The turn key house is a great option on its face, as it requires less work than the fixer upper. You will pay a premium for the convenience that you receive, however, so you need to understand the specifics of your feature set. From here, you can determine if the premium is worth its price. Here is the short list of questions that you should ask yourself about what is included in your turn key property.
What is a turn key house?
The general definition of a turn key house is a house that can be lived in immediately. If you are talking about a residential property, turn key means that an owner can move in on day one. A turn key commercial property means that a property passes legal muster with the municipality as well.
The phrase “turn key” is also used in the real estate contracting industry, meaning a job that is done to completion, including labor and materials. If you ask a contractor for the turn key price, then he should quote you a price to finish the job less taxes.
What should I expect from a turn key property?
In general, you should expect immediate convenience and utility from a turn key property: Everything works from the plumbing to the lights, there are no structural issues or immediate repairs that are pressing, and the house is also neat and tidy, ready for interior decoration or modifications. In order to get a property to this state, several steps are usually required. The best and cheapest method to prepare a property as a turn key property involves a specialized turn key contractor. You gain an all in one service that saves you the time of contacting all of the individual entities that go into making a property turn key.
If you are selling a property and advertising it as a turn key home, then you would likely benefit from a turn key contractor in many ways. First of all, the contractor can perform any needed upgrades more quickly than a do it yourself (DIY) homeowner or a general contractor. Secondly, this contractor will be able to help you direct fees and paperwork to the appropriate municipal entities to give the home legal status as a livable property. Finally, the contractor will be able to simplify the process for the homeowner by connecting all utilities, preparing the site for trenching or clearance, and getting all of the permits necessary for this type of work.
What is a turn key contract?
If you are selling a property that you are advertising as a turn key property, then you or your agent will negotiate a turn key contract with a contractor, detailing all of the modifications that you expect finished on the home. These modifications can include utility connections, tree removal, septic installation, connections to water sources and power, and site preparation for any excavations and back fills. The turn key contract will also detail the approximate cost of the repairs and upgrades mentioned above along with the timeline for the repairs.
If you are a buyer using a 203k loan from the Federal Housing Administration (FHA), then your lender will likely require a turn key contract before approving your money. The approximate cost for the services is especially important, as the FHA approved lender will need to know how much to roll up into the loan amount. There will usually be an appraisal initiated by your lender in order to evaluate whether the upgrades are actually worth the work.
You will also need to negotiate the draw with the lender and the contractor. The draw is a percentage of money owed to the contractor that is paid as the work is completed. In most cases, the total amount that is owed to the contractor is split into 10 draw amounts. As the contractor completes the work, the company will draw the money less 10 to 20 percent that is usually held back by the lender. The amount held back is given to the contractor upon the close of escrow and the completion of the work.
How do I find a turn key property?
There are real estate agents who specialize in finding turn key properties. If you are a buyer, these agents will help you to focus your buying efforts on properties that do not require any immediate repairs. The agent will also be able to look into the work that has been done on the property in order to evaluate the reputation of the contractor. Using a proper turn key property agent will save you a great deal of time looking for a property that has completed work from a reputable contractor.
You will also have more choice if you use a specialized turn key real estate agent. Because agents know what to look for, they will find more properties that meet your needs and are also within the auspices of a truly turn key property.
2 Point Highlight
In general, you should expect immediate convenience and utility from a turn key property: Everything works from the plumbing to the lights, there are no structural issues or immediate repairs that are pressing, and the house is also neat and tidy, ready for interior decoration or modifications.
If you are selling a property that you are advertising as a turn key property, then you or your agent will negotiate a turn key contract with a contractor, detailing all of the modifications that you expect finished on the home.
