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Searching for the perfect real estate investment option is always a challenge for real estate investors, especially those who are new to the business. Rental real estate is one of the favorites among real estate investors because it generates a steady recurring income.
Recent research has shown that the number of renter households in the U.S. grew three times faster than the number of homeowner households in 2Q 2024. In addition, according to Self, renters account for approximately 34% of the U.S. population, with 44 million housing units currently being rented. All that leads us to one fact: rental properties are needed and searched for.
Because of this, turnkey rental properties are gaining much popularity nowadays. The market presents unique opportunities for real estate investors, especially those in regions like Northwest Indiana, where affordability meets proximity to bustling cities like Chicago. They offer many advantages for real estate investors wanting to join the rental property industry. Let's approach this more closely and see the turnkey advantages.
Defining Turnkey Rental Properties
First, let's start with some information about turnkey rental properties. To make it as simple as possible, turnkey relates to buying, rehabbing, and managing a property through a third party. Property investors use this strategy, especially when the market prices are too high for their initial investment. On the one hand, consider it a time-saving strategy, especially if the investor has a tight turnaround and doesn't want to involve manual labor.
In Northwest Indiana, where the rental market remains competitive yet affordable, turnkey rental properties offer investors a hassle-free way to enter the business.
But how can you recognize even property is turnkey? Several characteristics can be seen. For example, the investor wouldn't spend too much time or effort preparing the property as it is gutted, renovated, or otherwise restored.
Turnkey VS Fixer-Uppers
Now, let's clearly distinguish between the two types of real estate investments. Much depends on the time and the amount of work the real estate investor wants to do to get the property ready. Turnkey properties are often sold through a third-party company, and they have already been renovated and the work is completed. This means the company will hand the property keys to the real estate investor as soon as you close the deal.
On the other hand, there are fixer-uppers, perfect for investors who want to renovate the property themselves. This way, real estate investors can do whatever they like with the property, as they have many personalization options. However, there are several things that you, as an investor, must think of before choosing a fixer-upper.
To be a success, a fixe-upper must be an outdated home at a cheap price. So, think about whether there are such properties available in your area. Also, a fixer-upper could lead you to underestimate the cost of the work needed if you are an experienced contractor. That being said, consider whether you have the budget for unexpected expenses. Moreover, think about whether you have enough money to pay the mortgage on the property plus the costs of renovations.
In areas like Northwest Indiana, there's a variety of turnkey and fixer-upper properties, providing investors the flexibility to choose depending on their timeline and budget.
Is a turnkey rental property a better option than a fixer-upper?
Let it be clear; the decision is purely yours and highly personal. If you want to be involved in the design process, a fixer-upper could grant you that creative freedom. However, make sure you have a longer window of time to work. On the other hand, if you want to invest in a location far away from where you live, consider turnkey properties as the best option.
How to buy a turnkey rental property?
It is a simple process. The buying process is the same as the traditional home-buying process. First, you need to do some local market research and secure financing. When you find a turnkey property that you like, you need to make an offer and sign the purchase contract, request a professional home inspection and see what kind of repairs you need to do, negotiate a suitable price based on the inspection, order an appraisal so you can know the properties actual value, and last but not least choose a property management company like C.A.P.S. to take care of the rental responsibilities and find tenants to fill the vacancy.
Thorough market research is essential when searching for turnkey properties in Northwest Indiana. Focus on emerging areas where rental demand rises due to proximity to major highways or growing employment hubs.
The Advantages of Turnkey Properties
Now, let's examine the advantages of investing in turnkey properties. In Northwest Indiana, where real estate markets can move quickly, turnkey properties allow investors to avoid renovation delays and capitalize on immediate rental demand. Here are the other pros.
Instant cash flow
What is better than the potential for immediate rental income? These properties are ready to take tenants in, so the investors can start generating cash flow without any delays at purchase.
Time-saving
As mentioned before, turnkey properties will save you a lot of time as an investor because you won't need extensive renovations and can rent or resell the property quickly. This way, you can focus on extending your investor portfolio and looking for additional investment opportunities.
Less stress
With a hands-on approach and minimal involvement in the day-to-day management of the turnkey properties, you, as an investor, will only see the benefits of the finished project. This is especially beneficial for investors needing more time or expertise to renovate property.
Lower renovation costs
The innovation costs will be much lower than the fixer-uppers because, with turnkey properties, you already have a rental property with modern amenities and updated features. This eliminates costly renovations, saving you money on remodeling expenses.
Predictable Returns
Finally, with a turnkey property, you can more accurately predict your investment return because the property is already in marketable condition, making it easier to estimate the rental income and potential appreciation.
How do you ensure the profitability of your turnkey rental property in Northwest Indiana?
To ensure your success will come, you will need to develop a strategy that will help you maintain and manage rental property with a high rate of return. The most important thing is location. For investors in Northwest Indiana, focusing on towns near Lake Michigan or areas experiencing employment growth, like Hammond or Valparaiso, can help ensure a strong return on investment. Review the real estate trends in Northwest Indiana and look at the past growth over several layers to see whether the demand is satisfactory.
Next, consider expense control, which refers to the type of tenants you want to select and the condition of the house you want to rent out. Finally, you can do anything without effective marketing so an in-depth marketing strategy will open opportunities for you.
Final Thoughts
Investing in turnkey rental properties can be an excellent way for a real estate investor to secure a stable income. It is not as risky and a long process as investing in a fixer-upper, and it offers many benefits. For Northwest Indiana investors, it has been proven that it is a great opportunity to secure high returns in the rental real estate industry.
At C.A.P.S., we make the process simple. Located in Northern Indiana, we leverage the region’s working-class population to quickly place tenants and achieve high rent-to-value ratios. We handle everything from acquiring and rehabbing properties to tenant placement and ongoing management, allowing you to enjoy a hands-off investment with great returns.
Let C.A.P.S. help you maximize your investment in the Northwest Indiana market, contact us today!
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