If you’ve ever thought about investing in real estate, but changed your mind because it might be too hard or too expensive… now is the time to give it a second look.
There are more options than ever before to buy properties to rent to others.
The best part?
You don’t need a lot of capital to get started. You can get started with as little as $1,000.
Turnkey rental properties allow you to earn passive income by buying houses, or shares of houses, just as you would shares of a company.
Kind of like buying stocks.
What are Turnkey Rental Properties?
Turnkey rental properties are properties that are purchased by one party and are immediately rented out to others.
And no, you won’t get called in the middle of the night every time the kitchen faucet drips. You don’t even have to meet your tenants if you don’t want to.
This form of renting became popular during the 2007 housing crisis, when there was a major shift between renting and buying.
Many people planned to buy but found that lending standards had changed. This opened the market to many new and unexpected investors. People who wanted to take advantage of the excellent ROI of real estate, even if they couldn’t buy the entire property.
Note: Keep in mind that the phrase “turnkey” is also used to describe properties that are ready for new residents to move into and take residence. Take care not to confuse these two meanings in paperwork.
How involved do I need to be with a turnkey rental property?
A general rule of thumb with turnkey rental properties is that some part of the management is handled by a third party.
You may decide to take on a more hands-on role if the property needs some repairs or remodeling.
But many turnkey property investors prefer to work with a property manager, who can help with every step in the process, from purchasing the property to taking care of ongoing maintenance.
However, investing in a turnkey rental property is different than buying a house.
It could be awkward to pool your money with others to buy a house. But there are several turnkey rental property platforms that let you do this even if you only want to invest a small amount.
The Most Popular Turnkey Property Management Platforms (And How they Differ)
There are several emerging platforms for finding and investing in turnkey rental properties. Some are over the internet, and there are many burgeoning local options in growing markets.
Two questions to ask yourself when choosing a platform for investing in turnkey properties are How involved do I want to be with this property? and How experienced am I?
Here is what you need to know about the top three turnkey property management websites:
This website is designed to serve those looking for a source of passive income through rental properties. It is a great place for beginners.
Roofstock offers property management options for its investors. You can even use Roofstock to sell your property. It will be featured in Roofstock’s pool of properties.
As soon as you log in, you can browse individual properties to invest in. There are lots of testimonials from beginning investors, who perhaps may have a special connection with the property in which they have invested.
Roofstock takes pride in highlighting the different cities and neighborhoods where their investors may purchase shares of homes. Histories and statistics are provided for individual cities, as well as lists highlighting the perks and risks for individual locations.
Roofstock seeks to appeal to new investors who may not immediately be at ease with living a long distance from their investment properties. 3D viewings of the houses and support throughout the process are selling points. It also shows how much money you will collect in rent every year.
However, low exposure investors are welcome to invest on Roofstock.
This website also has a blog answering questions about various aspects of the turnkey property investment process (including nuances such as timing and how individual cities may benefit from investment of this type).
PeerStreet is for people that are attracted to real estate investing but may not wish to know every detail about a property in which they are investing.
This company’s board contains a former Google employee, and numerous board members have existing backgrounds in real estate. They are also affiliated with Dr. Michael Burry of The Big Short fame.
After being in business for 2 years, they have funded over two billion dollars in real estate loans. As a peer to peer landing club, the home loans that they provide come from investors like you who consistently get a return of 6-12%.
PeerStreet takes care to explain that their finance options are unusually short: “Most of our loans are short in duration (6-24 months) with LTVs typically below 75%.” This may appeal especially to new investors or those looking to experiment with real estate investing.
You can assign new properties to your portfolio or allow PeerStreet to automatically select them for you.
However, PeerStreet does not seek to educate its customers through the blog and other materials. They focus instead on company updates and general finance culture.
PeerStreet may best be suited for investors with some knowledge of turnkey rental property investment already but may wish to have friendly mentors along the way.
This website is for accredited investors who want to invest in a portfolio of diversified real estate loans. This is perfect for someone who wants to invest in real estate… but wants to spend as little time as possible thinking about houses.
When you open your AlphaFlow account, you need to fund it with a minimum of $10,000. They spread that amount across an optimized portfolio of real estate loans. Once your account is set up you can deposit smaller amounts at any time.
With AlphaFlow, you will be investing in real estate loans, also known as bridge loans. Each individual loan can be for $75-$200,000, and secured by the property itself. Your portfolio will be spread across 75-100 loans in 15 states.
AlphaFlow claims a net rate of 10.04% and a 69.61% loan to value rate for their customers. More detailed information about their current portfolio health is available on their website.
For investors that want to track growth meticulously over time, this platform offers more peace of mind and more clarity on growth over time. An easily accessible dashboard allows investors who care about tracking the details regular basis.
Transferring more funds into an account over time may be much easier with AlphaFlow than other accounts that may require larger and more infrequent investments.
Another perk that may appeal to experienced investors is the AlphaFlow Exchange, which AlphaFlow claims compares other offers from different crowdfunding platforms across the United States.
AlphaFlow focuses specifically on portfolio building, and does not focus resources on the properties themselves. If you’re not attached to the city or home where your money is going to, this website may appeal to you more than the other options in this article.
At this time, AlphaFlow is only taking investments from accredited investors. Their minimum investment is $10,000.
Get Good Returns Without Having to Unclog a Single Toilet
Becoming a landlord is one way to make passive income.
But when you consider all the nonsense that landlords deal with – like frozen pipes and woodpecker holes in the siding – you realize that there’s nothing passive about it. It’s a lot of work!
Turnkey properties are a much simpler ways to begin real estate investing.
There is a much gentler path of assessment and scaling with turnkey properties. Acquiring more property is a much less tedious process than with other rental properties, and the in-person investment thereafter is much less intensive.
Turnkey Properties Give You the Benefits of Being a Landlord Without the Hassle
Turnkey rental properties are ideal for those who do not have the time, energy or desire to be landlords in the conventional sense.
If you like the idea of choosing a property and collecting rent every month, Roofstock is a good place to start because it lets you invest in real estate without taking on all the headaches.
You don’t have to get involved in the upkeep of the home. Once you choose a property, it guides you to all the venders that you’ll need to keep things passive. Especially a property management company.
People with location independent lifestyles or who constantly travel for work may find that investing in turnkey rental properties is easier to maintain than other forms of real estate investing.
It is advised that you research the laws in your area concerning real estate investment for those who are not residents.
If you want to make an investment that will help another person buy a home, PeerStreet is a good choice. If you want to realize good returns, with the safety that comes from a diverse mix of loans, AlphaFlow is your best bet.