3 Problems Turnkey Investors Will Encounter

Buying an investment property is a big decision for any investor. The time it takes to locate, evaluate and consider a property is a lot of work. There are problems that can and will pop up for even the most experienced investor when getting into the turnkey industry. Knowing how to fix these 3 problems turnkey investors will encounter will provide the foundation for growth in the investment industry.

Noted Issues with Rental Properties

Every investor who puts money down or decides to buy in cash will face some of issuing during or after a sale happens. There are problems with rental properties that are exclusive to the turnkey industry. Evaluating the problem at hand and knowing how to resolve it can be one of the best pieces of knowledge an investor can gain.

1. High Turnover

Rental contracts are typically in place for one or two years in most cases. Even if a tenant appears he or she will stay for the long term, problems might happen that causes higher than normal turnovers. Breaking a lease is difficult for new investors because it means an immediate decrease in monthly cash flow.

A way to combat higher than average tenant turnover is to use professional property management agencies. These companies know how to take care of current tenants and offer a solid way to find new tenants if a property is vacated earlier than expected.

2. Unexpected Repairs

National averages for the life cycle of appliances used inside of rental properties are currently five to seven years. This means that property owners will at some point be required to replace interior appliances. Appliance replacement, issues with plumbing and exterior damage can happen to the most secure piece of property. No investment property owner goes through a career without encountering one or more common problems.

Holding back a certain amount of rental income that is earned to use for repairs is a smart strategy. The money for repairs is essential and will be less of a burden when a costly issue arises. Each investor will have the choice of how much money to holdback for home repairs.

3. Annual Taxation

Personal meetings with accountants, lawyers and financial advisors are helpful before someone buys a property although will not prevent taxation issues from happening. Changing business formations in the middle of a tax year or increasing deductions can expose an investor to some types of taxation problems. Getting professional advice when a tax problem is uncovered is always the best advice.

One of the ways to prepare for taxation problems is to make decisions before the tax year begins about business formation and upcoming deductions. The last-minute changes that some investors make can be a costly reminder to plan accordingly for the upcoming tax season. There are things that can be written off of investment property tax returns and things that cannot.

Schedule Now

If you’re ready to get started with JWB, schedule a strategy session with our property investing experts now!