On the surface, you might think that purchasing a rent ready investment property is a good idea. Everything is done and it is ready to be rented, which means it is ready for you to make money. But, that is not necessarily the case.
What is a Rent Ready Investment Property?
A rent ready investment property, otherwise known as a turnkey rental property, is an investment property that has been rehabbed and is ready to be leased to tenants.
In some cases, the previous investor has rehabbed the property, has a property management company in place, and the property has been leased to a tenant. All you need to do is purchase the property and start collecting money.
What’s Wrong With Rent Ready Properties?
While it may seem like a dream come true to purchase an investment property that is already generating cash flow, you may want to think about the details before making a final decision.
The old saying, “If it seems too good to be true, it probably is” certainly applies here.
The problem with a rent ready property is that the investor who did the rehab stripped the property of its equity to make a profit. As a result, when the next investor purchases it as a rent ready property, there is no equity.
For example, an investor purchases an investment property for $60,000 and rehabs it for $15,000. Then, he sells the property to another investor as a rent ready property for $100,000, making a $25,000 profit.
In this scenario, the later investor who buys the rent ready property for $100,000 now owns a property with zero equity.
Buy a Turnkey Process, Rather Than a Turnkey (Rent Ready) Property
Instead of purchasing a turnkey property that is rent ready, consider purchasing a turnkey process (rent ready process) – this is how you make money.
Here is the turnkey process (rent ready process) we provide to clients, which allows them to keep more equity in the investment properties they purchase from us:
- We present properties with financial projections to an investor to purchase.
- The investor selects a property, or multiple properties, to purchase.
- The investor closes on the properties.
- We coordinate the rehab, and the investor pays the cost.
- We assist with finding a management company that manages the property and locates a tenant.
By purchasing an investment property with a turnkey process (rent ready process), the investor does just a little more work, and keeps more of the equity.
Similar to the example above, you purchase an investment property for $60,000 and rehab it for $15,000. The property is now worth $100,000, and you have made a $25,000 profit before it is rented to a tenant.
Graystone Investment Group
Graystone Investment Group is an experienced Investment Group, wholesaling single-family and multifamily investment properties in metro Tampa Bay.
Unlike other wholesaling groups, we provide clients with a turnkey process (rent ready process) at no extra charge. We find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years.