Turnkey Property

Turnkey properties offer convenience and simplicity for investors and buyers. Investors can immediately start generating rental income without worrying about renovations, repairs, or finding tenants. It allows them to focus on passive income generation and expand their portfolio quickly.

For first-time investors, turnkey properties provide a hands-off approach, reducing the stress and effort required to get a property ready for the rental market.

Higher Purchase Price: Turnkey properties tend to be priced higher because they are fully renovated and ready to use. Buyers are paying a premium for the convenience of a move-in-ready or rental-ready property.

Management: Many turnkey properties come with property management services, which can be helpful for investors who don’t want to be hands-on in managing tenants and maintenance. However, these services come with additional fees that may reduce net returns.

Location: The success of a turnkey property investment depends heavily on the location. Investors should ensure the property is in an area with strong rental demand to maximise income potential.

Buy-to-Let: A property purchased specifically to rent out to tenants for rental income, often used in conjunction with turnkey properties.

Property Management: A service offered by companies to handle tenant management, rent collection, maintenance, and repairs, often included with turnkey properties.

Rental Yield: The income generated from a rental property, expressed as a percentage of the property’s value. This is a key metric for evaluating turnkey property investments.

Advantages: 

• Immediate Rental Income: Investors can start generating income right away since the property is already tenant-ready.
• Low Effort: Turnkey properties require minimal involvement from the investor in terms of renovations and finding tenants, making it ideal for hands-off investors.
• Professional Management: Many turnkey properties come with management services that handle day-to-day operations, such as tenant relations and property maintenance.

Disadvantages: 

• Higher Purchase Costs: Turnkey properties are usually more expensive because they are fully renovated and often come with furniture or tenants in place.
• Management Fees: If a property management company is included, it can reduce the net rental income due to management fees.
• Limited Customisation: Investors have little control over the renovation process or tenant selection, which may be a disadvantage if they prefer a more hands-on approach.

Turnkey properties are often attractive to investors who want to generate rental income quickly without taking on the challenges of renovation or tenant management. They are particularly useful for investors in other locations or countries who prefer to invest remotely. By purchasing turnkey properties, investors can diversify their portfolios without needing to be involved in the day-to-day management of the property.

Scenario: An overseas investor purchases a fully renovated and furnished flat in Manchester. The flat is already tenanted, and the property management company handles rent collection and maintenance, allowing the investor to enjoy passive income with minimal involvement.

Do turnkey properties come with tenants?

Some turnkey properties come with tenants already in place, while others may be tenant-ready but unoccupied. The specifics depend on the property and the agreement with the seller.

Are turnkey properties a good investment?

Turnkey properties can be a good investment for those seeking passive income without the hassle of renovations or tenant management. However, they come with a premium price, so investors should evaluate the rental yield and long-term potential before purchasing.

In 2023, demand for turnkey properties grew, especially in high-demand rental markets like London, Manchester, and Birmingham, where investors sought properties that could generate immediate rental income. Turnkey properties in these cities often yield rental returns between 4% and 6%, depending on the location and type of property.