Do it Yourself vs. Turnkey Properties
Some investors like to hunt out the bargains, rehab the property themselves (or hire it out) and then turn it over to a property manager to rent. Other investors like to buy turnkey properties that have already been rehabbed and rented.
I've done both and there are pros and cons to each. Basically they can be broken down really simply.
When you buy a property and rehab it yourself it's a lot cheaper, however it's also a LOT more work and hassle. You have to hire the contractors and oversee them from a distance which is NOT an easy task.
Turnkey properties from a GOOD investment/property management company that are rehabbed and rented are a lot less work but are more expensive than doing it yourself.
Notice I said a Good company. Some companies are scummy and will do a bad job rehabbing and then just stick any renter in there. They will sucker investors into buying what is essentially a lemon.
How can you tell if a company is good or not? Follow a lot of the steps listed on the How to Choose a Good Management Company page. Also, do your due diligence on the property and check out the comps in the neighborhood.
Does the investment company guarantee their rehabs? Most good ones will warranty the rehab work for 6 months to a year. If they won't and they have done the rehab recently, look elsewhere. A property that has been rehabbed shouldn't have issues for at least 6 months. Granted, sometimes things go wrong but the chances of that happening are slim enough that if the company is good it will guarantee it's work for a certain period of time.
Regardless of which option you decide to go with, it's really important that your numbers show you that the property will positive cash flow for you. Without positive cash flow I would pass on the deal.
Got questions? Let me know. If I can help answer any questions you have I will be glad to. kip@realestateoutofstate.com