What Is Turnkey Rental Property Investing?
Are you tired of the small returns that your bank account savings or other investments provide? Or are you looking at other ways to continuously earn in a stable and growing market? If this is the case, then you should start looking at turnkey rental property investing. Is turnkey rental property investing an effective and safe way to put your money and time into? Let's answer these questions —
Turnkey rental property investing is good for people who want to expand their funds and gear away from the norm of investing in equity or stocks. The basic idea here is buying a renovated property from a turnkey property provider and putting it up “for rent”. Next step is to earn from the rental income and consider your expenses such as taxes, insurance, repairs and maintenance and the whole property management which can be outsourced to a turnkey property management company. The top advantage of turnkey rental property investing is that it gives the investor the liberty to determine their profits in many ways. Buying a home might not give you the desired ROI, but it will still give you expected bang for your buck, if you invest in a turnkey rental property.
Advantages of Turnkey Rental Property Investing
There are many advantages turnkey rental property investing, but here are 5 good reasons why you should take your time and start considering this for your future investments.
You will never run out of clients/tenants
From years before and until now, people will always look for houses to live in. As the population continue to grow, more and more people will opt to look for places to live in. Most people will go for the cities as this is where they would normally get employed with – and having a property near the workplace is an advantage.
Stability
Closely related to the first point, turnkey rental property has never gone on a downhill trend in terms of tenants. Nowadays, that millennials would opt to find a place of their own instead of staying with their families, so renting a property is always their first option.
Ability to manage your investment solely
Unlike other investments wherein the success or fall may depend on a lot of factors, when it comes to managing your turnkey rental property, it will mostly be you. You handle all the maintenance that needs to be done with your property. You set the schedule on when you want these routine check-ups are done to ensure your property is well-maintained. If you do want to do this on your own, you can hire turnkey property management companies. You pay the taxes and directly speak with your clients. All of the decision-making would fall on you; which means accomplishment of your investment would depend on your dedication and determination.
It is a passive income source
Just imagine, you do not have to be physical there at all times to earn money. Unlike a regular job that you need to put in hours, turnkey rental property investing would only require 2-3 times a month and around 2-3 hours per visit for the maintenance. While you are earning remotely from your rental property, you can do so much more with your time, may it be doing other businesses or jobs.
Property value appreciation
If you have a turnkey rental property situated in an area that is not yet developed and then becomes developed, you can be sure that your property's value will appreciate. When it does, it will then be your choice if you would opt to continue with the rentals (for a higher price) or sell it for a much higher price too.
To know more, read this blog post about advantages of Buying Single Family Rental Properties.
Turnkey rental property investing Guide
Upon understanding the turnkey rental property investing, we now know that one of the biggest factors you need to consider is the population growth, job growth and the affordability of the place. Knowing that there is continuous population growth means there is an unceasing need for a place to stay, which then goes back to the services that you offer, which is turnkey rental properties. Job growth on the other hand, accounts for the client's ability to pay and the property affordability will ensure your turnkey rental business will run smoothly as the rate and means of paying are both sensible.
Best cities for turnkey rental property investing in 2018
Now that you have been persuaded to go forth and start your turnkey rental property investing, below is the list of cities that would be the best option for you and your new investment. As mentioned earlier, the list shown here is based on the cities' population growth, job growth (1-year) and property affordability. Cities are ranked 1 to 10, with 1 being the best option.
1. Orlando
Orlando, a city in central Florida, is home to more than a dozen theme parks. The urban area is the 32nd largest in the country with 1.5 million people, while the Greater Orlando metropolitan area has a population of 2.13 million, which is the 26th largest in the country, the 6th largest in the Southeastern U.S. and the 3rd largest in Florida. Brian Alford, market economist for the CoStar Group, said Orlando's annual rent growth is one of the best in the nation. There has been a tremendous amount of rent growth in the Orlando rental market. Orlando is the number 1 tourist destination in United States. Many people see Orlando as the place where they would like to retire. Family friendly atmosphere and a number of great schools to choose from.
- Population – 277,173 (2016)
- Employment rate – 4.20% (1-year)
- Median rent – $1,360
- Zillow has 554 single family rental listings in Orlando FL
2. Tampa
Tampa is a city on Tampa Bay, along Florida’s Gulf Coast. A major business center, it’s also known for its museums and other cultural offerings. Tampa rental market is booming. Over the past year, rental prices in Tampa have jumped 4 percent, almost double the national rate and almost four times the Florida rate. Tampa Bay area home prices surged more than 14 percent in December, according to Florida Realtors. That's the biggest year-over-year gain of any major metro area in Florida. The rental market in Tampa has hit its stride in recent quarters as long-awaited job growth has emerged and retirees have resumed their migration to Florida. In fact, Tampa was the number one destination for northerners relocating to warmer climates.
- Population – 377,165 (2016)
- Employment rate – 2.10% (1-year)
- Median rent – $995
- Zillow has 406 single family rental listings in Tampa FL
3. Jacksonville
Jacksonville is the most populous city in the U.S. state of Florida and the largest city by area in the contiguous United States. A regional business center, it has many museums and cultural offerings. Jacksonville has a high rate of job growth and high interest from out-of-town population looking to move there. With a job growth of 3.0%, it one of the healthiest markets for employment opportunities in the state.
- Population – 880,619 (2016)
- Employment rate – 3.0% (1-year)
- Median rent – $1,050
- Zillow has 1161 single family rental listings in Jacksonville FL
4. Cape Coral
Cape Coral is a city in southwest Florida, known for its many canals. Home to manatees, Sirenia Vista Park has kayak routes to Matlacha Pass Aquatic Preserve, where birds wade amid mangroves. Cape Coral Historical Society & Museum traces the planning of the city. For single family homes, rental rates went up 3.6% 2016 to 2017. It has a fourth-highest rate of job growth in the country and a falling vacancy rate as people flock to its sunny shores. The average rental price in Cape Coral for a single family home is $1,200 per month. It’s difficult for people to get a home loan, so there is a strong tenant pool which is growing day by day.
- Population – 179,804 (2016)
- Employment rate – 2.44% (1-year)
- Median rent – $1,650
- Zillow has 524 single family rental listings in Cape Coral FL.
5. Pittsburgh
Pittsburgh is a city in western Pennsylvania at the junction of 3 rivers. It is a city in the Commonwealth of Pennsylvania in the United States. The Pittsburgh real estate investing market is one of the hottest in the country. Pittsburgh ranks 48th for suburban rent and 41st for urban rent among top 50 metro markets in a new Zillow study. Home prices in Pittsburgh are are well-below the national average for comparably-sized cities.
- Population – 303,625 (2016)
- Employment rate – 0.27% (1-year)
- Median rent – $1,140
- Zillow has 738 single family rental listings in Pittsburgh PA.
6. Huntsville
Huntsville is a city in Alabama. It's home to the U.S. Space & Rocket Center, featuring the Saturn V rocket and space travel artifacts. Huntsville Botanical Garden has a butterfly house. Huntsville is a premier city for people who want to rent property rather than own. Hence, the demand for rentals is high.
- Population – 193,079 (2016)
- Employment rate – 0.54% (1-year)
- Median rent – $995
- Zillow has 216 single family rental listings in Huntsville AL.
7. Houston
Houston is a large metropolis in Texas, extending to Galveston Bay. It’s closely linked with the Space Center Houston, the coastal visitor center at NASA’s astronaut training and flight control complex. Houston's residential real estate market took a hit due to Hurricane Harvey, but the market is bouncing back. The Houston Real Estate Market is becoming a hotbed of buyer activity that could be really beneficial for real estate investors; just ask the multitude of overseas investors who are choosing Houston as the city of choice to invest in for the foreseeable future. With an extremely diversified economy and a huge demand for housing, the Houston real estate market remains one of the top markets in the US for real estate investing. It’s got the jobs. Houston is the country’s number one city for job creation. Its unemployment rate is far below the national level.
- Population – 2.303 million (2016)
- Employment rate – 0.50% (1-year)
- Median rent – $1,425
- Zillow has 2422 single family rental listings in Houston TX.
To know more about Houston Real Estate Market, click on the link.
8. Cleveland
Cleveland is a major city in Ohio on the shores of Lake Erie. Landmarks dating to its days as a turn-of-the-20th-century manufacturing center include the Steamship William G. Mather, now part of the Great Lakes Science Center. Cleveland home values have gone up 10.9% over the past year and Zillow predicts they will rise 4.2% within the next year. It is true most Cleveland properties do not see double digit annual appreciation, but their caps are much more desirable than most areas of the country which makes up the difference and keeps out of state investors coming back for more. Cleveland real estate market is still strong. One of the few cities where investors can meet the 1% rule. It is well sought after for both investors and tenants which makes for some higher rents, unlike other markets that have become over saturated with rentals. There's a lot of investment activity in the Cleveland area, presumably because rents are strong but acquisition prices are still low. Some investors stick to suburban areas where they are finding mostly “B” class neighborhoods. Others go into the city where they deal primarily with “C”, or “D” neighborhoods. The returns can be higher here but these investments come with their own unique challenges and risks.
- Population – 385,809 (2016)
- Employment rate – 1.20% (1-year)
- Median rent – $1,140
- Zillow has 238 single family rental listings in Cleveland OH.
9. Cincinnati
Cincinnati is a city in Ohio, on the Ohio River. The Over-the-Rhine district is known for its 19th-century architecture, including Findlay Market, which has food and craft vendors. To the north is the Cincinnati Zoo & Botanical Garden. Cincinnati was of the hottest rental markets in the United States in 2017, with rent increases of 5.2 percent – on par with big West Coast cities, according to a recent Bloomberg report on data from real estate startup Zillow. The median rent in Cincinnati is currently $1,239, according to the Zillow Rent Index, which shows six years of rental data for the 50 biggest U.S. markets. With Cincinnati rents rising by 5.2 percent next year, the only cities with bigger projected increases are Seattle at 7.2 percent, Portland at 6 percent and Denver at 5.9 percent.
- Population – 298,800 (2016)
- Employment rate – 1.31% (1-year)
- Median rent – $1,239
- Zillow has 214 single family rental listings in Cincinnati OH.
10. Chicago
Chicago, on Lake Michigan in Illinois, is among the largest cities in the U.S. Famed for its bold architecture, it has a skyline punctuated by skyscrapers such as the iconic John Hancock Center, 1,451-ft. Willis Tower (formerly the Sears Tower) and the neo-Gothic Tribune Tower. It is the third-most populous city in the United States. The rental market in Chicago is complex and dynamic. Rent prices have been rising since before the recession, but new inventory and tenant turnover may change things. It is one of the most expensive rental markets in the country. Chicago's real estate market is very strong. Whether you’re on the hunt for your first home or you’re a serial real estate investor looking to expand your portfolio, 2018 is the year to invest in Chicago. Being such a hugeg market, Chicago is home to nearly 80 different neighborhoods.
- Population – 2.705 million (2016)
- Employment rate – 0.70% (1-year)
- Median rent – $1,650
- Zillow has 1040 single family rental listings in Chicago IL.
To know about how to buy turnkey rental properties, click on the link.
Click on the link for the complete list of turnkey rental properties for sale in the various real estate markets of the US.
For the first four cities on the list, what is common is the fact that it is all within the state of Florida. From research, it has been observed that due to the fact that property taxes and insurance are low, it plays a big part that there is no state income tax. With this in mind, plus the ideal environment which is warm and sunny, more and more people are choosing to start and rebuild their families and career here.
Click on the link if you want to know How To Buy Rental Properties With No Money Down.
For Pittsburg, although their overall population has not increased significantly, the ratio of their millennials did, which as mentioned earlier in this article is one of the main drivers of rental properties. Millennials at this stage are ready to take on the world on their own and are eager to leave their nest. Buying a new house is not an option yet for them since they are just starting, thus, renting properties will be their “go-to” plan.
For the rest of the cities above, each of these are home to several industries that are making its way into progress. Increase and focus on the financial sector, healthcare economy, education and a lot more companies can be seen in these places. Having these present, it is just a domino effect that you will have an increased need for manpower, in which will then require additional places to live.
In summary, if you are planning to invest on a new business, turnkey rental properties should be the option you are looking at. With the extensive list of cities that you can consider starting your turnkey rental property business at, plus the realities that rental property is an ongoing human need that comes along with other benefits — where else can you go wrong?
To read about Dallas Real Estate Market, click on the link.
For an in depth review of Atlanta Real Estate Market, click on the link.
If you are interested in buying Birmingham Investment Properties, click on the link.
References:
https://en.wikipedia.org
http://www.capeshorepmi.com/blog/2017-2018-cape-coral-rental-market-forecast-for-real-estate-investors
https://www.wcpo.com/news/insider/cincinnatis-rental-market-soon-will-be-one-of-the-hottest-in-the-nation
https://www.mashvisor.com/blog/rental-property-10-best-places-to-invest-inreal-estate/
https://www.mysmartmove.com/SmartMove/blog/6-benefits-owning-rental-property-why-you-should-invest.pag
https://www.thesimpledollarcom/the-advantages-and-disadvantages-of-owning-a-rental-property/
https://www.biggerpockets.com/renewsblog/i-love-rental-properties/
