What Is Turnkey?
A turnkey rental is a fully renovated property, often already rented, with a property-manager in place. Providers like Memphis Invest, REI Nation, and Roofstock sell these to out-of-state investors who want passive-income without hands-on work. Typical Memphis returns: 6–10% cap-rate, 7–10.5% cash-on-cash. The catch: not every "turnkey" rehab is complete — verify roof, HVAC, and water heater, and vet the seller before you buy.
Turnkey means you buy a rental that's already renovated, tenanted, and managed — you "turn the key" and collect cash-flow without doing the rehab or finding the tenant yourself.
At a Glance
- What it is: Renovated rental, tenant in place, management included — buy and collect rent
- Typical returns: 6–10% cap rate, 7–10.5% cash-on-cash in markets like Memphis
- Providers: Memphis Invest, REI Nation, Roofstock (now more MLS aggregator than pure turnkey)
- Included: Renovation, tenant placement, property management
- Risk: Some "turnkey" rehabs cut corners — roofs, HVAC not actually replaced
How It Works
A turnkey provider buys distressed properties, renovates them, places tenants, and sells them to investors. You close, and the property-manager (often the same company or a partner) handles rent collection, maintenance, and turnover. You're buying a buy-and-hold rental that's already producing cash-flow.
What you get. A renovated property — new or updated kitchen, bathrooms, flooring, paint. A tenant (usually) — lease in place, rent flowing. Management — the provider or a partner handles day-to-day. Some include warranty periods on the rehab.
The cap-rate and cash-on-cash. Memphis turnkey deals often show 6–10% cap rates and 7–10.5% cash-on-cash. Total ROI projections (income + appreciation) sometimes run 25–28%. Memphis has strong fundamentals — FedEx HQ, Amazon and Nike warehouses — so rental demand is solid. But those numbers are provider projections. Run your own.
The due diligence gap. One investor bought a "turnkey" from an unknown flipper via Roofstock. The roof looked fine. It hadn't been replaced. He had to revalue the whole deal. Lesson: verify major systems — roof, HVAC, water heater — and check that they're actually new or properly updated. Don't assume "turnkey" means bulletproof.
Real-World Example
Karen: Memphis turnkey via provider.
She buys a 3-bed in South Memphis for $125,000. The provider has renovated it, placed a tenant at $1,250/month, and set up management. Her all-in (purchase + closing) is $130,000. She puts 25% down — $32,500. Mortgage payment (PITI): $720. Management (10%): $125. Reserves (vacancy, capex): $150. Net cash-flow: ~$255/month. Cash-on-cash: 9.4%. She never visits. The property-manager handles everything. Two years in, the HVAC fails. She pays $4,200. She wishes she'd verified the HVAC age at purchase — the provider said "updated" but the unit was 12 years old.
Dave: Roofstock "turnkey" that wasn't.
He buys a Memphis 3-bed for $98,000. Listing said "fully renovated." He gets the inspection report — roof not in scope. He assumes it's fine. Six months later, a storm reveals leaks. Roofer says the roof has 3–5 years left, not new. He spends $8,500. His cap-rate drops. He learns: "turnkey" doesn't mean you skip verification. Check the big-ticket items yourself.
Pros & Cons
- No rehab — you're not coordinating contractors or living through a renovation
- Tenant in place — cash-flow from day one
- Management included — hands-off passive-income
- Access to out-of-state markets — buy in Memphis, Indianapolis, etc., without moving
- Lower stress than value-add — buy-and-hold without the value-add work
- Lower returns than value-add — you're paying for the rehab and the convenience
- Provider risk — you're trusting their renovation quality and management
- Some "turnkey" rehabs cut corners — verify roof, HVAC, water heater
- Less control — you didn't pick the tenant or the renovation scope
- Roofstock has shifted toward MLS aggregation — less turnkey-exclusive inventory than before
Watch Out
- Rehab verification: Don't trust "fully renovated" without checking. Roof, HVAC, water heater — get ages and replacement dates. Hire your own inspector.
- Provider reputation: Vet the seller. How long have they been in business? What do other investors say? One bad provider can cost you thousands.
- Management quality: Turnkey often bundles management. Check reviews. A bad property-manager can tank your cash-flow.
- Cap rate reality: Provider projections may use optimistic rents or low expense estimates. Run your own cap-rate and cash-on-cash.
- Market risk: Memphis, Indy, etc. can have strong fundamentals but also higher vacancy or crime in some submarkets. Research the specific neighborhood.
Ask an Investor
The Takeaway
Turnkey works when you want passive-income without rehab or landlording. The trade-off: you pay for convenience, and returns are usually lower than value-add. Do your due diligence — verify major systems, vet the provider, run your own numbers. "Turnkey" shouldn't mean "trust and hope."