Is DIY rental property investing or turnkey real estate investing the best move for you?
Income property investing should be a core staple of every individual and family’s finances. There is no question about that. One thing that some do debate is whether they should be trying investing on their own, or using a turnkey real estate service to find and manage their income property investments.
What Is A Turnkey Real Estate Service?
Turnkey real estate services provide a full service experience. They find the properties, evaluate and screen them, help with renovations and repairs, place tenants, and then ensure professional property management is in place.
It is a done for you approach to real estate investing. While it is a newer concept in the US, it has been the go-to method for real estate investors and especially sophisticated investors internationally for much longer.
The Truth About Being A DIY Landlord
You can make money as a do it yourself, self managing landlord. You can learn to find properties, go through all the steps to buy them and lease them, and then manage them until you get tired and sell them off.
It is possible, but the reality is that it is work. Being a DIY landlord is a job. Probably more than a full time job. Don’t expect any vacation time or to ever not be on call. Make sure that when you are calculating your returns you are also factoring in a fair wage and salary for yourself for all of these hours.
If you are doing it from scratch there is a lot of trial and error too.
Why Can’t I Build My Own Team?
Another alternative is to build up your own company with team members to handle all of the things a turnkey service does.
That means hiring people for:
- Marketing
- Leasing
- Acquisitions
- Bookkeeping
- Rent collection
- Maintenance
Unless you just want to create another job for yourself recruiting and hiring and managing all of these people full time, then you’ll also need to hire great executives and managers to manage these other people.
This takes time and money to do.
Compare that to a turnkey service or professional property management company. Can you do all the above for the same 5% or 10% of rents they would take in fees? Unlikely.
At some scale it may make sense. Though the numbers just won’t add up for most investors.
The Benefits Of Turnkey Real Estate Services
Among the many advantages of going turnkey are:
- Harnessing years of expertise overnight
- No salaries, benefits packages, or employee lawsuits to worry about
- Leveraging established local and national connections and relationships
- Benefiting from group discounts on contractors, repairs, maintenance, etc.
- Eliminating risk of direct engagement with tenants
- Generating truly passive income
There are some things you can DIY. You can wash your own car on the weekends if you have nothing else to do. You can cut your own grass if you really just love being out there doing it. It’s not very efficient, but if you are bored it can fill your time and get you out of the house. Other things should absolutely be left to professionals. Like taxes, dentistry and surgery. Where does investing fall on this scale for you?