Many individuals believe turnkey properties are overpriced. This is mostly because when you invest in a rental property, the idea is to buy below market value so you can force the price to appreciate. With a turnkey you are rarely able to buy below market value. This removes appreciation from the equation. Real Estate Virtual Tours can help you understand the clarification.
The reason many properties are priced below market value is because they are far from being in perfect condition. They require funds to fix them and then a reappraisal. This is where forced appreciation applies. By making improvements to the property the value has increased. Fortunately the appreciation does not always equal the cost of the repairs. This is why you make money.
When you purchase a good turnkey your price is the actual value. The property is already fully redeveloped. This leaves two basic questions. You must decide if rental properties are worth the market value and if it is possible to force appreciation on a turnkey property.
Paying the full value for a rental property can be profitable depending on the specific benefits and your investment strategy. The other option is to purchase a property and hold onto it for a period of time. One method is the buy-rehab-rent-refinance-repeat or BRRR method. This is not always the right solution because of certain factors including an aversion to risk, a lack of interest, a lack of skills or knowledge and a lack of time.
Your best option is to research the different routes available. The benefits of turnkey properties include less risk, minimal stress, minimal effort and time, mobility and being able to expand your portfolio faster.
It is possible under the right circumstances to force appreciation on a turnkey property. You must realize turnkeys are not sold according to appreciation but rather according to cash flow. Forcing appreciation is only possible when the market cycle is in specific stages. Although this option is not always available it is amazing when it presents itself. You cannot control the real estate economy or certain markets when they are in positions considered to be advantageous.
Real Estate Virtual Tours understands when the markets are in an advantageous position. This occurs when the real estate market is about to have a major boom. Tis boom is solid and it is based on the fundamentals of a positive market. It is often possible to predict when a boom is going to occur. Do not allow yourself to be fooled by individuals claiming a boom in eminent. There are markets some people have predicted will boom for more than twenty years. Make absolutely certain the boom is real and will actually happen.
If you make your purchase right before or at the very beginning of a boom the market itself will force your turnkey to appreciate. This can be incredibly tricky and many investors prefer the BRRR method for this reason. You must research and understand all of the methods and tricks involved in purchasing rental properties in order to succeed and be able to make money in this particular venture.