What does turnkey mean?

Whether you’re on the hunt for a home to live in or your next great investment, you may be asked if you're looking for something "turnkey." A turnkey home is one that is considered move-in ready and needs no repairs or renovations. Turkey homes are desirable because they are easier for you, or your renters, to settle into.

Turnkey definition

Turnkey is a common word in real estate investing, but it can also be used to describe a home that's intended to be your permanent residence.

A turnkey property can be a single-family home, and consumers often use the term to refer to recently renovated houses, but it can also refer to an apartment building or duplex. Essentially the term turnkey describes a property that is fully functioning and ready to move into or rent out immediately. 

A turnkey homes are typically fully repaired and renovated to meet modern standards. Turnkey rentals designed to attract investors may also come with property management services, so that the investor/owner doesn’t have to tackle landlord duties on their own. There are also real estate companies that specialize in turnkey investments by buying older homes and restoring them to tip-top condition.

What to know about turnkey homes

It’s easy to see why turnkey properties appeal to both prospective homebuyers and investors alike. They make things easier because they save the owner stress and time when it comes to maintenance and renovations.

Because these properties have a lot to offer, you won’t usually find them listed below market value. While you may pay more upfront to secure a turnkey home, you won’t have to worry about the logistics of repairs and renovations, which may very well make the price of a fixer-upper cost as much as a turnkey home in the end. 

House hunters who are looking to avoid renovating after moving in may request their real estate agent help them find a turnkey home. People looking for a real estate investment may also search for turnkey property so that they can rent it out as soon as closing on the sale without having to do extra repairs. This can help them start to earn a return on their investment sooner rather than later and can eliminate time spent paying a mortgage without receiving income from renters. 

How to find a turnkey home

You can find a turnkey home anywhere in the country and what you want out of the property can affect your search. An investor will have very different goals than a consumer looking for a home.

For investors

If you're looking for a turnkey investment property, look for houses and buildings in an areas with low tenant default rates that are priced low enough so you can profit off of the amount charged in rent. You should also choose a location where home values have the potential to appreciate strongly over time.

When it comes time to choose a real estate agent to work with, you'll will want to work with someone who has experience connecting investors with investment properties.

For homeowners

Consumers often have a different idea of what turnkey means. While some may simply look for a home that is modern, clean, and without repair needs, others may be looking for a home that aligns with their aesthetic standards. Consumers will work with a residential real estate agent to find a turnkey home that meets their needs and can use online home listing websites to narrow down their choices. 

If you’re ready to buy a rental house, there are several factors you should monitor as you begin your search. Historically, turnkey properties thrive in areas where the average monthly mortgage payment is cheaper than rent. By investing in areas that are highly saturated with renter demand, you can earn a profit based on the difference between what you paid for the property and the going cost for rent. A city with a growing population, inexpensive real estate and low vacancy rates could be the ideal candidate for the location of your first turnkey rental.

→ Learn more about buying a home as-is

Is buying a turnkey home a good idea?

Buying a turnkey home can be a great idea as long as all of the stars align. There are a lot of benefits associated with turnkey real estate, including:

• Not having to plan, schedule, and pay for renovations that can take months to complete
• Not needing renovation permits
• Being able to jumpstart your cash flow if it’s an investment property
• Low-stress lifestyle right after moving in
• Potentially having a high resale value

The tricky part about turnkey properties is that they are often owned by investors or homeowners who recently poured a lot of money and energy into getting the property ready to sell. Because of this, they may hope that the appeal of a turnkey home will allow them to charge a higher price - which will help them turn the most profit. 

Be careful not to overpay for a turnkey home simply because they are convenient. If you want to sell the property sooner rather than later, you may struggle to sell it at a price that allows you to break even or make a profit.