There is always this debate of buying a fixer-upper vs. buying a turnkey rental property. There is an assumption that it is always cheaper to buy and rehab a distressed property rather than buying a turnkey rental property. But most people discount the time and effort that goes into DIY rental properties. Let us find out what is better for you, buying a DIY property or a turnkey property.
Locating and Purchasing cheap properties is not easy
Forget it if you are thinking you would get properties much less than their market value easily by looking at the MLS or Zillow. It is going to be a hard grind to find a motivated seller who is ready to sell their property at a cheap price. You can save a lot of your time and effort by buying a turnkey property and renting it out straightaway. Also, it is difficult to find a lender ready to finance a fixer upper that is in a bad condition.
In today’s hot sellers market, it is extremely difficult to purchase distressed properties at a premium as there is often times multiple bids going in on the same properties. Read more here about working with the market.
You can easily underestimate rehab Costs
The idea of fixing a house sounds simple but you realize how difficult it is when you take up a project and try to execute it. The most successful people in fixing and rehabbing are those who have a strong and experienced team of contractors working for them, If you are new to the business of fixing and flipping, it is better to do your math as a worst case scenario so that you are not getting surprises at the end.
You must absorb the holding costs
Buying and rehabbing can prove costly with each passing day. Are you prepared for a long time period without getting rents? If you also have a mortgage for buying the property, you will have to pay mortgage payments out of your pocket for the time when you are carrying out repairs and renovations inside the property. Keep in mind that rehab is not always going to go according to plan so there can always be delays and cost overruns.
Despite these disadvantages, DIY rental properties can be a profitable idea if you know what you are doing. Of course, buying a turnkey property is an easier option and you can most likely reap the rewards of your hard work if you are able to find a cheap DIY property and carry out rehab in a short time period. The same goes for buying a turnkey ready asset. At the end of the day the choice is yours. We have multiple turnkey ready assets for you to look at and purchase!