Solo 401k Turnkey Rental Pros and Cons

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No one cares about your money more than you – nor should they!

You’ve heard the phrase “60 is the new 40.” That’s great for your health and energy levels. However, when it comes to investing on Wall Street for your retirement, the more appropriate phrase is “72 is the new 65.” For decades, investing your retirement account on Wall Street has been like watching an ice cube melt in July.

However, you can take full control of your retirement by moving off Wall Street with a Solo 401k. A Solo 401k turnkey rental is a truly passive income vehicle you may want to consider. Real estate has long been a preferred investment because the “average Joe” understands it. It’s also backed by physical property – not paper stock certificates.

There are many types of real estate investments. Others are house flipping, tax liens, and commercial properties. Of course, rental houses belong on the list and turnkey rental houses make an ideal investment to consider for passive income.

What is a Solo 401k Turnkey Rental?

Investors wanting highly secure and high yield investments favor turnkey rentals. These are rehabbed houses with a proven renter in place the first day. Turnkey rentals are a 100% passive investment. With a good deal, you could earn in the neighborhood of 9% each year. This return is after accounting for property management. It’s also before appreciation.

Defining a Solo 401k turnkey rental varies. At its most basic, a renter is in place or the house is ready to rent. No repairs or improvements needed. Recent rehabbing is common.

Most investors want a proven renter on a long term lease. Also professionals handling daily activities, maintenance, and future tenants. The mix is a fully hands free asset.

You may want to consider going with a rehabbed and already rented house for your Solo 401k turnkey rental. Also, a one to three year warrantee against major repairs even for a fully rehabbed house.

What are the Risks With a Turnkey Rental?

Most people will continue burying their heads in the sand on Wall Street. Sometime after the age of 72, these people will retire on whatever leftovers Wall Street gives them. Instead, turnkey rentals are lower risk for some investors. This tangible asset may increase in value as real estate has a long history of doing. With the right deal, it can also provide steady income.

Still, even a low risk and high reward investment isn’t completely without some risk. Here are the common risks that can be potentially reduced.

  1. Property could depreciate in value. You lower the risk by investing at a location with a long history of value increases. Also through proper maintenance.
  2. The property could have a vacancy. You lower the risk by picking a location with a high occupancy rate and history of placing proven tenants.
  3. It could require a major repair. Lower the risk short term with a warrantee. Long term, a reserve fund protects profits.
  4. It could demand more of your time than you want. This is the reason for a property management company. If one doesn’t work out, there is plenty of competition for your business.

What are the Rewards With a Turnkey Rental?

This where your Solo 401k turnkey rental shines.

  1. Real estate is all about location. A well managed turnkey rental enables you to invest nationally in the most profitable and low risk locations.
  2. These rentals deliver profits starting on day 1.
  3. Professional management has several upsides.
    1. Market knowledge about schools, crime, why one block is better than another, and much more.
    2. A process to find motivated sellers and proven renters.
    3. Management companies specialized in turnkey rentals use business facts. This takes the emotions and gut hunches out of your purchase decision.
    4. In-house staff takes care of minor problems like running toilets. Management companies have discount contracts for large repairs.
    5. They have experience dealing with renters and contractors.
  4. Dependable passive income for your retirement years.
  5. Slow to feel the effects of a slowing economy.
  6. Possibly the easiest and safest way your solo 401k can invest in real estate.

Have questions about turnkey investing with a retirement account? Solo 401K experts at Nabers Group will help you get your retirement funds into your control, where they belong.

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