Turnkey Property
A fully renovated, tenant-occupied rental property sold to investors with property management in place.
Definition
A turnkey property is a rental property that has been fully renovated, tenant-occupied, and is being sold to an investor with property management already in place. The buyer can 'turn the key' and immediately begin collecting income with no additional work required.
Turnkey providers typically buy distressed properties, renovate them to a defined standard, place tenants, arrange property management, and market them to out-of-state investors. The appeal: passive income without local market expertise, renovation management, or tenant placement challenges.
The turnkey model has trade-offs. Prices include the seller's renovation profit and marketing costs — you're paying a premium for the convenience. Cap rates are lower than comparable value-add opportunities. Quality control varies significantly between providers. Vetting the turnkey company's track record, the local management company, and the property's actual condition is essential before purchasing.
Related Terms
Buy-and-Hold
An investment strategy of purchasing property and holding it long-term for rental income and appreciation.
Cap Rate
Capitalization rate — the ratio of a property's net operating income to its market value.
Cash Flow
The money left over each month after all property-related income and expenses are accounted for.
Due Diligence
The investigation and verification process buyers conduct before committing to a real estate purchase.
Also in "T"
Tax Deed
A deed issued to the winning bidder at a tax deed sale — transferring ownership of a property seized for unpaid taxes.
Tax Lien
A government claim against a property for unpaid property taxes — investors can purchase these liens and earn interest.
Title
Legal ownership rights to a property — the bundle of rights that come with owning real estate.