5 Tips On Purchasing Detroit Turn Key Rentals

Purchasing Turn Key Properties

Many Detroit investors have made turn key properties their niche market. Purchasing a turn key property can be a smooth transaction that requires minimal effort.....sometimes. Some of us like to avoid the hassle of tenant placement, screening multiple applicants for all of them to do a disappearing act when it's time to submit a deposit. Others simply dread the process of rehabbing; the unexpected repair that throws the budget an extra $2,500, or the city inspector who hates your guts for absolutely no reason at all, or what about the 2 week delay for the custom windows?! Yea, No! For whatever reason you've decided turn keys rentals are the best fit for your portfolio, there are a few rules and tips one should always use throughout the purchase process. These tips will help you avoid very common mistakes often made by non local investors. You will save thousands and have a few less sleepless nights. 

1. Offer Inspection Contingency

whether purchasing in Detroit or Southfield; make your offer to purchase contingent on a private inspection. If said private inspection isn't to your liking, seller agrees to terminate the contract. Your Realtor/Broker can complete the inspection using their real estate knowledge and or a local contractor or professional home inspector. 

2. Preview tenants Lease & Ledger

This will be another contingency placed in your offer. Satisfactory review of the tenants lease and ledger is to be provided within a certain amount of days after offer acceptance or private inspection. If you've purchased multiple rentals in Detroit, you've experienced the run around when it comes time for the seller to produce these two documents. Don't fall for it. If you can't see the tenants payment history or their current lease, move on. 

3. Negotiate

Use the private inspection and or lease and ledger as leverage. If it's a good deal, don't walk away if issues are discovered. 

4. Check the Comps & Area 

If the tenant pays $900mo, but there is only two homes on the entire block your chances of re-renting that property for $900mo after the current tenant vacates are slim. Or if the property is in a great area where market rents are $850mo+ but this particular property is occupied by a long term tenant who only pays $650mo and has no intention on leaving. Either situation can definitely still be a profitable investment but it is imperative that you weigh your investments not just by what they are currently producing but future ROI as well. 

5. Have Property Management Company Ready

Once you've gotten a turn key property under contract and scheduled to close; seek management immediately. Some properties will already be professionally managed, so there will be no need to alert the tenant of a transfer. In other situations, you will be employing a new management company. In that case, contact need to be made with the tenant immediately to avoid any delay in payment or confusion and uncertainty. It is crucial to the future relationship with the tenant. A letter, phone call, and email should collectively be used. Tenants can become uneasy, confused and even upset at times when notified of ownership or a management change. They may want to speak with the property manager, ask questions, visit the office and or see legal management documents in order to feel comfortable with the change. So to help ease this situation and move it along, make the contact asap. I've seen great paying tenants stop paying entirely due to ineffective communication or untimely contact.

Malaka Green

Detroit, MI
She's Your Realtor

"Know Your Status"

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