What does ‘turn-key’ mean, and why should it matter when selecting an investment property?
If you’re looking to invest in property, turn-key is a phrase you might have come across – and it’s something that you should be aware of. Here’s why knowing what turn-key really is should matter to you when selecting your investment property.
So, what does turn-key mean?
Simply put, a turn key property is ‘move in ready’ – fully complete property that an investor can purchase and immediately rent out. By acquiring property that requires no refurbishment or maintenance, the investor can immediately place the property on the rental market, and start generating rental revenue straight away.
The term turn-key can be used for both existing properties and house and land packages. For existing properties, turn-key can be used to refer to any renovated, ready to move in home, with little to no repairs required. For house and land packages, it can get a bit more complicated. This is because unfortunately, the term turn-key is quite subjective and can mean different things to different people. What does ‘ready’ or ‘complete’ really mean when it comes to a property… a home that is completely finished on the inside, but does have a garden or driveway? A finished home that just needs painting and blinds installed? Or a property where absolutely zero additions required and a tenant can move in tomorrow?
Many people looking to buy house and land packages are often drawn into the pretty pictures and seemingly low prices that some builders and developers use. However, we’ve found that a lot of the time, they are using the old “bait & switch” advertising technique – offering what looks to be a complete house and land package, for a great price. Then, when you enquire about the package, more often than not the answers are “that block is no longer available,” or, “site costs are an estimation only, so they could increase later on,” or, “no window treatments are included.”
This can be trick for first time or inexperienced buyers, because they put themselves at risk of signing up to a package only to find out that there are a multitude of hidden costs down the track, such as site work increases, floor coverings, blinds, a driveway, landscaping, paving, internal wall painting…. You get the idea, the list goes on. Basically, if it seems too good to be true, it probably isn’t true! To make matters worse, some properties are advertised as turn-key, but only have 80% of the inclusions compared to a property which is full turn-key, i.e. ready to move in to tomorrow. This is due to the subjective nature of the term, and means many properties advertised as turn key don’t actually have inclusions such as window treatments and internal wall painting.
Full turn-key properties
For all of those reasons, at IPP Australia we only recommend full turn key properties, at a fixed price, with no surprises. What do we classify as full turn key? A property that includes absolutely everything you need to be able to attract tenants and be able to rent the property straight away (so they can literally just ‘turn the key’ and move in). A full turn-key property is fully complete with everything from internal fittings through to landscaping, a driveway, letterbox and clothesline. As an investor this is hugely helpful for multiple reasons – not only do you not have to waste time adding or fixing things, meaning you can rent the property out straight away, there are also no hidden costs. We know how confusing investing in property can be, so we do what we can to simplify the process, and remove any ambiguity. We believe that price should be agreed upon up front, and once agreed upon, should not increase – no one likes nasty surprises down the track!
Remind me again why I should invest in a house and land package, as compared to an existing home?
There’s a lot of conflicting advice when it comes to investing in property, particularly about choosing between investing in an existing home, or a house and land package. At IPP Australia, we ultimately just want the best outcome for the customer. In saying that, we believe that house and land packages provide the best investment solution for our clients, the reason being that house and land packages have:
- Equity uplift in building
- Lower stamp duty – only pay on land component, which means less than half of the stamp duty costs)
- Builders warranties
- Lower maintenance requirements
- Higher rental yield
- Higher resale value
- Builders 12 months maintenance period
- Greater tax benefits through depreciation
- Higher demand amongst emerging demographics
We find that people can be hesitant because when they think of a house and land package, they imagine a development lot in a heartless suburb in the middle of nowhere. Now, we aren’t denying that those exist. But would we recommend something like that to you? Absolutely not. For each new person that we meet, we assess many factors, such as their current personal and financial situation and their goals. We then fully customise the process for them, helping them to sort out their finances, prepare a tailored investment strategy, and recommend investment properties which suit their exact needs and can help them achieve their goals. All of the properties we recommend for investment must satisfy our four key pillars – economic growth, infrastructure, demographics and population growth, to ensure that the property will perform to a high standard and maximise returns.
Keen to learn more? We’d love to hear from you! Please feel free to get in touch with us at firstname.lastname@example.org, or schedule a call or appointment via our simple booking system.