Turnkey Investments Attracting Australian Investors
Turnkey investments are fast becoming a popular investment product for Australians seeking capital growth and passive income generation.
A turnkey property or ‘ready built’ home is defined as a home that is ready to move into on completion. These homes are fully finished by the builder featuring painting, flooring and blinds which are additional items in most builds.
Turnkey properties are perfect for investors as the builder has already packaged together floor plans and finishings in the price. All that the investor needs to do is choose the one that best suits their block and select from the colour selections set out by the builders experienced Interior Designer.
Many investors and developers are taking the option of including the turnkey items to ensure their projects are rent ready or ready for resale. With a turnkey finish, the dwelling is handed over fully completed without you having any input other than choosing colours and fittings. A builder specialising in this area will organise the entire process.
Often, investors and developers do not have the required funds to fully complete their projects to a turnkey finish. This can create a lot of stress and delay you selling or renting the finished product resulting in reduced profit or income. By including the items in the building contract, the bank will also include the items in the valuation. Many lenders actually see this as an advantage, as it reduces their risk in the project should the borrower default on the loan.
Another reason why investor and developers include the turnkey items in their projects is that a lot of effort and time is required for you to source out a dozen different suppliers, and overseeing the installation of the products requires you to constantly be accessing the developments, which can cause delays and a lot of frustration to the builders. Most times, the builder will not allow you access to the site prior to completion, which also adds to the delay. Site clean-up can be delayed or need to be re-done after new contractors have been through.
Many Australian investors and developers believe they can complete the turnkey items cheaper than a builder. Whilst there is definitely an argument that you can cash and carry the products and potentially receive a discount on the goods, you still need to consider the logistics of installation and apply a cost for your own time in supervising the finishing items. Another point to consider is that if damage is caused whilst installing the products to something else in the house, the installer may not cover the costs of the damage if you are dealing with them as a one off customer. A builder would insist on the damage to be covered as they are an ongoing customer.
One of the benefits of leaving the turnkey items to the builder is that you won’t get emotionally attached to the homes themselves. Once you start to add in ‘nice to haves’ to a dwelling that you are not going to be living in yourself, this can cause time delays and add-on costs. Developers who are highly experienced in looking at the design and choosing a set of fittings and colours that are known to work together, can speed up your project.
Video: Understanding turnkey property investments
Ventura iD and Multi Living Developments offer a free consultation service so you can see if developing is an option for you. Call (08) 9241 1600.