"Turnkey home" actually has different meanings, depending on who you talk to. Here's what you need to know about buying a turnkey property.
What does turnkey home mean?
When someone says a home is turnkey, they usually mean that it's move-in ready. That’s not to say the property is new—it could be newly renovated or updated. This is super appealing to families, busy individuals, or investors who want to be able to have someone move in immediately.
Those who go out searching for turnkey homes typically don't want to have to do any work to the house. While some people are totally fine ripping out the carpet or adding their touch to the kitchen, others would rather just move in and be done with it.
Does turnkey mean furnished?
People have many questions about turnkey properties. And we get it—the term is a bit vague. Turnkey property does not typically mean furnished, but some turnkey properties might be furnished. It typically says in the property description whether it is furnished or not.
If you are touring a turnkey property and fall in love with the furnishings and the property, however, talk to your real estate agent. They may be able to add that into the deal.
What is turnkey construction?
Turnkey construction can refer to a few things. Typically it means that you obtain a home loan the way you would for a home that is already built, but for a house that is in the process of being built. The loan for the property could be from a third-party mortgage broker or one that works with the developer. The appeal of turnkey construction is being able to make changes to the property as it's being built, but also able to move in right as it finishes.
What does turnkey price mean?
Turnkey price is a way for the seller to let you know that it's a bit pricier than most houses. Much of real estate needs something completed in it before it is move-in ready and is at a more "average" price.
By indicating that the property is turnkey, the seller is letting you know that you are paying the price of being able to just move in without having to do extra work on the property.
Should I buy a turnkey house?
The most obvious benefit is that you (or your tenants!) can just move in when you purchase the house. As an investor, you can even have your property management vet tenants as you close. You don't have to do anything to it to make it livable, aside from moving in your possessions.
The drawbacks of buying a turnkey house are the price and the lack of customization. With houses that need a little TLC, you're able to add your own flair as you rebuild it. If you don't like the kitchen, you could knock out a wall and add an island. That's a bit more difficult (and pricey) to do in a turnkey property.
What Turnkey Actually Means
Turnkey means you can move in right away, but depending on who you are, move-in ready might mean something very different to you.
For example, one investor went to tour a property that was described as turnkey by the seller. They had been consistently renting both units for the last 20 years and considered that good enough evidence for someone to be able to just move in.
When the investor saw the house, they discovered that their definition of move-in ready was not the same.
There had been no updates to the house since its construction—more than 30 years before. It was obvious a smoker had lived in one unit for some time, as the walls were a dingy yellow, and you could see white rectangles on the wall where they'd hung their pictures. The carpet was also original, with stains and sections that were nearly worn through.
This is an extreme—but sadly not uncommon—illustration of the difference turnkey can mean. The bottom line, though, is this: Turnkey or not, always inspect the property before purchasing it.
What to Look For in a Turnkey Property
Beyond a basic inspection, you should also examine any work that has recently been done. Occasionally, flippers will buy properties that need work, do a quick reno on them, and sell it as turnkey.
Take the time to look into the updates completed. Were they professionally done or are they going to need repairs in a few months or years? You'll want an inspector to go over it with a fine-tooth comb.
If it's not as turnkey as the seller made it sound, then there's room for negotiations.
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