Turnkey real estate is a term that presents a significant problem for investors. Why? There is no set industry standard for rehab or renovations for a turnkey rental property. What this means for investors is that they can fall prey to unethical and dishonest turnkey real estate companies that sell subpar investment properties in undesirable locations. This is one of the reasons why we created our own turnkey standards.
To help you avoid buying investment property from shady turnkey property companies, we’ve rounded up the top eight red flags.
What are Turnkey Properties?
While there is a gray area regarding the level of renovations for turnkey rental properties, a turnkey property is defined as a real estate investment that has been fully renovated or built to rent and is ready for immediate occupancy.
Turnkey real estate investment properties are typically offered by turnkey real estate sales and management companies that specialize in acquiring, renovating, and managing rental properties, allowing investors to own property without the usual hands-on involvement.
Property types could be single family rentals, multi-family rentals, or new construction properties. The turnkey investing strategy is an excellent method for investors seeking a more hands-off approach to building wealth through real estate.
8 Signs of Dangerous Turnkey Real Estate Companies
1. Inexperienced Operators
You don’t want your turnkey real estate operator learning on the job with your investment property. Find out how long the turnkey property company has been rehabbing, building, and managing turnkey rental properties. If they are worth working with, they will have a demonstrable track record and be willing to connect you with references and satisfied long-term clients. If they don’t, walk away.
2. They Don’t Know the Business Inside & Out
There is much more to this business than simply buying a property and renting it out. To be successful, turnkey real estate companies need to acquire properties in the right neighborhoods, renovate or build them properly, sell them at the right price point to investors, have a well-developed screening process to find qualified tenants, and manage the properties and tenants with finesse and thoroughness. All of this is crucial for success in the turnkey real estate sales and management business.
When vetting a potential turnkey real estate investment company, they must be able to articulate what they do and why they do it clearly. If they cannot, that’s a big red flag. If you are not sure what to ask, here are some questions to start:
- How long have you been in the turnkey real estate business?
- Why did you choose this area, and what neighborhoods are seeing the most growth?
- How do you source your properties?
- What is your renovation process and standard?
- What is your tenant screening process?
- Do you personally own rental properties in these areas?
- What locations and neighborhoods do you invest in and why?
Investor tip: If you’re considering working with a real estate agent, take the time to vet them thoroughly. Most agents specialize in selling primary homes and are unfamiliar with the calculations real estate investors use to determine if a potential property will deliver a return on investment (ROI).
Additionally, they tend to be overly focused on appreciation potential and overlook important sustainability factors, such as holding costs and cash flow. Many agents do not own rental property themselves, and that lack of experience doesn’t help you invest successfully.
Our advice is to always seek advice from people who have done what you want to do, repeatedly, and for many years. If you work with an agent, ensure they own and have experience managing their rental properties.
3. Lack of Systems
Good turnkey real estate companies have a proven system that they consistently replicate, ensuring quality and consistency in rental properties and turnkey property management. Ask about the system and software they use. This question applies to both the renovation team and property managers.
Investor tip: RealWealth prefers to see a turnkey property management company using software like Appfolio or Buildium. These are two of the most well-known and capable platforms for large-scale managers. They offer online owner portals, allowing owners to generate their own reports, communicate with managers, and review statements from vendors and invoices.
4. Inability or Unwillingness to Scale
Another red flag is a turnkey real estate sales and management company that is growing and successful, but unwilling or unable to scale the business. Sometimes this happens because management is afraid that bringing in new people will mean a loss of control. Other times, it’s a failure to innovate and adapt to modern-day technology and practices. Failure to adapt to rapidly changing technology in this space results in operational inefficiencies and an inability to retain the most desirable tenants, as well as manage the costs associated with property maintenance.
Either way, the result is the same. They try to do it all themselves, from service slips to clients’ notices. Their consistency and quality slides, and they start losing business. Always ask the property team and the turnkey property management company how they handle client load and at what point they bring on new people.
5. Invest in Bad Areas / Neighborhoods
Be very careful if the turnkey real estate companies you are vetting operate predominantly in a C or D neighborhood. Here’s why: C and D properties can look great on paper with great return on investment (ROI) and cash flow. But reality is a much different story, which could put your money at risk.
A perfect example is Kansas City. There’s the nice part of Kansas City, and then just a mile away is the worst part of Kansas City. During the day, it photographs pretty well, but at night, the scene changes dramatically. In this part of town, vandalism is almost guaranteed. If you can find a local person willing to live there, they will be terrified. For you, that means a loss of income and ROI.
In addition, more sinister turnkey property companies prey on out-of-state investors as they are unfamiliar with specific zip codes and lack local insights on areas to avoid. They lure these overly trusting investors in with low price tags and promises of high cash flow returns. If you are presented with a deal that sounds too good to be true, it most likely is.
6. Subpar Renovations
How do you know if a turnkey company is not fully renovating the properties they sell? How can you tell if they’re just trying to make a profit, overcharging you, and leaving you with costly repairs? When investing in turnkey properties out of state, it can be more challenging to monitor the renovations and ensure they are completed to the desired level of quality.
The best way to protect yourself is simple—hire a licensed third-party home inspector to inspect the property and provide a comprehensive report with photos. It’s the home inspector’s job to identify issues that buyers should be aware of. This could range from a simple issue, such as a broken tile in the bathroom, to more significant problems, including electrical or HVAC system issues.
Take the time to review the report carefully. If you have questions or are unsure about anything, please don’t hesitate to ask the inspector. Here are some questions to get you started:
- I don’t know what this means. Can you clarify?
- What’s the condition of the ? (fill in the blank here, like roof, HVAC, plumbing, foundation, insulation, drainage, etc.)
- If this item isn’t fixed now, what should I be mindful of as time passes?
- Do you see any major red flags?
- What’s the costliest repair needed?
- What repairs would you consider absolutely necessary if you were buying this home?
We always recommend having the property thoroughly inspected to ensure the upgrades are done, especially if you don’t live there.
Investor tip: At RealWealth, we developed our own set of standards for the turnkey real estate companies we recommend. These REAL Income Property™ Standards require that all plumbing, roofing, HVAC, boilers, foundations, and electrical systems be upgraded to code, and we obtain inspections to verify that this has been done.
By developing standards for turnkey rental properties, we help our members avoid making costly real estate investing mistakes. Join RealWealth to gain access to our recommended turnkey property teams and explore turnkey properties for sale.
7. Over Market Pricing
Ethically challenged turnkey real estate companies might try to overprice their properties significantly above market value, knowing that to a Seattle chiropractor, any price will seem like a bargain.
This markup is not only a sign of shady practices, but the higher price skews the comps above a realistic price point. This means that when you receive a comparative market analysis or appraisal for your property, it may not be 100% reflective of reality and could be lower, as the comparable properties have not been sold at an inflated, artificial rate.
Unfortunately, this does happen. Property appraisers, for the most part, are pretty accurate; however, this does not prevent many unscrupulous turnkey real estate companies from attempting to influence their market in this manner.
Always order a home appraisal. If you are financing a property, your lender will order one automatically. If you are purchasing a home with cash, you will need to arrange for a home appraisal independently.
Investor tip: RealWealth does not recommend paying more than the appraised value of a property. If your appraisal comes in below your contract price, a reputable turnkey real estate company should be able to protest the appraisal with additional comparable sales or negotiate a reduced purchase price.
8. A History of Fraud
When we bring on a new turnkey real estate sales and management team at RealWealth, we always do our due diligence. We always conduct criminal background checks and searches of local court filing records. If we uncover a history of mortgage fraud or any other suspicious activity in the real estate world, we typically conclude our due diligence and refrain from proceeding.
However, if it was a long time ago, we ask them if there’s anything we should know about them before we proceed. If they don’t tell us what we already know, we end things right there. If they explain what happened and the checks and balances they have in place to prevent future occurrences, we will continue with the next step in our vetting process.
That wraps up our list of the top red flags to be aware of when dealing with turnkey real estate companies. Use these signs as your guide to avoid getting scammed or having a subpar real estate investing experience.
Tips for Vetting Turnkey Real Estate Companies
What can you do to invest wisely and smartly in turnkey rental properties? Here are some tips to help you vet a potential turnkey real estate sales and management company.
1. Avoid working with turnkey teams that show any of the red flags above.
We’ve been in the real estate investing industry for more than twenty years and have seen it all, so please take these red flags seriously.
2. Visit the turnkey real estate company in person.
Travel to the market to meet with the team and see their operation firsthand. Visit a few properties and observe their operations, including rehabilitation and property management. You may be reluctant to do this as it is an extra expense, but it is well worth the effort if it saves you from working with a shady turnkey provider.
Investor tip: At RealWealth, we complete extensive site visits as part of our standard vetting process. To learn more about our process, watch this video with RealWealth Co-founder Kathy Fettke and RealWealth Property Team Managers Grant and Rebekah Anderson.
3. Speak to references.
Every person on the turnkey team is an opportunity to screen their business. You’ll also want to obtain outside references, as they can be the most telling if something is amiss. Once you feel good about screening the references they provided (operations, rehab team, property management team, and the overall areas they invest in), you are in a good place to proceed.
Investor tip: At RealWealth, we also contact real estate agents, industry-related partners, and other turnkey providers in the industry, as they can provide an additional perspective about the reliability and trustworthiness of a turnkey operator.
4. Work with a real estate investing club that thoroughly screens turnkey teams.
When it comes to investing in turnkey rental properties, you don’t have to go it all alone. RealWealth saves our members time and money by thoroughly vetting our recommended turnkey real estate companies. We evaluate everything they do, including their rehabs, new-build projects, track record, background and reference checks, management practices, and property offerings, to ensure they align with our commitment to quality and investor success.
Learn how investing through RealWealth works.
Investing Safely in Turnkey Properties With RealWealth
At RealWealth, we help people just like you invest safely and wisely in turnkey real estate. If you want to belong to a real estate investing club that makes your success a priority by thoroughly vetting turnkey real estate companies and providing you with support from a seasoned investment counselor, join RealWealth today.
Membership is 100% free and provides access to educational resources and recommended turnkey teams for selling off-market properties.
Frequently Asked Questions
A turnkey rental property is ready for immediate occupancy and available for tenants to rent. It is a fully rehabbed property or a new build, may come with tenants in place, and has property management in place. Investing in turnkey real estate is ideal for busy professionals or investors who want cash flow without the hassle of renovations or property management. Learn more about this investing model in our article Turnkey Real Estate Investing: Your Guide to Hassle-Free Wealth Building.
Turnkey investment properties offer investors immediate cash flow potential from day one, along with professional property management and the ability to diversify across multiple markets. It’s ideal for busy professionals or new investors who want to build long-term wealth without the stress of hands-on renovations or tenant management. Learn more in Turnkey Real Estate Investing: Your Guide to Hassle-Free Wealth Building.
Turnkey property providers are not created equal, and across the industry, there is no standardized definition of what constitutes a turnkey rental property or a turnkey rental company. Some red flags to watch out for are providers who overpromise returns, hide critical details, or fail to meet quality standards. Others may lack third-party inspections, fail to provide transparency about their markets, or have limited experience in property management. Because of this, it’s up to you to thoroughly vet any turnkey real estate company you are considering.
The best turnkey companies offer complete transparency, have a proven track record in property management, and possess local market expertise. They should also align with investor goals (such as cash flow, appreciation, or a combination of both) and provide ongoing support, rather than just a one-time sale. RealWealth partners only with vetted property teams that meet our REAL Income Property™ Standards, and RealWealth Investment Counselors provide ongoing support to all our members.
Both strategies build wealth through real estate, but they are suited to different types of investors. Turnkey real estate investing offers ready-to-go properties that generate predictable cash flow with minimal effort, making it an ideal investment option for passive investors. The BRRRR strategy—Buy, Rehab, Rent, Refinance, Repeat—requires more hands-on involvement, greater risk, and potentially higher returns. Learn more in our article How to do a BRRRR Strategy in Real Estate.
Begin by identifying your financial goals, target markets, and level of comfort with risk. Then, work with a turnkey real estate company like RealWealth that connects you with vetted property providers selling off-market turnkey rental properties in the nation’s top markets. It’s 100% free to join, and you’ll receive access to education webinars, property team connections, and ongoing support from an experienced investment counselor. Explore the various types of turnkey rental properties available for sale.
While you can buy a turnkey real estate on your own, we highly recommend joining a real estate investment club like RealWealth (membership is free). Working with a trusted company and provider will save you time and money.
For over 20 years, we’ve been helping people build wealth through real estate, and as investors ourselves, we have experienced the ups and downs of the housing market. With our resources, you can connect with vetted, turnkey property teams in top U.S. markets, as well as other industry resources, including lenders, lawyers, and asset protection specialists.
As a member, you’ll have access to property pro formas, local market insights, and a dedicated Investment Counselor to help you evaluate markets and deals. Once you have chosen a property, review the pro forma, verify the management, and finalize the closing. Your local team then handles operations—so you earn hands-off, passive income from day one.
As a leader in the industry, our members tell us that our free education and resources, direct connections to vetted turnkey property teams, and ongoing support from pros have helped them successfully invest in passive turnkey real estate. Hear directly from RealWealth members who are achieving financial freedom through turnkey investing and real estate syndications.
At RealWealth, we don’t just provide access to turnkey providers; we also offer personalized support from experienced investors. This support is designed to help our members succeed at every step of their investment journey. Join us for free at RealWealth.com and start learning and investing with confidence.
Yes, as a member, you’ll have full access to sample turnkey rental property pro formas that show projected cash flow, ROI, and other key metrics. While you can connect with a property team at any time after joining, we highly recommend scheduling a strategy session with your investment counselor to help tailor your investment strategy to your goals, whether focused on cash flow, appreciation, or a hybrid market approach. Once you connect with one of our vetted property teams, they will send you current inventory—including available turnkey rentals with full pro formas—so you can evaluate potential returns before investing. You can also use analysis software like DealCheck to run your own projections.
The 1% rule helps investors quickly estimate if a potential rental property will generate positive cash flow. This calculation says that the monthly rent should equal at least 1% of the property’s total purchase price, including renovation costs. The 2% rule sets a higher benchmark—2% of the purchase price—but is rare in today’s market. These rules are helpful screening tools, not absolute indicators of performance. Learn more and see examples in “What are the 1% and 2% Rules in Real Estate Investing?”
Yes! Investing out of state can unlock more substantial cash flow, faster growth, and geographic diversification, mainly when you invest in more landlord-friendly, affordable markets. Success hinges on choosing the right market, building a reliable local team, conducting thorough due diligence, and managing remotely with professional services or working with a company like RealWealth that provides direct access to turnkey property teams who sell off-market properties with property management in place. Read our guide to learn more about Out-of-State Real Estate Investing Strategies.
There are several ways to find turnkey rental properties for sale, including the MLS (Multiple Listing Service) and working with real estate investing companies like RealWealth. The method you choose depends on your skill level, investment goals, and the time you have available. Many investors prefer investing through RealWealth because they have limited time or want to expand their portfolio with low effort. By partnering with us, you can easily connect with vetted property teams that operate in some of the nation’s top-performing metropolitan areas, including Dallas, San Antonio, Indianapolis, Cincinnati, and Birmingham, among others. Each property team offers professionally renovated homes or new build properties with property management in place, making it easy to invest remotely.
When you join RealWealth, you’ll gain access to a vetted network of industry pros like asset protection specialists, lenders, 1031 exchange facilitators, and more, who understand real estate investing and investors. Members can connect directly with these experts to build customized strategies for protecting their rental property portfolios.
Pros: Turnkey investing offers immediate cash flow, since they’re renovated, tenant-ready, and often already have property management in place. That saves you time, stress, and the hassle of renovation and leasing, as well as the day-to-day headaches that come with being a landlord. This makes it an ideal investing strategy for those wanting a more passive income stream.
Cons: Turnkey investment properties typically carry higher upfront costs due to the “rent-ready” premium. Depending on the property provider, renovations may sometimes be superficial or inconsistent in quality, and often rely heavily on the property management company’s competence. You can also face challenges with long-distance ownership (laws, inspections, local oversight). Not all turnkey companies and markets are equal; it’s critical to partner with a reputable turnkey provider and conduct thorough due diligence.
Learn more in Turnkey Real Estate Investing: Your Guide to Hassle-Free Wealth Building.
Section 8 properties are rental homes that accept tenants using government housing vouchers through the U.S. Department of Housing and Urban Development (HUD). Investors receive consistent rent payments directly from local housing authorities, which can provide stability even in changing markets. However, these properties often come with stricter inspections, more paperwork, and longer timelines for tenant placement. Learn more about evaluating rental property strategies in Section 8 Properties for Sale & Why Buy Now, and see if it is right for you.
A variety of professional analysis software is available for real estate investors. We recommend DealCheck, which has a free and paid version. All of our pro formas are created in DealCheck, and RealWealth members receive an exclusive discount on the paid version. Analysis tools like these can be invaluable for assessing a property’s viability. To get more accurate rental prices, we recommend RentCast. These resources make it easier to evaluate returns, compare markets, and make data-driven decisions before making a purchase.
To find rental properties in states with favorable landlord laws, first review RealWealth’s guide on Landlord-Friendly States. Markets like Texas, Florida, Alabama, Georgia, Indiana, Arizona, and North Carolina typically have faster eviction processes, no or limited rent control, and fewer regulatory hurdles for property owners. These locations are commonly included in RealWealth’s vetted turnkey investment opportunities, making them good places to start when looking for landlord-friendly turnkey rental properties.
The cities that tend to offer the best return on investment (ROI) for rental properties combine strong job growth, affordable home prices, and rising rents. RealWealth’s heavily researched markets, including Dallas, San Antonio, Birmingham, Chattanooga, Cleveland, and Indianapolis, consistently rank as top performers. These metros often feature favorable landlord laws and solid rent-to-price ratios, making them ideal for investors looking for cash flow and appreciation. Explore detailed market data and vetted turnkey opportunities in the article Best Places to Buy Rental Property.
Getting started is simple. Join RealWealth for free to access vetted turnkey teams, investment counselors, investor education, and sample property pro formas. Your RealWealth Investment Counselor can help tailor your investing strategy, connect you with trusted teams, and guide you through your purchase—so you can confidently grow your real estate portfolio and build long-term wealth.
