Turnkey Rental Analysis: What to Check Before You Buy
Turnkey rental due diligence on Zillow—what turnkey really means, metrics to verify, expense assumptions, and a pre-offer checklist with Realy underwriting.
Turnkey sellers promise: "Tenant in place, minimal work, cash flow day one." Some deliver. Many sell inflated rent pro formas on mediocre properties. Your job is to underwrite the asset—not the marketing PDF.
What "Turnkey" Actually Means
| Seller claim | Reality to verify |
|---|---|
| Renovated | Scope of work, permits, age of systems |
| Tenant in place | Lease terms, payment history, deposit |
| Property management included | Fee structure, performance, contract |
| Guaranteed cash flow | No such thing—run your numbers |
Turnkey is a convenience premium, not a pass on due diligence.
Metrics to Calculate First (Realy on Zillow)
Pull the listing into Realy and confirm:
Cap Rate = NOI ÷ Purchase Price
Cash-on-Cash = Annual Cash Flow ÷ Total Cash Invested
Monthly Cash Flow = (NOI − Mortgage) ÷ 12
DSCR = NOI ÷ Annual Mortgage
Turnkey screening targets (adjust for market):
| Metric | Typical floor |
|---|---|
| Cap rate | 5–7%+ (market-dependent) |
| Cash-on-cash | 6–8%+ after real expenses |
| DSCR | ≥ 1.20 |
| Monthly CF | Positive after 8% mgmt + vacancy |
See: Good cap rate · Good CoC in 2026.
Assumptions Turnkey Sellers Inflate
Reset these in Realy before trusting CoC:
| Line item | Seller default | Your model |
|---|---|---|
| Rent | Pro forma / best month | Comp average |
| Vacancy | 0% | 5–8% |
| Maintenance | $0 | 5–10% of rent |
| Management | "Included" hidden | 8–10% explicit |
| Insurance | Underestimated | Actual quote |
| CapEx reserve | Ignored | $1,500–3,000/yr older homes |
Realy lets you set vacancy in months, management as % of gross rent, and insurance as $ yearly—matching how serious investors model.
Physical Due Diligence (Still Required)
Turnkey does not eliminate:
- Roof age (insurance and capex)
- HVAC, water heater, foundation
- Plumbing (polybutylene, cast iron)
- Tenant damage behind fresh paint
- Scope of "renovation" (cosmetic vs. structural)
Photos on Zillow lie gently. Inspection does not.
Lease & Tenant Verification
Request before closing:
- Current lease (start/end, rent, escalation)
- 12 months payment history
- Security deposit amount and ledger
- Section 8 / subsidy docs if applicable
- Estoppel certificate if commercial-style lease
If rent in lease ≠ Zillow Rent Zestimate, model the lease in Realy manually.
PM & Turnkey Provider Vetting
- Who manages after sale?
- Fee: % of rent + lease-up + maintenance markup?
- Eviction track record in that market?
- Reviews from other out-of-state owners?
8% management on $1,500 rent = $1,440/yr—enter in Realy assumptions.
Turnkey Pre-Offer Checklist
Financial (Realy)
- CoC meets hurdle with conservative expenses
- Cap rate acceptable vs. local comps
- DSCR ≥ lender requirement
- Loaded cap rate (with closing costs) still works
Operational
- PM contract reviewed
- Lease verified
- Insurance quote obtained
- Tax bill confirmed (TX assessor guide)
Property
- Inspection ordered
- Rent comps support modeled rent
- No red flags in listing history
Analyze Turnkey Listings on Zillow
Open listing → Realy mini panel → set conservative assumptions → Detailed analysis for shareable report.
Related: Out-of-state screening · Value-add analysis