Turnkey investment properties are growing in popularity as people realize how reliable the returns are. If research is done properly, a solid return on investment is almost guaranteed. Due to the nature of investments, however, not every property will be successful. But, you can easily reduce risk and boost your profit margins by making specific marketplace investments.
Throughout history, there has always been a pattern of areas that have been successful for real estate investment properties. While there are many different strategies that can be successful, here are some of the best types of markets for profitable turnkey investment properties.
Colleges and Universities
One of the most cost-effective areas for turnkey investment properties are cities and towns surrounding colleges and universities. There are so many ingredients that cause these areas to boom and continuously produce returns. Each year, thousands of new students arrive at the school. While freshman typically live in the dorms, a lot of upperclassmen move out to apartments and rent houses nearby. If you are worried about misbehaved college students, they are by far the minority. Most students are extremely well-behaved and disciplined, making excellent tenants. Even if you don’t want to risk renting to students, the market is still wide-open.
Universities provide a rippling effect for the local economies. People start businesses to supply the students, and employees need homes and apartments to rent. You are able to easily pick up properties with regular tenants and make excellent returns. People pay a lot of money to live close-by to colleges and their place of employment. To top it all off, many alumni remain in the area they graduated from. Married renters with children are some of the most stable tenants you can possibly obtain. These combined factors are why cities and towns surrounding colleges and universities are some of the most successful turnkey investment properties you can make.
Likely the most successful marketplace for turnkey investment properties are pre-boom cities. These are areas where the growth is steadily increasing in multiple economic factors: rising population, industry success, job rate growth, and decreasing crime rates. If you can identify a marketplace before it skyrockets, you are in a place to make enormous returns. The reason for that is you can purchase properties for incredibly low prices. Soon, the area will experience growth at such rates it can hardly keep up. As the local industries prosper, people will want to live nearby for quicker work commutes. Houses and apartments will fill-up rapidly. Since it takes quite some time to build new houses and structures, people will scramble to buy and rent. With such high demand and little supply, prices will rise immediately. People will be begging to be your tenant. You’ll get to choose who you believe will be the steadiest, most reliable resident.
It is important to recognize the difference between speculative pre-boom cities and established pre-boom cities. Speculative pre-boom cities are just that; unproven areas who some believe may experience rapid growth. There is little-to-no evidence of such an expansion, but some turnkey providers have a “feeling” it will happen. Some people will do or say anything to make you believe a town is the next “hot thing” and on its way to the big time. If someone makes that claim, be sure to ask for prove in order verify their information. On the other hand, established pre-boom cities are verified to the point of almost being a guarantee. Sure, you could try jumping in ahead of time to get the cheapest prices possible. However, until an area is confirmed as a pre-boom market, there is a much larger risk of it falling through. It is best to wait until it is validated so you can safely invest and prepare for the boom cycle and profits that come with it.
Turnkey investment properties can be excellent long-term investments when you research and plan ahead. Universities and surrounding towns are consistent, successful areas that always have an abundance of available tenants. Confirmed pre-boom cities have cheap housing and property available for purchase. As the market booms in that area, prices will rise at an exponential rate. You’ll be able to charge high prices and choose tenants that fit best for you. Both areas have high rates of married couples with children; the most reliable residents you can have.
Meet the Author:
Tom Ott (Investor, Agent, & Turnkey Provider)
Home Town: Cleveland, Ohio
Specialty: Turnkey Provider and House Hacker
Years in Service: 2
Passion: Assisting Investors Earn Passive Income
Goal: Educate Investors to Help Them Achieve Their Goals
Written by: Tom