7 Turnkey Property Benefits to Know
Turnkey properties offers many advantages that you may not be aware of. Real estate investors who are seeking cash flow are often focused on how much income can be generated each month from a turnkey property. While this is certainly one benefit of owning a turnkey property, there are several more ways that you benefit financially from your real estate rental property investment. In this article, we look at all the benefits that investors gain when owning a turnkey rental property.
1. Equity Buildup
Equity buildup occurs when the value of the turnkey property increases in relationship to the decrease of the loan amount. When you first purchase a turnkey rental, it’s rare—but not unheard of—to acquire instant equity upon purchase. However, it is very common for real estate investors to build equity in a short period of time. This is particularly true when investing in up and coming cities like Memphis and Birmingham. Once sufficient equity is built up, you can leverage it to finance future real estate investments.
2. Turnkey Property Appreciation
Along similar lines, turnkey property appreciation is another benefit you may not have fully realized. Real estate rental property is an asset that offers security for the future. As that property appreciates in value, your financial net worth increases. This can be leveraged to qualify for certain exclusive loan types, to help you become an accredited investor or even to sell for profit. Should your financial situation change, you could sell your turnkey property that’s appreciated in value and resolve your own financial problem, or help out a family member who’s in trouble. Even better, you could take advantage of the 1031 exchange and turn your appreciated turnkey property investment into an entire real estate portfolio of properties.
3. Turnkey Property Principal Payoff
If someone told you that it was possible to get into real estate for $20,000 or less, you’d probably be very skeptical, right? But that’s exactly what you can do when you buy turnkey property. If you look carefully at the financial information for an example turnkey property from MartelTurnkey, you’ll notice two things: 1) the tenant pays for the utilities and 2) the net cash flow is $268 per month. What some less experienced real estate investors don’t realize is that the $268 net cash flow is after the expenses have been paid; specifically, after the mortgage loan payment is made. That cash flow number is also after the property management fee has been paid. So for a $19,000 initial investment, you get a turnkey property with a tenant paying down the principal for you. After the mortgage loan is paid off, the continuing rents pay back your initial investment of $19,000.
4. Tax Deductions on Turnkey Property
Yet another turnkey property benefit you may not fully realize is the numerous tax deductions. Even though you have positive cash flow from your turnkey rental, the expenses related to turnkey property ownership are tax deductible. This includes things like:
– property management fees
– marketing fees
– purchases and repairs for the property
– depreciation on appliances, etc.
These tax deductions are a powerful way to offset income earned from your full-time job or other income-producing projects. To ensure that you’re taking advantage of the maximum number of tax deductions possible from your turnkey property, consult with a tax professional.
5. Cash Flow
Of course, the number one reason why many real estate investors like turnkey rentals is for the cash flow. This cash flow is virtually passive income that you don’t have to “work for.” Your only responsibilities will be to respond to property manager communications every now and then, and to pay for any needed repairs or replacements for the turnkey property. Cash flow is pure profit, and is a definite benefit to owning rental property. However, as you’ve learned, it’s not even the most important or valuable benefit.
6. Estate Planning With a Turnkey Property
There is perhaps no better legacy to leave to your beneficiaries than turnkey property ownership. When you leave real estate to your heirs, you leave behind the tools and assets that they can use to grow their own wealth and long-term financial security. After you’re gone, your heirs can reap the benefits of passive income, which may even alleviate some of the financial strain immediately after your passing. Your heirs can then choose to keep the property for income, live in it themselves or sell it for profit. Passing on a turnkey property is an estate planning benefit that requires nothing more than a well-executed will or trust.
7. Hedge Against Inflation
Turnkey rental property ownership is also an effective hedge against inflation. When you invest today, you lock in the lowest mortgage interest rates that we’ve seen in decades. As time goes on and rates increase, others will be forced to pay higher interest while you enjoy paying off your mortgage loan faster and gaining value faster in your investment. The key to this particular strategy is to act quickly, before rates increase. If you have $20,000 or so ready to invest, there’s hardly a better place for your money than a turnkey rental property.
At MartelTurnkey, our goal isn’t just to sell turnkey rental properties. We want to establish long-term relationships with our real estate investors by offering valuable turnkey rental opportunities and real estate investment information that will help you build wealth as an investor. If you have any questions about all the benefits you can reap through turnkey rental properties, or you’re ready to buy one of our available turnkey rentals, please don’t hesitate to contact MartelTurnkey today.