Definition of "Turnkey Condition" in Real Estate
"Turnkey" is a term used to describe many things, including employees, products, services and real estate. When it's used in commercial or even residential real estate, turnkey condition simply means that the space being rented or purchased is ready to move into.
Specifically, all wiring, fixtures, flooring and superficial decorative items like paint and carpet are already in place. The term is often used in conjunction with older properties. Simply put, you could describe "turnkey" as "a space ready to move into - just 'turn the key' and open the door."
Offering a Turnkey Property Sets You Apart
The real estate market goes up and down, subject to several influencing factors. When the market is depressed, offering a turnkey property for sale sets you apart from anyone else who's scrambling to move property from seller to buyer.
Investors particularly appreciate turnkey properties. They don't have to financially maintain the properties for an indefinite period of time while they bring them to habitable condition for prospective tenants or resale.
A turnkey property may also appeal to an investor who just dabbles in real estate, someone who buys a single property with the intention of renting it out. He doesn't want to be a full-time landlord.
He just wants this one property for one reason or another. Will he have the time or inclination to spend his weekends after purchase doing the labor? He might be willing to pay a little more to purchase something that's move-in ready.
Downside of Turnkey Efforts for Residential Properties
If you're selling your home, going to a lot of expense and trouble to make it turnkey may not be necessary. It's one thing if you're planning to rent the residence; neutral colors hit the spot and offering a property that's simply up to code is typically sufficient.
When you're selling, however, it stands to reason that the buyer will want to put his own stamp on the property. Yes, fresh paint is important, but it's a safe guess that the new owner will cover it up with something more to his own tastes when he moves in.
Creating a turnkey property should be cost-efficient. Fixtures and appliances should be in good shape, ready to use and not likely to need repair, but it may not be necessary to go to the expense of upgrading them to state-of-the-art items.
If You're the Buyer/Tenant
Keep in mind that the phrase "turnkey" is intended to lure in tenants and buyers. You're sure to see it in advertisements and hear the promise from real estate agents and sellers. This doesn't make it so. Be prepared to be disappointed. In the worst case scenario, you can use any of the property's shortcomings in your negotiations.