Are you new to the world of investment property and eager to learn? Then we have good news: learning how to start investing in real estate does not have to be complicated, difficult or expensive.
On this page, you will discover why you should consider investing in real estate and how this can be done as a beginner, from A to Z.
You can also get inspiration on how to convince your partner to get involved in such an investment in bricks (assuming you are married or living together).
We then turn our attention to turnkey investment properties and how to build a passive property portfolio without putting further pressure on your professional and family life.
This section of passive investing in real estate concludes with an analysis of three different types of rental guarantees.
Each type of rental guarantee is covered in detail and you will also suddenly see some ready-made investment property offers, broken down by type of rental guarantee.
Table of Contents
- 1 Why should you consider investing in real estate?
- 1.1 Introduction
- 1.2 Financial freedom and independence
- 1.3 Recurring revenues (stable, positive incoming cash flow)
- 1.4 Value increase and added value | Investing in real estate
- 1.5 Investment property as an alternative pension plan
- 1.6 Tax advantages of investment property
- 1.7 Leverage effect when investing in real estate through financing
- 1.8 Control
- 1.9 Counter inflation by investing in real estate
- 2 How can you convince your partner to consider investing in real estate?
- 2.1 Explain that investing in real estate is not a capital gains game
- 2.2 Use literature and the Internet
- 2.3 Compare offers from construction companies
- 2.4 Understand that shares are not as safe as you might think
- 2.5 Explain what the return on the buy-to-let property(ies) will be
- 2.6 Please answer the following questions
- 2.7 Know your partner
- 2.8 Realise that your current forms of investment are probably expensive
- 2.9 Use your budget as ammunition
- 3 Turnkey investment property for building passive investment portfolio
- 3.1 Passive investing in real estate: Divided opinions prevail
- 3.2 Why choose a turnkey property investment? Let’s look at the benefits
- 3.3 How do I find a reputable turnkey real estate company that offers passive yield properties?
- 3.4 Ways in which providers of turnkey rental properties differentiate themselves
- 3.5 What other things also deserve my attention?
- 4 Investing in real estate | Types of buy-to-let properties
Why should you consider investing in real estate?
You can hide your money under your mattress or in the barrel of chicken feed like the legendary Tony Soprano, played by the late James Gandolfini.
You could also wrap it in plastic bags and bury it like Pablo Escobar in the series Narcos.
Fortunately, for the somewhat more normal people, there are also a series of other things into which you can put your money, for example, EUR 50 000 [AVAILABLE SOON], EUR 100 000 in savings [AVAILABLE SOON], or EUR 10 000 [AVAILABLE SOON].
Examples include stocks, funds, savings accounts, deposit savings accounts, coins, digital coins such as Bitcoin, gold, bonds, timber, wine, whisky, commodities, precious metals, vintage cars, art, and of course, real estate.
Of course, every investment option has its advantages and disadvantages. But since you are here to learn about real estate, we will only discuss this form of investment below.
Every person who invests in real estate has personal reasons for doing so.
Frequently cited reasons by real estate investors are the following:
Financial freedom and independence
For many people, this is the main reason for investing in real estate. You then buy buy-to-let properties that give you annual income.
You can reinvest the profits you make and your property portfolio can grow.
In time, you may be able to stop working for someone else since you have become financially independent thanks to your income property.
Recurring revenues (stable, positive incoming cash flow)
It doesn’t really matter whether you buy an income-producing property with your own capital or whether you take out a mortgage loan [AVAILABLE SOON] with favourable interest rates in order to partially finance it.
If you do it right, there will be a positive monthly cash flow when you subtract the monthly repayment from the monthly rent received.
In other words, a limited own contribution combined with financing for the investment property [AVAILABLE SOON] can ensure that your monthly rental income is greater than your monthly repayment.
In such a case, your buy-to-let property will provide a monthly passive income [AVAILABLE SOON].
With the added advantage that you can refinance the mortgage loan later (extend the repayment period again, for example) to increase the monthly net income a little more.
And when the mortgage loan is finally repaid, the investment property [AVAILABLE SOON] will be 100% yours!
Value increase and added value | Investing in real estate
An increase in the value of buy-to-let property(ies) leads to a surplus value at the later sale (exit) [AVAILABLE SOON].
Often, the value of the buy-to-let property increases as time passes and as the investor adds value to the property in question.
We are thinking of renovations, repairs and maintenance.
In addition to recurring rental income, the potential added value at a later sale is a second important component of return when considering investing in real estate.
Investment property as an alternative pension plan
Investment property [AVAILABLE SOON] is an exceptional additional private retirement savings plan. Exceptional because it is an asset that generates monthly income until death.
In other words, unlike a classic retirement savings plan where you get paid a capital sum when you reach a certain age, investment property provides monthly rental income.
In terms of extra financial breathing space during your golden years of retirement, of course! If you set aside time and money to build up a real estate portfolio [AVAILABLE SOON], you will be able to continuously reap the benefits later on.
Owning one or more buy-to-let properties means a world of difference when you are retired. For you should not count on Uncle Sam (or John Bull for the English among you) for a full and carefree pension.
Thanks to the monthly rental income from rental property, you are getting yourself ready for a financially independent retirement!
Pension accrual with investment property, it is definitely a track that needs to be looked at in detail! Read all about it on the following pages:
- Securing passive retirement income with real estate [AVAILABLE SOON]: An overview of some frequently asked questions
- Saving for retirement with real estate [AVAILABLE SOON] versus traditional forms of pension saving
- Accumulating your own extra pension with rental property [AVAILABLE SOON]: Eight good reasons for private investors
- Retirement with real estate [AVAILABLE SOON] & early retirement: Simple mathematics [with practical example]
Tax advantages of investment property
An additional advantage of investment property is its tax benefits (think of the interest on a loan and the favourable taxation of rental income in certain situations).
The interest you pay as an investor to repay the mortgage loan is in most cases deductible and therefore also provides a tax advantage.
In certain countries, tax relief is also available for capital repayments and debt balance insurance premiums paid.
The rental income itself is also taxed particularly favourably in certain situations (based on a fictitious income and not on the actual rental income).
Leverage effect when investing in real estate through financing
Leverage is a powerful effect used by all successful property investors. Moreover, it is thanks to this effect that many people effectively decide on investing in real estate.
This leverage is actually nothing more than borrowing money to increase the return on equity.
We can best illustrate this with an example:
Example of leverage
Mr. Poor invests in a buy-to-let property without using the leverage effect. About the leverage, he thinks to himself:
I am not interested
He buys a house worth EUR 200 000 and does it 100% with his own money (money he has in his savings account).
After a year, the value of this house has increased by EUR 10 000. Mr. Poor therefore achieves a 5 per cent return in this scenario (abstracting from other costs).
Mr. Rich is the antithesis of Mr. Poor and is obsessed with all kinds of investment techniques. About the leverage effect, he thinks the following:
That interests me! I can score higher with it!
He buys a house similar to our first character’s, in the same region and also worth EUR 200 000. Mr. Rich takes a different approach to the purchase in order to make optimal use of the leverage effect.
He makes an equity contribution of EUR 40 000 and arranges bank financing of EUR 160 000 via a mortgage loan.
We assume that the same EUR 10 000 increase in value applies to this house after one year.
This means that his original contribution of EUR 40 000 is now worth EUR 50 000. In other words, Mr. Rich has a Return on Investment of 25 per cent after one year.
Conclusion of the example
The difference in this example between not applying the leverage effect (Mr. Poor) and applying it well (Mr. Rich) is gigantic: a difference of 20 percent Return on Investment! Mr. Poor is the loser and loses out on returns…
Don’t forget to take into account the other benefits of investing in real estate! In the above example, Mr. Rich might be able to keep a monthly cash flow of €300 (rental income – repayment).
In this scenario, there is investment property that generates passive income on a monthly basis [AVAILABLE SOON].
This then results in an additional amount of EUR 3,600 on an annual basis on top of the increase in value of the buy-to-let property.
And even if the buy-to-let property does not increase in value, as an investor you still enjoy the positive cash flow and the positive return!
Add to this the interesting financing conditions (the low interest rates) and you understand that it is possible to build up wealth by investing in real estate.
Most asset managers will advise you to diversify your investment portfolio. This is undoubtedly good advice.
However, as an investor you should be careful not to invest all of your money in certain paper assets such as shares or equity funds.
The problem with equity funds is that you are not in control. You have no control over the assets in question.
Often such funds are managed by professional fund managers but still… You have no control whatsoever.
Investing in real estate, on the other hand, gives you control. This way, you can increase the value yourself by carrying out repairs or renovations.
You can also guarantee a positive cash flow by ensuring that the rents exceed the monthly repayments sufficiently to even turn a profit.
Real estate can be more easily controlled if investors choose for investing in real estate that is undervalued. Read more about it on the page about value investing in real estate [AVAILABLE SOON].
In the area of buy-to-let properties, it is also not necessarily the case that an increase in yield is accompanied by an increase in risk.
Counter inflation by investing in real estate
Inflation actually has two meanings: monetary inflation and price inflation. In the current economic context, there are both types of inflation.
On the one hand, there is monetary inflation as euros are printed like there’s no tomorrow.
This money creation means that the money supply in circulation increases. And this has a lowering impact on interest rates.
On the other hand, there is also price inflation, which is actually nothing more than an increase in the general level of prices.
Price increases reduce people’s purchasing power and also reduce the value of money. For the same amount of money, you can buy less.
Investing in paper assets such as the euro (which, by the way, is also what holding a savings and/or current account is all about) makes you lose. This is because the inflation rate is higher than the interest rate at which your euros can grow.
Investing in real estate is a solution since the value of real estate generally increases with a growth rate that at least keeps pace with the inflation rate.
And real estate generally at least keeps pace with inflation, no matter how badly the euro weakens.
So by investing in real estate you are going for diversification and choosing a different asset class than our euro currency.
How can you convince your partner to consider investing in real estate?
Investing in real estate is a personal decision that no one can make for you.
We recommend that you consult with your partner before making any decisions. You must both be 100% behind it.
Suppose you are convinced of the advantages of a buy-to-let property. So you would like to take money out of your savings account and use it for investing in real estate.
So how do you convince your partner to start investing in real estate?
Here are a few things your perhaps conservative partner should know:
Explain that investing in real estate is not a capital gains game
Purchasing real estate and counting on an increase in value and realising a surplus value is not how you make money in the real estate sector. Of course, you can sometimes realise this, but that is not the point!
Prudent investors are investing in real estate because of the cash flow and recurring income, not because of any potential added value.
Explain to your partner that you want to invest in a buy-to-let property for the recurring income and not for resale.
In other words, you would not buy to hope for an increase in value and then sell again.
Use literature and the Internet
Try reading books and blogs about real estate, read financial newspapers, also give webinars and podcasts a chance.
If we can recommend three books that can convince your partner of the sense of investing in real estate, they are the following:
- Rich Dad, Poor Dad by Robert Kiyosaki
- The Art of The Deal by Donald Trump
- The Richest Man in Babylon by George S. Clason (Look here for 5 tips from this book to avoid an empty wallet [AVAILABLE SOON])
Knowledge is power, both for yourself and for your partner!
Compare offers from construction companies
Are you planning on investing in real estate? Possibly via a turnkey solution [AVAILABLE SOON] with carefree rental income?
Then don’t take any chances and do your homework! It is your duty to compare different types of real estate from different construction companies (this can be done very easily at the bottom of this page).
You ask for information, you attend open days, you talk to a representative, and so on.
By gathering information yourself and consulting thoroughly with your partner, you can take a well-founded direction!
Stock market crashes are cyclical and a crisis is actually always lurking around the corner. Very often the following expression is perfectly applicable:
What goes up, must come down.
Many investors hope that they do not have to fall back on their investments during moments of crisis. But you can never be sure…
The stock market and the share markets have made many people millionaires and even more people poor and naive.
Shares and mutual funds are some investment options but they are certainly not the only ones! Investing in real estate offers a good alternative, for example.
Explain what the return on the buy-to-let property(ies) will be
You probably have some buy-to-let properties in mind. You have done your homework and you are convinced. Now you just need to convince your partner…
Analyse the buy-to-let property(ies) [AVAILABLE SOON] you have in mind and calculate the difference with your current investments.
Please answer the following questions
- What is the purchase price?
- Can you make use of the leverage effect (by taking out a mortgage loan)?
- What are the rents in the neighbourhood?
- What is the return on equity based on recurring revenue? Make a distinction between virtual versus real return [AVAILABLE SOON].
- Is there a rental guarantee [AVAILABLE SOON] and guaranteed return? Investment properties with a rental guarantee [AVAILABLE SOON] can provide guaranteed income, which suits people with a risk-averse investment profile. Defensive investment in real estate [AVAILABLE SOON] is possible with such guarantees!
- Which type of buy-to-let property suits you best?
- A house? Get more inspiration on the different ways to buy a house to let out.
- A student room or dormitory? Then read more in-depth info about student housing as an investment at:
- Tips and advice on investing in student accommodation
- Buy student accommodation as an investment [AVAILABLE SOON]: Good reasons to make this investment
- Is student accommodation as an investment [AVAILABLE SOON] a good idea for your savings? An analysis
- A hotel room? Investing in hotels is now also possible as a private investor. Find out more on the following pages:
- What is the investment horizon? When will you plan your exit [AVAILABLE SOON]?
- What about competing projects in the neighbourhood? Compare, for example, the location [AVAILABLE SOON] and choose the best one!
- Are the statistics right about the demand and supply of similar buy-to-let properties in the same region? Organise a benchmark analysis and, in any case, buy (above) average real estate [AVAILABLE SOON] for rent for that specific neighbourhood!
If you do your homework, you can decide based on hard figures and facts.
Know your partner
Chances are you know your partner inside out. So you can imagine the arguments and objections they will put forward.
Prepare for what is to come and try to prepare well-founded replies.
You can guess which questions your partner will ask, so prepare your answers already.
Realise that your current forms of investment are probably expensive
Whether you invest in stock funds, bond funds, mixed funds, equities or foreign exchange, chances are you do not really know how much these investments cost you.
Entry fees, management fees, brokerage and platform commissions, it is all rather opaque in most cases.
Try to find out about all the hidden costs, chances are you will be surprised!
Use your budget as ammunition
One of the best ways to convince your partner is to play the heartstrings. You must therefore outline tangible and perceptible benefits!
And what could be more impressive than to compare the current budget with the potential future budget (which is higher thanks to investing in real estate)?
Outline what the additional recurring income, positive cash flows, could mean for your family!
Try to quantify this income and compare it with certain expenses in your current budget.
This fires the imagination and makes your partner fantasise about extra purchasing power or investment resources.
Turnkey investment property for building passive investment portfolio
Buying turnkey yield properties and renting them out passively to activate your savings capital…
It can be the perfect way to get more return on your savings with relatively limited risk (especially compared to stock markets).
Specifically, investing in real estate for maximum return on your money is possible in two different ways: as a passive real estate investor or as an active real estate lessor [AVAILABLE SOON].
In what follows, we pay attention to the first investment strategy: passive investment in real estate [AVAILABLE SOON] with turnkey investment property.
Passive investing in real estate: Divided opinions prevail
If you want to start a vigorous debate on social media or internet forums, post a question about what investors think of turnkey, or ready-made, real estate and then open a bag of popcorn.
Answers will appear soon and fierce divergent opinions are sure to follow.
Investing in turnkey real estate sometimes causes emotions to run high because it goes against what many property investors think “real” investors should be.
Time and again you read that if you do not invest physically yourself and do not do the work with your own hands and feet, then somehow you are not a real investor.
It does not really matter whether it is about buying property in a rented state in order to rent it out [AVAILABLE SOON], buying and refurbishing it for rent or buying and refurbishing it for a sale with added value.
There is often a strong preconception that you have to be personally involved in the operation and rental or else you are not ‘really’ investing in real estate.
However, the real debate about turnkey real estate as an investment should be about what turnkey really means.
Prospective investors should understand that there is often no real meaning, at least when you see the term used/misused online.
The term turnkey investment property [AVAILABLE SOON] has unfortunately been hijacked by marketing people and in most cases is just meant to attract attention.
Perhaps it is precisely that which has stirred up so many people, has brought and will continue to bring them in the future.
It is almost impossible to compare two turnkey investment property developers [AVAILABLE SOON], or two turnkey investment properties.
This is because there is seldom consistency in exactly what is offered in terms of real estate and in terms of management services [AVAILABLE SOON] and any guarantees of rental income [AVAILABLE SOON].
Below, we will define exactly what turnkey real estate as an investment should mean to investors.
Is turnkey buy-to-let property a good option for you?
To be honest: Unless you are willing to let a third party find a property, renovate it (or build it as a new building) and manage it professionally, turnkey buy-to-let properties may not be the right choice for you.
Therefore, here is a 5-part checklist to determine whether investing in real estate through a turnkey formula can work for you.
Ask yourself the following five questions:
- Do you want a source of passive income [AVAILABLE SOON]?
- Are you interested in investing in real estate as a side project?
- Do you define successful investing also by the value of your available free time?
- Do you want to build up a real estate portfolio [AVAILABLE SOON] of houses and/or flats and/or studios?
- Are you fine with not seeing your rental properties regularly?
If you really want to build a passive real estate portfolio of ready-made buy-to-let properties, you must be able to answer the above 5 questions in the affirmative.
So in practice, how can you invest in turnkey properties for rent? Read on…
What exactly is turnkey investment property?
Turnkey investment properties generally refer to those that have already been renovated (or newly built), are occupied by tenants (or for which the future rental income is contractually defined), are managed and generate a positive cash flow.
The term originates from the idea that one can “put the key on the door” and walk straight into habitable property.
Unfortunately, many construction companies, and even individuals selling small-scale real estate, hijack the word to use it in their marketing, just because they know it attracts attention.
The term itself is like a shiny object because it implies simplicity, something that many investors are looking for…
The absolute safest way to buy a turnkey rental property is to ensure that the following conditions are met:
- Check whether the investment object [AVAILABLE SOON] is actually owned by the company promoting the investment property,
- Enforce contractually (e.g. by means of detailed specifications) that a complete renovation and/or finishing (in case of new construction) takes place as discussed,
- Check that the management company (and steward) is the same company as the one selling you the property [AVAILABLE SOON].
Below you can read why it is always safer to buy an investment property that has already been bought, renovated or newly built and is under management.
Know that the term turnkey revenue property is used to define a property that is ready to produce an income stream from day one through rental income.
This is never the case with the purchase of a traditional house.
You would buy it as a private investor, finance its renovations and refurbishments, find and select a tenant, possibly hire a property manager and then hopefully make a profit every month.
Turnkey real estate as an investment allows you to skip a lot of steps, reducing the threshold to earning a monthly positive cash flow.
But there is a catch…
The problem with investing in turnkey real estate is that there is simply no fixed meaning for the term turnkey investment property.
Turnkey real estate companies [AVAILABLE SOON] can look very, very different (and we’ll get into those differences and some red flags later).
Make no mistake: Turnkey property investments can be great. But it must also be the right investments with the right people and partners.
Remember: no investment is 100% secure. Every investment requires careful study with attention to detail and the fine print.
A fairly strong case can be made for the benefits of turnkey real estate as a passive investment vehicle.
When you know the pitfalls to watch out for, you can start to select a suitable turnkey investment with confidence.
Why choose a turnkey property investment? Let’s look at the benefits
Ideal for true passive investors
Not everyone wants to invest in their own premises that they can regularly see and touch or drive past. Whether local properties or not, many investors simply want a more passive investment.
Your local market may not offer the price point you would like or offer exactly what you are looking for. You may want to invest in positive growth markets that look promising.
For other investors, it may not matter what their local market looks like, they may simply not feel like actively investing.
They may not have a good, local option to easily invest in a nearby turnkey property, and therefore have to look at other markets.
In short, every investor has his or her own reasons for looking outside their local market.
However, investing abroad can be quite scary. After all, would you want to buy a property you have not seen in an area you are not familiar with?
How do you know you are not being cheated?
So there is always a lot of uncertainty when it comes to investing in real estate in an area where you do not live. You would be right to be cautious.
At the same time, that is precisely one of the reasons why investing in turnkey real estate is such a great option!
Yes, you will have to find a market where you feel comfortable owning property for the long term and you will have to find a reputable company before you buy. But suddenly you are not alone.
You don’t navigate the market without seeing the buildings. And you place your investments in the hands of people you know you can trust because you have done your homework. Suddenly, new markets open up around you!
As passive as passive income can be
For many property investors, investing is not their full-time job or focus. And that is totally fine!
In many ways, that is what this type of investment is good for: building up passive income [AVAILABLE SOON] to contribute to future financial goals and security.
But traditional real estate investment can very easily turn into a full-time job, even if investors do not take on the responsibility of a landlord [AVAILABLE SOON].
Turnkey, on the other hand, as a model, is as passive as it gets. Of course, there is work to be done to find the perfect market and the right turnkey property company. And there is always the responsibility to keep up with your investments and the investment market [AVAILABLE SOON].
But you don’t have to worry about the day-to-day business: your investments are (ideally) in the hands of a highly professional management team that takes care of all the time-consuming ins and outs of property management via an all-inclusive service package [AVAILABLE SOON].
Your job as a real estate investor is now mainly loaded with research and screening and requires monthly follow-ups and check-ins to make sure you are treated fairly and that no mistakes are made with the management of your property(ies).
If, as an investor, you are willing to put a little time into researching markets in advance and interviewing potential turnkey partners, then you have done most of your work.
We would like to point out that there are companies that promote themselves as turnkey, but that they themselves are not. They are actually promoters who put investors in touch with turnkey companies.
Their sales pitch is often that they research to find the best turnkey companies for you, but in reality they are paid by these turnkey companies to bring in buyers.
There is nothing wrong with working with such a company, but you cannot abdicate your responsibility to do prior research on the region and area where you are investing.
You must assume that because there is an interaction between a promoter and a provider, you are still responsible for your own interest (to be protected through proper research and due diligence).
Easier learning curve
There is still a learning curve if you decide on investing in real estate passively, do not underestimate it. But it is certainly easier than if you were to work alone as a property investor.
Because the turnkey company has largely taken care of the heavy work, finding a tenant, arranging the management of the property, and so on, you can start investing in property [AVAILABLE SOON].
And along the way, you can learn more without fear of making the same costly mistakes that another investor might make.
You are able to use the expertise of others in a way that is inseparable from your own real estate investments. That gives much more room to learn as you go – and that is a great relief.
Many turnkey investors who are in serious doubt between active or passive real estate investing [AVAILABLE SOON] have used turnkey as a great entry point into investing in real estate before moving on to more active deals.
Growth potential of the property portfolio
While turnkey real estate investments are organised as passively as possible to facilitate retail investment in real estate [AVAILABLE SOON], these types of investments also offer the most scope to grow your real estate portfolio [AVAILABLE SOON].
This is because they take up less of your personal capacity in terms of management and maintenance.
It takes as much time to buy and own one property as it does to buy and own five turnkey properties. That is a very big advantage of passive investing in real estate.
So if you have the means to support it without any problems, why not add another property investment to your investment portfolio?
When investments are passive, it means that you have more space and time to respond to new opportunities.
In this context, take a look at the various types of buy-to-let properties for sale for passive investors at the bottom of this page.
Market access & understanding: Worldwide, borderless
A major advantage for investors abroad and investors in other regions or provinces in particular is that turnkey real estate provides access and insight into these distant markets.
And that is something you cannot really get effectively through the usual avenues of active property investors.
A good and reputable turnkey company will have knowledge and love for the market(s) in which they operate and in which they find themselves.
It can identify promising locations and real estate opportunities while providing a more nuanced understanding of the area to their investors.
Not only that, but if a company is already established in a booming property market, it means that investors who want to invest, but are frustrated by bidding wars, can access the market in a different way.
Key real estate companies offer that access combined with expertise in the region, and that is very important.
All this, of course, depends on finding the right company to meet your needs.
How do I find a reputable turnkey real estate company that offers passive yield properties?
The first step to getting involved in turnkey real estate is to find someone to sell it. However, not all turnkey real estate companies are the same.
Much of the suspicion and backlash you see online around turnkey properties has to do with untrustworthy companies that are not interested in working with investors; their eyes are only on making money.
With the wrong company, retail investors can lose a lot with turnkey real estate.
There are retail investors who are (or will be) disadvantaged because they buy turnkey investment properties and do not pay enough attention to who and where they are buying from.
Therefore, it is important to carefully research the companies you might be working with.
As simple as it sounds, Google is the best place to start. Find the city or town in which you want to invest and use the additional search words “passive investment property”, “turnkey property” and “passive real estate investment”.
Ideally, you should look for a real company with offices in that region and people who are present there. In some cities or regions, you will find several companies offering such passive buy-to-let properties.
Often (but not always), the best investment property companies will have a dominant presence in the online world: masses of interesting blog articles and web pages on their website(s), e-books, white papers, brochures, infographics, social media channels, educational videos and even instructive podcasts.
When researching specific companies, note how much you can learn about them online. A red flag you might encounter is the fact that you find a particular company and yet have no idea whether the company knows what it is doing…
Who are the driving forces? Who are they? What do they stand for? Where is the information on their history? What is their track record? Is there enough experience in the ranks?
Do they work on a small scale (which can certainly be an advantage) or do they do mass projects (where you become a number after signing)?
Read a lot, research everything and then turn to social media groups, pages and/or online forums. This is only the beginning of learning and you want to create a complete picture for yourself.
Is the company known? Do they have a positive history? Are they raising their profile in the interests of greater transparency? Do they have a good reputation?
These are the questions you want to answer first before delving deeper to see if they are worth your time.
So, what makes a turnkey investment property business worth investing in? Let us look at some distinguishing common parameters between the companies:
Ways in which providers of turnkey rental properties differentiate themselves
Own internal team for property management versus outsourcing management tasks
Many turnkey real estate companies offer property investors some form of property management services such as a hassle-free rental service [AVAILABLE SOON].
If they do not offer any form of property management, and some of them effectively do not, forget it. That doesn’t even come close to a turnkey buy-to-let property. It is a red flag.
If you have to hire an external property manager for the rental and management, it is not completely passive and therefore not turnkey.
If the turnkey company were only a salesman, it could be very easy for them to take the shortcut, taking advantage of you as an investor.
What are the procedures after the sale? A good company will want to continue working with you after the sale. The after-sales service [AVAILABLE SOON] is the most important thing for a respected and professional investment property company.
A reputable property manager is an integral part of your success as a property investor and well worth the effort.
The management of your property(ies) [AVAILABLE SOON] can make or break an investment, no matter how promising the property itself was from the start.
Certainty of incoming cash flow versus uncertainty of rental income
Ideally, a rental return should be available immediately upon purchase of the property.
Such an instant rental return can be achieved by buying an already rented property (with occupant).
Or because you are working with a promoter who offers a rental guarantee [AVAILABLE SOON] (secure income so that vacancy and non-payment do not impact your monthly return).
Make sure you understand the contractual terms, if necessary with the help of a lawyer or an expert.
What does the rental contract look like? How does the property management team ensure that the residents/tenants meet the requirements?
What can you expect in terms of resident turnover? Is there possibly a contractually guaranteed rent that fully covers you against vacancy?
Too often, investors take the meaning of turnkey for granted and end up buying an investment property that has not yet been renovated or built and therefore cannot provide an immediate return.
Again, this is not turnkey. Suppose a provider from another region says they will handle everything for you. And suppose you have to buy the house and then pay for the renovation.
Then it might be a passive investment, but unfortunately it is not turnkey.
In other words, such an investment does not provide an immediate return (and delays in the construction sector can mount up, so keep this in mind!).
This increases your risk as an investor exponentially. After all, when will everything be completed and when will you finally start earning rent?
What other things also deserve my attention?
Details of renovation/renovation must be contractually defined
Any good company offering turnkey investment properties provides a full description of the scope of works.
This is a detailed overview (called the specifications in technical terms) of all the work that will be carried out inside and outside a building.
Preferably before and after photos should be provided as well as photos of new floor coverings, painting, air conditioners, heaters, roofs, approved permits, and so on.
In addition to a classic building permit, a permit is often required for major works such as plumbing, electrical, heating and ventilation.
So make sure the promoter has the right permits before you invest in that location.
Not all providers of investment property are equally committed to all licensing requirements in the sector.
Unfortunately, due to the presence of a few rotten apples, the whole sector suffers from a less than perfect reputation in this area.
Be clear about exactly when you will receive rental income
It is important to know exactly what has been done and will be done to the buy-to-let property. And more importantly, how these activities will affect your investment.
If you buy a turnkey property that cannot generate immediate income, then it is not a turnkey property.
Make sure that the provider in question is clear about when exactly you will receive the first rental payments.
After all, a decisive factor of ready-made investment property is that it provides an immediate return!
Apart from the yield component, there is also a stress component.
It can still be a passive investment, but to be considered a real turnkey investment property, there can be no deferred renovation, refurbishment and maintenance works. Why?
Consider how you would feel as an investor if you found that you had to have major system replacements or even roof replacements within the first few years.
That’s not going to feel like a stress-free, headache-free buy-to-let property.
Moreover, you then run the risk of vacancy and a much lower return (due to the extra costs and possible loss of income caused by vacancy). You start to feel that you were/are being taken advantage of.
Want to know why so many investors have bad turnkey experiences? This is an important reason why.
The reality is that it is the responsibility of the investor to know whether the property has been properly and completely renovated or adequately rebuilt.
If that is not the case, it is not turnkey and as an investor you should definitely be prepared for large maintenance costs and hidden costs in the future.
Reliable recommendations and references
Ask for external references. Talk to other investors who have worked with the company in the past.
Don’t just settle for the list the company gives you: go to Google or any other search engine online.
Search for reviews. Join various investment forums. Ask around in your network of connections. The more information you can find and gather, the better.
Also ask for the contact details of investors who have not had a perfect experience. This may sound strange, but it is the best way to find out what kind of meat you have in your barrel.
If the provider in question cannot/will not put you in touch with an investor who may have had maintenance problems or experienced lower than expected returns, then you should ALWAYS find another company to work with.
Such a party is either not honest or they are not experienced enough (they have not been in the investment property business long enough).
You really want to find out how a company deals with investors who do not have a perfect experience. What happens if an investor has an unexpected maintenance problem? How do they deal with the unexpected?
A professional always rectifies certain mistakes (everyone makes mistakes, it’s how they are handled and how they treat the customer after the purchase).
You need to have a high level of comfort and confidence to invest in passive, turnkey properties, especially if they are located far from home.
Knowing how a company deals with the unexpected can be of great benefit to you as a retail investor.
How long a company has been in business is important. We cannot emphasise this enough. As an investor, your risk goes down the longer a company is active and of course it goes up when a company is only a few weeks/months/years old.
Time is what helps a company achieve scale in management and operations and reduce costs in new construction and renovation (process optimisation).
The more mature a company is, the better it can deal with problems that arise. After all, proper handling of various types of problems also requires knowledge and experience.
In other words, there is also a learning curve involved in solving problems.
Avoid (dirt) cheap properties
Turnkey investing in real estate is supposed to be a passive investment.
Whatever anyone thinks or claims about low priced properties (below the median value), in the majority of cases these are not good investment properties for passive, turnkey investors.
A hands-on, active investor can do great things with such cheap properties by putting time, labour, cents, energy and effort into them. These are generally time-consuming properties.
Do you dream of passively investing in real estate? Then don’t waste your money and time looking at cheap construction traps that still need to be put in order (and you may only receive the first rent payment years later).
The same applies, by the way, to bargain basement properties that are offered as ready-made. If the price of such a buy-to-let property is extremely different from the average in the area, avoid the offer like the plague.
There is simply not enough money in the deal to both purchase, and properly renovate, and earn a decent recurring management income based on sound and proper management of the income-producing property at these price points.
Such providers usually economise on the quality of building materials in order to reduce the costs of renovation or new construction.
And the passive, external investor often finds this out only later after he/she has already bought the property.
Do yourself a favour and make sure you purchase your turnkey investment property [AVAILABLE SOON] at the median market price and above. You pay a fairly normal price and therefore run much less risk as a passive investor.
Are they trying to hide something?
Beware of any company that lacks transparency and does not disclose full details to prospective investors. Any company that is not open and honest with you about the details from A to Z should be avoided at all costs.
If you are shielded from certain activities, interventions and financial dealings, it is probably not the kind of company you want to do business with.
Proceed with caution. Ask questions. See what kind of support they offer after closing the deal.
If it is not entirely to your liking or if it makes you feel uncomfortable, do not go with it and look for a better alternative.
Finally, remember the following: Not all turnkey property companies that disappoint are unscrupulous or underhanded.
It may be that they simply do not have the business experience they need, or that they do not have a sustainable business model.
Even with the best of intentions, things can go completely wrong. That is why it is so important for retail investors to be wary of promises that seem too good to be true.
Investing in real estate | Types of buy-to-let properties
Are you wondering which investment property [AVAILABLE SOON] offers are available on the market with rental guarantee? Then take some time to look at the following offers in detail. And take care: one rental guarantee is not the same as another [AVAILABLE SOON].
It may be that you suddenly get a better idea than to play landlord yourself with all the stress and worries that come with it…
Take a look at the following ready-made investment property offers, categorised by type of rental guarantee:
Bronze rental guarantee when investing in real estate
Turnkey buy-to-let properties that you can outsource to a real estate agency – More information about the bronze rental guarantee [AVAILABLE SOON]
- Real estate for sale in Brussels at an attractive top location, investing in Brussels real estate is possible here from €100,000 and with a 5-6% return, completely passive and hands-free
- Buy new flat in Brussels as a passive investment with rental service from A to Z – Investing in rental properties in Brussels is possible with this offer in Evere starting from 85 000 euro equity.
- Invest in single family houses for rent in Sweden [AVAILABLE SOON] with +/- 7% annual return
- Luxury property in Montenegro at prime location with nice projected rental yields and 6 weeks of free use per year
Silver rent guarantee when investing in real estate
There are building promoters who offer a carefree rental guarantee in the form of guaranteed rental income for a certain period – More information about the silver rental guarantee [AVAILABLE SOON]
- Investing in student rooms in Leuven [AVAILABLE SOON] as an alternative to a savings account, including rent guarantee without vacancy risk
- Buying a student room in Leuven [AVAILABLE SOON] as a savings plan with the return characteristics of a bank savings certificate
- Buy German income property with security of tenure – Carefree rental guarantee in the Sauerland region
- Buy flat in Germany for rent – including contractually guaranteed rental income
- Buy a house in America as an income property in Baltimore (Maryland), from 37,500 Euros equity, with attractive rental guarantee and completely passive
- Buy a house in the United States – Family home for sale in Philadelphia with all-in rental service and secure returns
Golden rent guarantee when investing in real estate
Formula whereby the developer offers not only a rental guarantee but also advantageous own use – More detailed information about the golden rental guarantee [AVAILABLE SOON]
- Recreational property as an investment in France – Invest in the tourism sector and get up to 8% return! Participation is possible from EUR 17 230.
- Buy a second home in France in full ownership with at least 5% guaranteed annual return, 4 weeks free personal use per year and the right to two resale guarantees: Sale at minimum 125% or 150% of original purchase price after 5 or 10 years respectively
- Buy a holiday home on Samos in Hera Bay Luxury Resort (Greek real estate investment with guaranteed return and free weeks of personal use)
- Flats for sale with rental guarantee on the Costa del Sol [AVAILABLE SOON] in Spain