Our principals have been resurrecting real estate investment properties in Cleveland and building residual cash flow investment properties in Cleveland for over a decade. Recently, we’ve noticed that the term “turnkey” is being widely used these days by sellers and agents alike in their marketing.
Through our discussions with many fellow investors, we’ve realized that when online research is being conducted it is extremely difficult to decipher what truly makes an investment property “turnkey”. Unfortunately, these findings are often never realized until the surprise expenses pile on, or once an inspection has completed and costs already incurred.
Primary point: there is a major difference between a “rent ready” property and a “turnkey rental property”. Cosmetically an investment property may have new paint and carpet, but we are talking Cleveland here and many of the best invest-able areas are 1950-ish construction – so what’s under the hood is extremely important to know!
Here are the TURNKEY signs to look for in real estate investment properties:
Plumbing – have the plumbing and plumbing lines been repaired or replaced? And not just the plumbing lines (pipes), but the knobs/nozzles as well.
Electrical – electrical is the biggest risk to safety. TURNKEY will have updated electrical panels with circuit breakers up to code, and all required GFCIs in place.
Windows – does the property have old windows? (this is very important because tenants notice this immediately, as Cleveland winters are frigid and tenants typically pay their own utilities, i.e. heat! – You will want to make sure that the properties windows are either in very good shape or preferably new(er).
Flooring – has the flooring been updated with water-tight flooring? – cheap flooring can result in hidden dangers, often resulting in expensive repairs within 2 years.
Mechanicals – have they been updated? Water heaters typically have a life span of 10 years and furnaces approximately 25-30 years. TURNKEY should make sure you have at least 3 years left on the water heater and 10 years left on the hvac – (make sure the hvac has been cleaned and certified if it is not new!)
Basements/Waterproofing – Cleveland properties typically have basements. Age and condition are always important as waterproofing can be a very large maintenance ticket! TURNKEY will either have waterproofed as needed, replaced or cleaned the gutters and properly routed all water-dispensing channels. Dry-locking basement walls for unfinished basements should be standard for a real turnkey property.
Concrete – again many of the best price-to-rent ratios in Cleveland are found in suburbs which have POS inspections. These typically require concrete repairs/replacements to be addressed – make sure the repairs were done professionally and don’t look like a city might repair a pothole!!
Roof – typical FHA inspections will require a minimum of 5 years of estimated life left for a roof. For our TURNKEY standard, we prefer 10)
Landscaping – landscaping is typically a budget expense add-on which most rental property flippers will avoid. TURNKEY will have addressed landscaping….after all, the front of the house is the first thing a potential tenant will see…and if they move into the property and the outside has not been taken care of, I would feat they would be less concerned on how they will take care of the inside!
Leave us a comment or contact us if you’d like to discuss more about the difference between “rent ready” and “turnkey”.