What Is A Turnkey Home?

Whether you are house hunting for yourself or as a real estate investment, there is some real estate-specific terminology that can help make your home-buying experience go smoothly.

“Turnkey” is one of those words that you might not have encountered before if you are new to real estate. Turnkey essentially means move-in ready - no repairs or renovations needed. But its meaning can also include a few other things. Let’s talk about turnkey homes and if they might be right for you.

A turnkey home is a property that’s considered “move-in ready” with no renovations needed. These properties are typically bought and sold by companies specializing in real estate investment. They are considered ready to immediately rent out or live in.

These homes could have been recently renovated or flipped. Sometimes they are even being sold fully or partially furnished.

However, buyers need to be wary of homes that are being described as turnkey and still check them out as diligently as they would any other home. There is no standard or certification to be called turnkey - it’s something any realtor can write on a home description to draw in potential buyers, but it doesn’t necessarily mean it is brand new or freshly renovated.

It is important to check the quality of a property. Paint and any other cosmetic work should be examined to make sure it was done well and not quickly or cheaply to flip the house. Always have an inspector inspect a house and its systems to ensure everything is working well under the shiny new exterior.

There are a few types of home buyers that would benefit from buying a turnkey home. These might include:

Home Buyers Who Want To Move Right In

Turnkey homes might appeal to home buyers looking to buy a house, whether it be a new home or refurbished one, but who aren’t interested in making home improvements or renovations, at least not at first. These homes are enticing because they are usually beautiful, on-trend, and very clean. However, that upgrade does come at a higher price because you are paying for the benefit of not having to put a lot of cash into the home immediately after buying it.

Real Estate Investors

Real estate investors looking for a rental property as an investment property to rent out immediately for cash flow may want to buy a turnkey home. Investors won’t need to put any time or energy into the property - they can immediately work with a property management company to start generating revenue.

There are pros and cons to buying a turnkey home. Let’s discuss a few here:

Pros

• Turnkey homes are move-in ready for home buyers or tenants, which saves time, money, and energy for buyers.
• Buying a turnkey home can save home buyers and investors time normally spent making renovations and repairs.
• Buyers who don’t want to make design decisions will be glad to buy an already designed home that is probably on trend.
• Investors who want to buy out of state investment properties will have an easier time with a turnkey property compared to having to manage a renovation across state lines.

Cons

• Turnkey homes can be expensive because sellers and companies roll renovation costs into the selling price.
• As an investor, buying a home at a higher price puts you more at risk in the case of the real estate market going down.
• Using a turnkey home as a real estate investment can generate lower returns than a home refurbished by the investor.
• Buyers and investors have less control over a home’s appearance, layout, and style when bought as a turnkey home.
• Some homes that are sold as turnkey are quickly and sloppily refinished with poor workmanship. Always ensure you have a licensed home inspector review a property that has been recently flipped.

Turnkey homes can be a great way for buyers to get a dream home or dream rental property without having to live through a renovation themselves. If you are able to stomach the higher price tag, it might be worth it to skip the hassle of updating a home. To learn about turnkey homes in your area, work with a real estate agent.