Real Wealth Network Sets the Standard for REAL Turn-key Rental Property
Approximate Reading Time: 9 Minutes
More and more companies that sell rental properties are calling themselves “turn-key,” in hopes of meeting the insatiable demand of out-of-state investors seeking easy cash flow.
But what does “turn-key” really mean?
Hopeful buyers believe it means that the dirty work has been done for them, and that all they have to do after purchasing the property is sit back and deposit rent checks. Unfortunately, that is not always the case.
In reality, there is no commonly-accepted definition for turn-key property. In fact, any slick salesperson can put the word “turnkey” in front of their company name and sell property that is just… well, property. Without a detailed definition, it means virtually nothing.
R.E.A.L. Turn-key Properties™ by Real Wealth Network
At Real Wealth Network, we believe a turn-key investment company should meet the following criteria:
- A highly experienced real estate team understands rental demand and potential growth areas in their particular market
- They know how to find great real estate deals in those areas through their extensive network
- They acquire the properties and then renovate them to like-new condition
- They do enough volume that they are able to acquire materials at steep discounts
- The have a highly rated, licensed property management company in place to find and screen for qualified tenants
- The property management team offers on-going oversight of the property with systems in place
Why an Industry Standard for Turnkey Property is Necessary?
Real Wealth Network has been monitoring turn-key operators for over 12 years and we’ve seen it all. The truth is that any investment – whether stocks, start-ups or real estate – attract both honest and greedy people. And some of the nicest people can turn out to be wolves in sheep’s clothing.
We’ve seen many unsuspecting investors end up writing more checks than they deposit, once they find out that their so-called “turn-key” property wasn’t fully renovated as promised.
We’ve seen turn-key providers inflate the sales price so much that they also have to inflate the rents in order to make the numbers work. The only tenants who will pay higher-than-market rents are those who get rejected everywhere else due to their poor credit. Unfortunately, this can lead to a high turn-over rate, exposing the harsh reality that rents need to be lowered. The property no longer cash flows, but also can’t be sold for the same price the investor paid. He or she is then forced to take a loss either in the form of cash flow or upon a sale.
We’ve seen “turn-key” operators offer rental guarantees in order to make a sale. But once that rental guarantee is over, the investor finds out the seller was supplementing the rents all along, and in fact market rents are much lower.
But not all bad turn-key operators are wolves.
We’ve seen well-intentioned companies implode due to poor business management. For example, property management companies can grow too quickly, without knowing how to scale up properly.
They hire staff to keep up with demand, but suddenly find themselves in a cash flow crunch because they didn’t budget properly for growth. They may start to “borrow” incoming rents to cover payroll and other expenses. And when owners get upset that their rent is late, the property manager may then be tempted to “borrow” from the deposit reserves to cover the negative cash flow.
Even though this is totally illegal, they may convince themselves that they’ll find a way to pay it back. One way they find the cash is to start marking up repairs or doing subpar work. Eventually the owners notice something is wrong and the unintended Ponzi scheme is discovered.
Sadly, there has been little to no regulation of turn-key companies… until now!
We are thrilled to announce that Real Wealth Network is setting the industry standard with our REAL Turn-key Property Model.
[intense_content_section size=”full” class=”real-bg” padding_bottom=”0″ padding_top=”60″ padding_left=”0″ padding_right=”0″] [intense_heading responsive=”1″ aggressiveness=”1.3″ font_size=”30″ align=”center” min_font_size=”20″ font_weight=”700″ font_color=”#ffffff” class=”heading-lineheight” tag=”div”]R.E.A.L. Turn-key Properties™[/intense_heading] [intense_heading responsive=”1″ aggressiveness=”1.3″ font_size=”20″ align=”center” min_font_size=”18″ font_color=”#ffffff” tag=”div” class=”heading-lineheight”]In order to provide our members with a consistent, quality product, we work closely with our vetted property providers to provide a R.E.A.L. turn-key income property.[/intense_heading] [intense_snippet snippet_id=”11135″ snippet_title=”REAL Internal”] [/intense_content_section]
REAL Turn-key Rental Property meets or exceeds these guidelines:
- Roof: Replaced if less than 10 years of life left, approved by an independent home inspection
- Furnace: Replaced if less than 5 years of life left, certified by an HVAC contractor
- Boiler: Replaced if less than 5 years of life left, certified by an HVAC contractor
- A/C: Replaced if less than 5 years of life left, certified by an HVAC contractor
- Plumbing: Updated, and approved per independent home inspection
- Hot Water: Replaced if less than 5 years of life or if the home was vacant for 6 months, certified by a licensed plumber
- Foundation: Approved per independent home inspection
- Electric: Updated and approved per independent home inspection
- Driveways: Safety, approved per independent home inspection and city requirements
- Flooring: Updated with durable products (commercial vinyl tile, ceramic tile, laminate, hardwood – carpet not recommended)
- Paint: Freshly painted (semi-gloss recommended)
- Exterior Paint: Repaint or touch up if exterior has been painted in last 5 years
- Fixtures: Updated lighting, switches, blinds, fixtures, cabinet hardware, door knobs – all to level of neighborhood
- Appliances: Replace/update dishwasher, garbage disposal, stove, refrigerator, washer, dryer to neighborhood level and tenant expectation
Any companies recommended by Real Wealth Network will be required to meet the REAL Turn-key Property Standards.
We hope that investors who work with turn-key companies outside our network will demand these same standards. We believe that when buyers have clear guidelines of what is acceptable, they will no longer be subject to misleading advertisements.
It will also be much easier to compare deals. For example, two different companies might say they have “turn-key” rental properties that yield an 11% return. But if one company renovates their properties to like-new condition while the other does the bare minimum, the returns would be very different in reality.
If you would like a list of REAL Turn-key Rental Property providers in the best US Markets who have passed our very rigid screening process, simply join the network. It’s free!