. With blossoming appreciation rates, growing rental demand, and the rise of experienced property management companies, investing in turnkey rental properties has become easier than ever before. A few simple steps will have you building your investment portfolio in no time.
Find out more about Turnkey Rental.