Turnkey vacation rentals can provide an excellent way for investors to benefit from income producing investments with little or no risk and no time invested, unless you count the time it takes to watch the money roll in. On the other hand, a turnkey rental property that is not set up right to begin with, or that does not have an experienced management team to handle all aspects of the booking process and guest experience, can quickly become just another headache for owners to deal with.
Is Turnkey Right for You?
To start with, it’s important to understand exactly what a turnkey rental property really is… And what it isn’t! The word “turnkey” has been misused often over the years, causing some investors to shy away from investment properties that tout this attribute. Generally speaking, a “turnkey rental property” is one that is 100% ready to rent and is bought by an investor but managed by an experienced property manager or turnkey provider, who lines up the guests or tenants and handles all payment transactions, paperwork and maintenance needs.
Next, take the time to evaluate the pros and cons of the turnkey real estate investment model by analyzing the market(s) where you are looking by observing other similar investment properties in the area(s). The whole idea of turnkey is to locate a passive investment that will also provide income and low risk, as well as a hedge against inflation and portfolio diversification. On the other hand, investing in turnkey vacation rentals is not the same thing as flipping a property and is not a short-term strategy or “get rich quick” scheme, but instead should be considered more of a long-term wealth building strategy, despite the fact that it should generate ongoing income.
Pros and Cons of Turnkey
The main advantage of turnkey real estate investing lies in the passive nature of the investment, since buyers should have to do very little and still get to enjoy great return on investment. A good turnkey provider will handle all aspects of managing the investment after purchase, keeping your investment goals in mind and operating a cash-flowing property that will meet or exceed those expectations. Think of the provider as a partner of sorts who is there to handle most (if not all) of the time-consuming aspects of managing the property, including maintenance and booking guests in vacation home rentals, or renting to tenants in apartment buildings and other multi-family housing.
On the other hand, every investment strategy has its disadvantages and turnkey vacation rentals are no exception. The major “con” involves the fact that turnkey rental property often has a higher price point than other types of investment properties, making it more difficult to get in the game. One major exception to this comes in the innovative new luxury condos that double as exclusive vacation home rentals in popular vacation destinations like Mexico’s Riviera Maya, which are designed to provide a signature “No Worries No Hassles Ownership” experience wherein the property pays for itself through rentals and also gives buyers access to their very own luxury condo in one of the area’s gorgeous Caribbean beach towns.
What are you looking for in a turnkey vacation home? Let us know in the comments section!