Buying a Turnkey Property in Philadelphia
Are you thinking about buying a turnkey property in Philadelphia? Make sure you read this blog post to find out what you need to know before buying a turnkey property in Philadelphia or the surrounding area. This information could help you find a suitable investment and avoid the wrong one!
You can buy many different kinds of homes for investment purposes, but we believe that turnkey property is one of the best investments for most real estate investors. Turnkey properties are already cleaned up, rented, managed, and cash-flowing right from day one, which means you start generating returns earlier than you would with a flip or a distressed property that you need to do all the work on before you start seeing any income. Many investors are torn between which one may be considered more beneficial. If you buy a home for investment purposes, that may need a lot of work done to the house. Then you definitely will need to know who will do the job to the home for you. Many investors may struggle to find reliable contractors to fix their investment property, which costs them time and money, primarily if the investor uses a hard money loan to fund the project. Because now they are stuck with a home, they cannot move a tenant into yet and not be able to find a contractor to handle the work.
Buying Property 215 has been purchasing homes for a while now and using them for rental purposes. We buy houses Philadelphia that need work and homes in turn-key conditions if you are a buyer trying to figure out which is best for you. Then there is our insight to help you find the perfect turnkey investment. Here’s what you need to know before buying a turnkey property in Philadelphia.
#1. Cash flow
You’ll want to know how much its cash flows. Cash flow can vary, but ANY cash flow can be good. (Even Robert Kiyosaki’s first property was only cash flow positive, $25 a month!) The key is not necessarily a specific cash flow amount but more about the consistency of the income. Are the current tenants good paying? Do they have a decent track record? The advantage of buying a home with tenants already in place is that you can figure out their type of tenant. Usually, the tenant will stay the same even with a new owner. However, there is sometimes a risk that they may stop paying when a new owner purchases the property. If you want cash-flowing properties, talk to us here at Buying Property 215. Contact us at 215-359-6090, and we’ll share our current inventory of cash-flowing turnkey properties.
#2. Expenses and fees
As with any investment, there will be expenses and fees. It’s good to know what yours will be. Are there HOA feels? If you’re holding them inside an LLC, will there be corporate fees? If you’re buying the property inside an IRA, will there be fees to the Self-Directed IRA custodian? There’s nothing wrong with prices; it’s just good to know what they are. If you are taking out a loan on the property you are looking to purchase; you will need to have insurance on the home. Covering you in the event of any type of accidents the renter may cause. Taxes are a massive fee to factor in when buying a home. Certain areas in Pennsylvania have high taxes. Delaware County is home to one of those high-tax areas. If you are looking to buy a home in this area that is a rental, then you may want to think again. Depending on how high the taxes are, it could almost eat into any profit you make on the home. The best part about taxes and insurance is to wrap these two up into your mortgage.
You will need to focus on location as a huge factor when buying a home as a rental. You will want to focus on an area that has excellent potential. You are already off to a good start if you notice new construction going on through the neighborhood. Often, a person may look for investment properties in all the wrong areas. You also want to make sure that when you purchase a rental property, you want to make sure it is close to public transportation, hospitals, stores, and other residential areas. If you choose a vital location with many amenities, you will have no problem renting the home from tenant to tenant.
#4. Management team responsibilities
One of the best parts of turnkey investing is getting a cash-flowing real estate investment that you don’t have to manage yourself! The management team will take care of many things to help make this hands-off investment. You should know what they will and won’t do ahead of time. Will they proactively tell you when someone needs to be repaired, or do you need to ask? Will they pay utilities and taxes, or will you get the bill? There is no correct answer; you have to figure out what works for you but be aware ahead of time, so you don’t get any surprises. Sometimes it can be very beneficial to have a property management company working on your behalf. It also may be more in your best interest to manage the property independently. Sometimes these management companies will hit you with many unexpected fees causing you to miss out on potential profit.
Generate wealth from real estate
You do not have to be a billionaire to generate wealth from real estate. If you learn to save money and use that savings to buy homes, you will have no problem generating wealth. Once you have finally purchased your first home, you can focus on the next one. If you are looking to learn more about how you can generate wealth from real estate, you should check out our blog post!