Commercial properties are bought and sold in various conditions. Rehab properties are those that require renovations and things like additional electrical wiring, paint, carpets, and fixtures after they are purchased. These properties are convenient for those who want to customize the space to fit their needs.
However, there are other commercial properties that are already in liveable condition and move-in ready for lessees who require immediate tenancy and don’t have the time to worry about repairs and superficial decor. These properties are classified as “turnkey”, meaning buyers can simply ‘turn the key’ and open the door to a commercial space that’s ready for use.
The Turnkey Process
Turnkey real estate companies will typically buy distressed commercial properties at discounted rates. They then direct and oversee the rehabilitation of these properties. Once a property is move-in ready, it will be put up for sale and the real estate company will find a lessee. Long-term investors are the most common purchasers of turnkey properties, as they benefit from avoiding performing renovations and finding a tenant.
How Does a Turnkey Property Benefit Commercial Lessees?
Turnkey properties are most beneficial for commercial businesses that are in need of immediate relocation or are looking to set up shop quickly and do not yet have the time or funds to make big repairs or renovations. Turnkey properties can be both old and new construction, so you aren’t limited to the type or age of commercial space you choose to lease. Your lease also comes with a property manager who is either the turnkey real estate company themselves or an outside professional they have approved and hired.
Things to Look Out For
As with any rental property, you’ll want to be cautious and not let obvious benefits, like the dazzle of immediate move-in and “no renovations needed”, cloud your judgement. Here are a few tips for leasing a turnkey property:
- Attend a thorough walk-through before you lease to ensure that no necessary functionality is missing from the property.
- Make a list of everything you need in a commercial location in order for your business to run smoothly.
- Don’t jump on a turnkey property just because you have an immediate need for tenancy. You’ll also need to ensure that the location is ideal for your type of business, the rent isn’t subject to drastic yearly increases, and that there are no underlying clauses to the leasing agreement that could risk random arbitrary eviction.