A turnkey property is a home or small rental building that is fully renovated and ready to rent, or already rented, at the time of purchase. The name suggests you can simply turn the key and start collecting rent without doing repairs yourself.
Turnkey properties are popular with out-of-state investors and people who want rental income without managing renovations. They are often sold by companies that buy, renovate and sometimes manage the homes.
How it works
A typical turnkey purchase looks like this:
- A seller acquires a property, often in a market with lower prices relative to rents.
- The seller renovates it, with updates to systems, finishes and curb appeal.
- The seller or a partner places a tenant, sometimes before the sale closes.
- The buyer purchases the property and often hires the seller’s affiliated property manager.
Pros and cons
Advantages:
- Rental income can start right away
- Little or no renovation risk or effort for the buyer
- Easier to invest in markets far from home
- Predictable startup costs
Drawbacks:
- You pay a premium for the renovation and convenience, which can lower your returns
- Quality of renovations varies, and problems may be hidden behind new finishes
- The seller’s projected rent and expenses may be optimistic
- Affiliated management may not always be independent
What to check before buying
- Get an independent inspection rather than relying on the seller’s report
- Compare the rent with market rent for similar homes nearby
- Review the lease, tenant payment history and how the tenant was screened
- Ask which capital improvements were made, with permits and receipts
- Run your own cash-on-cash return and cap rate using realistic expenses
Why it matters for landlords
A turnkey property can be a smart way to start or grow a portfolio, as long as you verify the numbers and quality yourself. If you plan to self-manage from a distance, tools like TenantLoop for single-family rentals let you collect rent, handle work orders and track expenses online. Our single-family investing guide covers how to evaluate deals.
Related terms
Where it gets confusing.
Is a turnkey property a good first rental?
It can be, because income starts right away and there is no renovation to run. You pay a premium for that, so check the numbers yourself before buying.
What should I check before buying a turnkey rental?
Get your own inspection, compare the rent with similar homes nearby, review the lease and the tenant's payment history, and ask for permits and receipts for the work done.
Do I have to use the seller's property manager?
Usually not, although many sellers offer an affiliated manager. Compare it with independent managers, since an affiliated one may not be fully independent of the seller.