A turnkey home is move-in ready but there’s no legal definition for that actually means
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The real estate industry loves jargon that leaves most people outside of the real estate business scratching their heads. Fortunately, most of these industry terms aren’t that complicated when you get down to it.
In this article, we demystify turnkey homes. Learn about the pros and cons of buying a turnkey home, what the real estate definition of a turnkey home is, and better equip yourself to make the big decision of whether or not to invest in a turnkey property.
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Key takeaways
- Turnkey homes are classified as move-in ready. However, that does not mean all turnkey homes are created equal. Some of them may require finishing touches or furnishing. If you’d like to personalize your space, that may require additional time and money as well.
- Turnkey homes are best suited for individuals in need of a move-in ready space or investors looking to rent out a property with minimal renovation work. They’re also becoming increasingly popular among millennials for their convenience and value.
- There are several pros and cons you’ll need to consider when determining whether buying a turnkey home is best for you. Turnkey homes can help diversify your investment portfolio and allow you to tap into distant markets, but they’re also some of the most expensive real estate and offer fewer options for customization. Because there’s no standard definition of a turnkey home, you’ll also need to do your independent research to ensure a turnkey property is up to modern standards.
What does turnkey mean?
When you purchase a turnkey property, it’s ready for you to live in or rent out. Literally speaking, you’re ready to turn the key in the lock and begin living in it. The word “turnkey” has a wide variety of applications, which we’ll explore in the following sections.
What does turnkey mean when buying a house?
It’s important to know that the term “turnkey” isn’t one-size-fits-all. While some turnkey properties are fully furnished and require no work before move-in day, others may come recently renovated but unfurnished. Do your due diligence on any property listed as turnkey by investigating the exact details of the home or building before making any financial commitment.
What is a turnkey property?
Turnkey properties are often renovated buildings that investors use for simple streams of income, which are usually obtained through rental revenue. However, the phrase “turnkey home” may also be used to describe a move-in-ready residential property. Generally, turnkey homes are more expensive than fixer-uppers, since most of the renovation work has already been completed.
Should I buy a turnkey property?
Turnkey properties aren’t ideal for every homebuyer, which is why it’s important to assess your individual needs and goals before settling on a turnkey property. The two main groups most interested in turnkey properties are: those who need, and can afford, a move-in-ready property and those seeking to buy an investment property.
Are turnkey homes popular with Millennials?
Millennials (those born between 1980 and 1995) currently compose the largest share of new homebuyers, coming in at 37%. They’ve also begun to upend the traditional real estate model, through the smart technology they use to conduct home searches and the changing buying trends they impose on the market.
In recent years, millennial trends have indicated the generation’s desire for turnkey homes. Turnkey properties offer millennial investors the opportunity to secure a hands-off, hassle-free income stream that can be managed from anywhere. Young business people residing in New York City or Los Angeles are finding they can secure a higher return on investment elsewhere in America, and they can do so without moving from their primary residence.
Turnkey properties remove the time investment usually needed for a buyer to fix up and manage a property, making them an optimal investment for millennials looking for low-risk income streams.
What are the pros of buying a turnkey home?
There are several pros of buying a turnkey home, including:
- It’s ready to go. Time is money, and turnkey homes allow you to move in immediately. You won’t have to deal with the frustrations and pitfalls of renovation work, especially as supply chain inefficiencies and high labor demand make it more difficult to patch up a fixer-upper than ever before.
- It can be remotely managed. Turnkey properties are ready to rent as well, and some companies even offer property management solutions that can locate and manage tenants on your behalf. If you’re looking to purchase a turnkey property as a rental investment, that’s a big bonus.
- Contributes to portfolio diversification. Once again, the main pros of turnkey homes are on the investing side. You can invest in any part of the country, even if the property is geographically far from your primary home. This allows you to strategize by buying in up-and-coming areas and cushioning yourself against the effects of market dips in other regions.
What are the cons of buying a turnkey home?
In addition to the pros listed above, there are some potential cons involved with buying a turkey home:
- There’s no standard definition of turnkey. Although a property may be listed as turnkey, we’ve already established that there is, actually, no standardized definition of what exactly that means. You’ll need to do your own research to ensure you are getting the home you think you are.
- You’ll have to do your own legwork. Even though you probably won’t have to endure extensive renovations or hire contractors with a turnkey house, you need to do your research on the property before signing any paperwork. From a legal standpoint, “turnkey” means little to nothing in terms of buying guarantees. Before investing in a turnkey property, it’s therefore crucial to hire a home inspector who can ensure all appliances, plumbing, structural support, and electrical work are up to par.
- They’re more expensive. Because they require little to no effort on the part of the buyer, turnkey homes also run on the pricier side. If budget is a major concern for you and you don’t mind getting your hands a little dirty, a turnkey home might not be the best option for you. On the flip side, if you’re a real estate investor looking to rent out the building, it could be the perfect fit.
- Less personalization. If you’re buying a turnkey home to live in, it’s important to note that you’ll have very little control over how the home is styled, laid out, and perhaps even furnished. For those who prefer to put their personal touch on their living space, a turnkey home might not be the ideal option.
In summary
It’s important to consider all of your options when looking to invest in a residential home or rental property. Turnkey homes offer an unrivaled convenience and hassle-free living experience after you’ve conducted your initial research and home inspection. However, they lack the versatility and affordability you may be able to find with a fixer-upper. Weighing the pros and cons of buying a turnkey home against your lifestyle and needs will help you arrive at a well-thought-out decision on turnkey homebuying.
FAQ
What is included in a turnkey house?
What’s included in a turnkey house will vary greatly from property to property. Research the individual property to gain a better understanding of what its turnkey classification really means.
Is turnkey good or bad?
Turnkey is neither good nor bad. It’s a designation that can help potential buyers better understand a home’s condition and price so that they can make buying decisions accordingly.
Are turnkey homes worth it?
A turnkey home could be a worthwhile investment if you are considering renting the property or need a move-in-ready space. Remember that turnkey homes generally cost more than fixer-uppers or homes that need minor improvements, so cost is also a determining factor for many buyers. You’ll need to weigh your own needs against the pros and cons of buying a turnkey home to determine if a turnkey home is the right investment for you.
Does turnkey mean furnished?
Turnkey can mean furnished, but it doesn’t always. You’ll need to check on the specific property inclusions to know whether or not a turnkey home comes furnished.
What are turnkey rental properties?
Turnkey rental properties are rental units or buildings purchased by investors who plan to rent out the property for income. Investors generally prefer turnkey properties that allow them to begin renting immediately — some properties even come with pre-existing tenants, too. A property management company can handle the day-to-day management activities, while the owner has the flexibility of managing from afar.
About the author: By day, Celita Summa is a Florida-based freelance writer specializing in real estate, technology, sustainability, and a plethora of other topics. By night, Celita can be found developing her talents, which include her black belt in karate, her fluent Italian, and her knack for vegan cooking.