Real Estate
winter 2019

Beginner tips for turnkey real estate


What if you want to invest in real estate, but don’t have any experience or a mentor to guide you? What if you live in a high-cost location and can’t find reasonably priced properties to invest in? And what if you want to invest in real estate but don’t want to do any of the active management?

In recent years, turnkey real estate providers have emerged, offering to solve all of these problems for would-be investors.

Generally, a turnkey real estate provider buys and renovates a distressed property, sells it to an investor, and then serves as property manager — screening and placing tenants, and managing operations. As the property owner, you get to remain fairly passive. You may only have to get involved if significant repairs are needed, above a preset cost threshold.

Business models vary. Some turnkey providers will buy, renovate, rent, and then sell the property to you. Others help you locate and purchase the property, and then follow up with rehab and rental support.

Critics say turnkey real estate providers charge a high margin, do shoddy renovation work, and try to sell buyers sub-par properties in sub-par neighborhoods. There is real risk involved, especially if you can’t travel to inspect your investment in person.

Others say turnkey real estate is a good opportunity for investors who can’t afford to break into their local market, new real estate investors who want more hand-holding, and those who are just too busy to be landlords.

Generally, a turnkey real estate provider buys and renovates a distressed property, sells it to an investor, and then serves as property manager — screening and placing tenants, and managing operations. As the property owner, you get to remain fairly passive. You may only have to get involved if significant repairs are needed, above a preset cost threshold.

Turnkey firms make it easier to invest in a profitable real estate market without having to live there. A good turnkey provider has local market insight, experienced staff, and a well-oiled marketing machine to source tenants. They simplify the process, allowing you to diversify your investments without having to handle all the details.

Here’s some advice when evaluating a turnkey real estate opportunity:

  • Recognize you’re paying a premium. This is a business. Turnkey providers are doing all the legwork and providing monthly management services. In some cases, they’re taking on the initial risk. You will be paying for their efforts and probably buying at market price. That means if you change your mind or need to resell soon after buying, you may lose money.
  • Do lots of due diligence. The turnkey provider is going to get paid whether you make a good investment or not. You’re putting a lot of trust in this company, so do everything you can to vet the team and the property before investing. The most prudent investors will meet the turnkey team in person, seek out online reviews, talk to other clients, get a third-party inspection, and visit the firm’s other properties.
  • Calculate beyond basic cash flow. Take a critical look at the firm’s cash flow projections. Check that estimates are accurate and realistic and include all expenses. Consider extra expense for repairs and vacancies.
  • Look for warranties. A reputable turnkey company should provide some warranties on their rehab work. Look for at least a one-year warranty on large-ticket items like roofs, HVAC, and water heaters.

Help mitigate your risk by consulting with an experienced real estate attorney. They can assist with due diligence and review purchase and investment contracts to ensure your interests are protected.

We welcome your referrals

We value all our clients. And while we’re a busy firm, we welcome all referrals. If you refer someone to us, we promise to answer their questions and provide them with first-rate, attentive service. And if you’ve already referred someone to our firm, thank you!

Listing photos a concern for some sellers, buyers

Close-up of businessman's hand checking house on laptop

If you’ve purchased a home or vacation property in the last few years, you might be surprised to find the realtor’s listing photos still lingering online. In a recent advice column in The Chicago Tribune, one homeowner expressed frustration that the seller’s agent wouldn’t remove online photos of her new home. In her mind, those photos represented an invasion of her family’s privacy.

Reportedly, the seller’s agent refused to take the pictures down because such photos serve as “comparables” for future clients. In an online discussion, many other agents weighed in, asserting the necessity of those photos for appraisers and comparative market analysis.

As a homeowner, if you’re concerned that such photos are a privacy or safety issue, start by contacting the listing agent and asking for his or her support. Be aware that you’re asking for a favor and he or she has no obligation to honor your request.

Even if they agree, it may never be possible to have your house photos removed from the web. While the listing agent has control over their own site, there’s only so much they can do about other listing sites.

In order to get the photos removed from MLS data, which feeds other sites such as Trulia and Zillow, you’ll need the seller’s agent or managing broker to make the request. Once photos have been submitted to MLS, they are the only ones who can request the suppression of interior photos. Even if a request is granted, the main exterior shot of the home almost certainly will remain.

If your listing agent is not supportive, you’ll have to make individual requests to each site on which your pictures appear. Zillow, Redfin and Trulia all offer the option to remove photos. That doesn’t mean, however, that you’ll have any luck with other sites that republished photos without adherence to MLS licensing agreements.

If you are in the market for a home, you can ask to have photos removed from the agent’s site and MLS as a contingency in your purchase offer. Recognize that this may not endear you to the listing agent, and that there’s only so much he or she can do once the photos are out in the world.

Understanding easement rights

Imagine you’ve found the perfect home or piece of land, but you find out there’s an easement on the property. What do you need to know?

An easement gives someone the legal right to use your property in a specific way. For example, your next-door neighbor might have access to drive across your land to get to theirs. The utility company might have the right to dig up your lawn to install power lines.

Easement duration
Some easements can be canceled, but some remain in perpetuity. An appurtenant easement applies to the land, meaning the easement remains if the land is sold. But an easement in gross gives rights to an individual owner, and the easement expires if the landowner sells the property or dies.

Common easements

  • Private easement: A property owner may sell an easement to an individual. They may, for example, grant a neighbor sewer or solar access or the right to use a driveway.
  • Easement by necessity: When a property owner is landlocked, they cannot be denied access to their property.
  • Utility easement: A utility company may access a property for things such as power or water lines.
  • Prescriptive easement: Use of a property is granted for a defined period of time.
  • Public easement: Access to a property is granted for public use.

Easements can be affirmative or negative in nature. An affirmative easement grants permission for the land to be used in a certain way. A negative restriction is one that is placed on the land. This type of easement prohibits you from doing something with your property. For example, a negative easement may prevent you from putting up a building or planting trees that would block a neighbor’s view or block sunlight to their solar panels.

Disputing easements
As a property owner, you can’t interfere with the purpose of a legal easement. If you do so, you may be liable for damages and subject to a court order requiring you to stop.

In certain circumstances, an easement can be challenged in court. Easement rights may be void if they are no longer necessary. If you wish to dispute an easement or are concerned that someone is trespassing on your property, talk to an experienced real estate attorney, because laws vary from state to state.

Transferring property: a primer on deeds and titles

A scale house on some forms for a deed to conceptualize on the financial investment.

A property deed is a legal document that transfers title or rights of ownership from one party to another. It’s the official proof of transfer document that gets recorded, usually by your local county government.

A deed should include an indication that it is a deed, a description of the property, the signature of the individual or entity transferring the property, and information on who is taking the title. Every property transfer requires some type of deed.

A deed is the actual legal document that transfers title from one person to another. A title is not a document, but a concept. It says you have legal rights to use the property. When you buy a property, you receive a deed that says you have title to the real estate.

Typically, to purchase a property, your lender will perform a title search, verifying the seller has the legal right to transfer ownership and that there are no liens against the property. The title company ensures the deed is recorded with the appropriate authority.

If a property is not recorded properly, there can be gaps in the title. Such gaps can raise questions about whether the person transferring the property had the legal right to do so and whether you’re in fact the valid owner.

There are several different types of deeds, which vary based on the warranties provided to the grantee (the person receiving the property). Here are two of the most common:

  • Warranty deed: A warranty deed guarantees clear title to a property. It ensures the grantor is the legal owner and has the right to convey the property. This deed also ensures there are no liens or encumbrances on the property other than those listed on it.
  • Quit claim: A quit claim deed transfers interest in the property from one party to another, without guaranteeing the status of the property. It’s typically used to transfer interest between family members, when moving property into a trust, or when there has been a division of property such as in a divorce or business dissolution.

Other special-purpose deeds may be used, including a special warranty deed, a bargain or sale deed, or a grant deed. Whenever transferring property, you should use a real estate attorney to ensure you have the right legal document and protections for your situation.

LGBT homebuyers fear discrimination

Members of the lesbian, gay, bisexual, and transgender community say they fear discrimination when buying a home, according to recent research from Freddie Mac.

Survey respondents who identified as LGBT were largely positive on homeownership, with three-quarters saying they believe home ownership is a good investment. In fact, 72 percent said they want to own a home in the future.

But 46 percent said they fear discrimination in the process. When buying a home, they ranked living in an LGBT-friendly neighborhood as a high priority, just after home price and safety.

LGBT homebuyers may face various forms of discrimination when trying to buy a home. They may encounter a real estate agent who refuses to work with them or they may be told a house is unexpectedly off the market.

The Freddie Mac study found that 49 percent of LGBT households are likely to own a home, lower than the national rate of 64 percent.

Not all jurisdictions offer legal protections for LGBT homebuyers. Housing laws only protect certain classes, varying at the state and local level.

To help LGBT buyers, Trulia launched a tool that helps people identify which protections are available in their state. To see the legal protections available, visit, click on an individual home listing, and scroll down. The “Local Legal Protections” information appears after “Affordability” and before “Price Trends.”

However, this tool may not reflect local protections. Consult an attorney if you have concerns or suspect you’ve experienced discrimination.

This newsletter is designed to keep you up-to-date with changes in the law. For help with these or any other legal issues, please call today. The information in this newsletter is intended solely for your information. It does not constitute legal advice, and it should not be relied on without a discussion of your specific situation with an attorney.