What are the do's and don'ts when buying a turnkey rental property? Turnkey rental properties are not far from being cut and dry as you may think. You will need to do certain things and take certain actions to manage your TurnKey rental property investment.
Hi, there! Joe White here from Grow Property Management, your trusted property management company in Philadelphia.
When investing in turnkey rental properties, it's crucial to be aware of common pitfalls that can turn what appears to be a hassle-free investment into a nightmare. Turnkey properties, typically renovated and sold by contractors, may seem like a convenient option for investors seeking a hassle-free income stream. However, many investors find themselves grappling with unforeseen issues and costly repairs due to shoddy workmanship and deceptive practices.
One prevalent issue is the installation of fake outlets and registers by contractors looking to cut corners and save costs. These dummy fixtures, while visually appealing, serve no functional purpose and leave landlords obligated to rectify the situation when tenants move in. As a landlord, it's essential to ensure that all aspects of the property deemed reasonable by a prospective tenant are fully functional, even if they were misrepresented by the contractor. This can result in the need to undertake extensive and expensive repairs, such as running new wiring or installing ductwork, to make the property habitable.
The frustration and financial burden resulting from these issues are compounded when tenants discover the extent of the problems after moving in. From leaking plumbing to malfunctioning HVAC systems, tenants are left feeling exasperated and questioning the decision to rent the property. As property managers, we are often caught in the middle, facing complaints and demands for immediate solutions to issues that should have been addressed prior to the tenant's occupancy.
Unfortunately, recourse against the seller or contractor is often limited, leaving landlords to bear the brunt of the expenses associated with remedying the situation. While legal action against the contractor may be an option, the feasibility and likelihood of success are uncertain, leaving landlords with few viable solutions other than undertaking costly repairs themselves.
To mitigate the risks associated with purchasing turnkey properties, thorough due diligence is essential. While home inspections are commonly recommended, it's crucial to select an inspector who will conduct a comprehensive assessment of the property's condition, including testing all outlets and HVAC systems. However, the reliability of home inspectors can vary, with some prioritizing their relationship with real estate agents over thoroughness. Therefore, it's essential to conduct independent research and select a reputable inspector with a track record of thorough and impartial assessments.
Additionally, investors should personally inspect the property and perform their own tests to ensure everything is in working order. Attending the home inspection, if possible, allows investors to observe the process firsthand and raise any concerns or questions they may have. By actively participating in the inspection process and scrutinizing every aspect of the property, investors can better protect themselves from costly surprises and make more informed investment decisions.
While turnkey properties may seem like an attractive investment option, investors must proceed with caution and conduct thorough due diligence to avoid potential pitfalls. By selecting reputable inspectors, personally inspecting the property, and scrutinizing every aspect of the investment, investors can minimize the risk of encountering costly issues and ensure a more successful and profitable investment outcome.
Safe investing = happy investor
