A turnkey rental is sold ready to rent. The renovation is finished, a tenant is often already paying, and a management company usually comes attached. Most are sold to buyers in another state who will never stand in the house.
The pitch almost always arrives as a one-page sheet with a monthly profit at the bottom. That bottom line is the one number you should refuse to accept as given.
What does turnkey mean?
Turnkey means the seller has done the renovation and placed a tenant, so you are buying an income stream instead of a project. Some sellers renovated the house themselves. Others are brokers who package houses other people renovated, which means nobody you speak to has held a paintbrush.
Either way you are still buying a house. The roof has an age, the water heater has an age, and the tenant has a lease with an end date. Turnkey describes the condition on the day you close. It says nothing about year three.
What does a seller’s sheet leave out?
Four costs go missing more often than any others.
- Empty weeks. A sheet that counts twelve months of rent assumes the tenant never leaves and never pays late. Tenants leave.
- Money set aside for big repairs. A new-looking kitchen does not reset the roof. Spending nothing on repairs for two years and then $9,000 on a furnace averages out to a real monthly cost, and a sheet that shows nothing has simply moved it into your future.
- Management. The sheet may show no management fee while the seller also tells you the property is fully managed. One of those is wrong, and you are 900 miles away.
- Insurance at your price. The seller’s premium reflects the seller’s claims history and often a policy written for a renovation, not a long-term landlord policy in your name.
The gap between a sheet and the same house rebuilt is usually larger than new buyers expect, because the missing costs all point the same way.
One turnkey house, the sheet and the rebuild
Here is a house priced at $250,000 renting for $2,750 a month, bought with 20% down on a 30-year loan at 7%, with a $3,000 yearly tax bill. The example’s rate is its own assumption. For reference, Freddie Mac’s weekly survey put the 30-year average at 7.28% on October 1, 2026, on purchase loans for one-unit homes their owners live in.
The seller’s column counts every month rented, no reserves, no management, and the seller’s $1,400 premium. The rebuilt column adds empty weeks at the national rate, 5% of rent for repairs and 5% for replacements, 8% for a manager, and a $2,400 quote in your name.
| Seller’s sheet | Rebuilt | |
|---|---|---|
| Rent | $2,750 | $2,750 |
| Empty weeks (7.3% of rent) | – | −$200 |
| Repairs and replacements (5% each) | – | −$275 |
| Property management (8% of rent) | – | −$220 |
| Property taxes | −$250 | −$250 |
| Insurance | −$116 | −$200 |
| Mortgage | −$1,331 | −$1,331 |
| Cash flow each month | +$1,053 | +$274 |
These are example figures, not a forecast for any market.
Nothing in the rebuilt column is a penalty or a worst case. It is the same house with four ordinary costs written down. The advertised $1,053 becomes $274, and $274 a month is thin enough that one bad furnace erases the year.
What vacancy rate should you use on a house you cannot visit?
Use a published figure until you have a local one. The Census Bureau’s Housing Vacancy Survey put the national rental vacancy rate at 7.3% in the second quarter of 2026, in a release dated July 28, 2026. That is the share of rental units standing empty and offered for rent, which is not the same thing as the share of time one particular house sits empty, but it is a far better starting point than zero.
A single house turns over in lumps rather than percentages. One tenant leaving after three years, with six weeks to clean, list and re-let, is roughly 4% of that period. Add one late payment and a holdover month and you are at the national figure. One rental at three vacancy rates shows how much the choice moves the answer.
The same logic applies to repairs. A share of rent set aside every month is how a lumpy cost becomes a monthly one, and what to set aside for repairs and replacements sizes it on a house this age.
What should you check before you wire the money?
Ask for documents, not assurances.
- The lease itself, with the end date, the deposit held and any concession given to get the tenant in. A tenant who got two free months is paying less than the sheet says.
- The tenant’s payment record for as long as it exists.
- The scope of work, listing what was replaced and what was left. Ages matter more than adjectives: ask the year of the roof, the furnace, the water heater and the electrical panel.
- The county’s current tax rate and assessed value, looked up yourself on the county’s site rather than taken from last year’s bill.
- An insurance quote for that address in your name, from your own agent.
- The management agreement, including the leasing fee charged when a tenant turns over, which is usually separate from the monthly percentage.
Then run the house twice: once with the seller’s numbers, once with yours. 12 numbers to confirm before you make an offer is the longer list, and seven fixes that took one rental from $966 to a loss shows what the pattern looks like when every optimistic input is corrected at once.
Is a turnkey rental worth buying?
It can be, and the convenience is real: renovating a house from another state is harder than most first-time buyers expect. What you are paying for is the work already done, and the price reflects it, so the margin is thinner than on a house you fix yourself.
Judge it on the rebuilt number. Put the seller’s sheet into the calculator, then add the empty weeks, the reserves, the manager and your own insurance quote, and see whether what is left is worth the cash it takes. If the deal only works on the seller’s version, you are not buying a rental, you are buying their arithmetic.