Turnkey real estate has become popular over the past ten years as new landlords enter the market wanting more cash flow but less stress. And, if you’re going to maximize the passivity of your portfolio, you’ll want to find turnkey property management that’ll send you rent checks, not headaches.
This guide will give you the pros, cons, and step-by-step action items to follow when searching for turnkey property management.
What is Turnkey Property Management?
Turnkey property management is almost identical to regular rental property management. A property manager will take care of the marketing and leasing of your rental, handling repairs on your behalf, and sending you rent checks monthly. In addition, most turnkey companies offer in-house property management, unlike a regular rental property where you’ll need to find a property manager yourself.
Benefits of Turnkey Property Management
As a rental property owner, you know that the cost of hiring property management can take a considerable chunk out of your bottom line. But turnkey property management companies can help you save serious time by providing the following property management services:
Higher Rent
A turnkey property management company will often get you more rent thanks to professional marketing and staging than if you were to self-manage. Even an extra $50 bump in monthly rent can make a huge difference in your rental property cash flow!
Lower Vacancy
Because property managers are there to take care of tenant concerns and repairs, they’ll often get something fixed far quicker than a self-managing landlord. This means tenants stay happy in your rental, and you don’t lose money to vacancy or constant tenant turnover.
Less Stress
A property manager takes the most dreaded task off your plate: picking up calls from a tenant. Whether it’s a 2 AM toilet problem or a challenging tenant request, your property manager is there to take care of problems, so you don’t have to.
More Free Time
Turnkey real estate is all about providing time freedom for the investor. So, instead of self-managing or dealing with repairs that take up your entire day, a property manager will do this for you so you can do anything and everything besides dealing with a leaky sink!
Drawbacks of Turnkey Property Management
Turnkey property management provides a lot of pros, but some critical drawbacks may force landlords to reconsider:
Lower ROI
Property managers, on average, will take anywhere from 8% to 12% of your monthly rent as their property management fee. Since turnkey properties are rent-ready right out of the gate, you could be paying someone a significant portion of your rent to collect checks or pick up a few phone calls. This will definitely ding your rental property’s ROI (return on investment).
Less Involvement
If you’re a hands-on landlord, turnkey property management may not be your best bet. Since property managers are trained to deal with things, not bug you (the investor), you may not know much of what’s happening at your property until a tenant moves out.
Hard to Find a Reliable Company
Let’s be honest. Finding a good property manager is like finding a golden needle in a haystack. Most do the bare minimum and often use their in-network maintenance specialists to do simple repair jobs that cost significantly more than a neighborhood handyman. As a result, finding a reliable property management company is difficult and will take time and effort. But if you find a great one, they’re certainly worth it!
How to Find the Right Turnkey Property Management Company
If you want tenant tasks taken off your plate, here’s what you should look for in a property management company:
Look for Experience
The best turnkey property management companies not only have time-tested experience managing single-family homes, duplexes, triplexes, etc., but they also should have experience with turnkey investors. Since turnkey investors are far more hands-off than regular rental property investors, turnkey property managers know when, and most importantly when NOT, to communicate with the owner.
Look for Connections
Your turnkey property management company should have a vast list of reasonably priced and readily available vendors. Be sure to ask potential property managers, “what would you do if [blank] breaks?” You’ll want to know if they have the Rolodex to deal with repairs as they come up.
Test Their Communication
When interviewing and meeting property managers, test their follow-up. If it takes them days (or even weeks) to give you a simple response, they aren’t the best company to work with. On the other hand, if they send you great reviews, an email or phone call follow-up, or pick up the phone right away, they could be great property managers.
Ask Other Investors
Local investors know the best (and worst) property managers in a given area. So try to attend local meetups, chat across online forums, or offer to take an investor out to coffee to see who they’d let manage their property. Odds are, most of the decade-long investors use the same few property management companies—and you probably should too!
Do You Need Turnkey Property Management?
Turnkey real estate, almost by default, are some of the most effortless rental properties to deal with. Since they’re newly renovated and repaired, there shouldn’t be too many things for you to fix or take care of for at least the first few years. So, if you want to save money and manage the property yourself, it might be worth it (at least at first). But, if you have a hectic day job or a busy personal life, hiring turnkey property management may be worth the 10% or so of rent every month—just make sure you find a great property manager!
