I am buying a new home for my family and we are wanting to rent out our current 3/2/1 home at 1802 W. 62nd Street, Tulsa, OK 74132. For the locals, it's West Tulsa in Jenks school district. I have the price range in mind ($950) for what I'm asking for monthly, but I was wondering if anyone had any tips on deposits, pet deposits, laws I should read up on. Also, I am starting out this new real estate journey and wanted to get into buy and hold properties. What are some good reads? I have been using the podcasts and Real Estate Investing For Dummies as a reference and I have the The Book on Investing In Real Estate with No (and Low) Money Down: Real Life Strategies for Investing in Real Estate Using Other People's Money by Brandon Turner and The Book on Rental Property Investing: How to Create Wealth and Passive Income Through Intelligent Buy & Hold Real Estate Investing! by Brandon R Turner on my Amazon list, but I don't know which one to buy first. Any help would be greatly appreciated. Thanks in advance!
Hi Damian. I'm born and raised in Tulsa, so I am very familiar with the metro. Most of my properties are in the suburbs (South Jenks, BA, Owasso, Bixby) and are renting for $1200+/mo. To answer your questions, I typically use one month rental rate as the house deposit. Sometimes I bump it a little higher so that tenants don't assume that the deposit is the last months rent. As for pets, I started out with a $250/pet refundable pet deposit and that was a disaster, so I changed it to a $250/pet fee (non-refundable) and that didn't work. Currently I am at $25/pet/month and surprisingly nobody has had any issues with it. That results in higher rental rates above market rate which has been nice.
With respect to laws, google the "Oklahoma Landlord Tenant Act". That has most of the information you will need. Lease templates and other documentation/information can also be found at the Oklahoma Real Estate Commissions website. As for reads, I would honestly surf this site. Its free and has everything you need in my opinion. The biggest hurdle I see is that people dont take the step and dive in. If you are thorough and active, the risk on losing money is low. best of luck!
Damian, I agree with everything that Callum posted. Like Callum, I have all but one of my rentals in the burbs. The lease is your friend and I explain to the tenants that it is very thorough to protect both parties. I review the lease in detail with them and also provide a move-in letter that in a non-legal manner lets them know what to expect from us and what we expect from them - and what the boundaries are. They must sign both the lease and the move-in letter prior to moving in!
The other thing I've learned over the years is to handle ALL issues immediately. I encourage my tenants to call me if they have any concerns about repairs - no matter how small. It's easier and much cheaper in long run to handle small issues before they can become big issues. And, you will be rewarded with loyalty if you provide superior customer service. Believe me, turnover will drain your profitability - and keeping loyal tenants will dramatically reduce turnover.
Regarding getting out in front of issues, if you suspect a tenant is not living up to their end of the lease, investigate it and deal with it quickly. Do not let a questionable tenant linger! There are ways to get rid of them short of eviction. But, should you need to evict, do it swiftly but kindly to avoid damage to property.
But, if you screen the tenants and keep an eye on things, your rate of tenant issues should be pretty low.
Best of luck.
BTW Callum, I like your idea of adding $25 per month for pets.. I may need to try that out. I currently do a $250 non-refundable pet fee. Have ever only had one issue with pet damage but it required totally replacing the carpet in the whole house - so the $250 did not begin to cover it.
Have you ever not had a tenant you wanted to rent from you not do so b/c of the monthly pet fee?
Thanks guys! Printed the Landlord Tenant Act papers. The pet fee idea is awesome!!! Definitely gonna have to do that one. I know I'm lower than most homes in my area. They're all around $1,100-$1,200/month, but at $950 I'll be making $270/month more than the mortgage and I figure I'll raise the rent a little every year, as costs and taxes go up. Plus, the only comps I had to go by all had a 2-car garage as opposed to my 1-car and 400+ more square feet than I have. How long are you doing your leases for? @John Kunick and @Callum K.
The longest starting lease is a one-year term.
Actually, I've done a couple of six-month "trial" leases if I'm not sure about a tenant. In such cases, I have them sign a form outlining that this is a "probationary" lease due to concerns and outline exactly what they must do over the six months in order for it to convert to a one-year lease. In all but one of these trial leases, we were able to convert to longer term leases. One of my best and longest tenants started out this way. On the one that wasn't working out, I just simply asked them to leave and explained exactly why it wasn't working out - and they left without any hard feelings.
If I find a tenant that is really good, I then offer a two-year extension with either no or minimal rent increase. I have done a three year extension one time and am glad. I only offer longer-term leases to valued tenants. If I'm on fence about a tenant, I ask them what they think they can do better and also what they expect for us to improve. I find this open dialogue will weed out questionable tenants.
@John Kunick , I was in the same boat as you were. I had a carpet completely destroyed by several dogs and it didn't cover it and for my longer term renters, the $250/pet didn't go very far, so I switched to the monthly pet fee because most of the apartments in town do that. It has been a tremendous success. I can't think of anyone griping about the pet fee, but I have had some people try to circumvent the fee. The biggest hurdle I deal with now is when people tell me they got rid of the pet and want the rent reduced. I take them for their word, but when I catch or find out that it wasn't the case, I have a heart to heart with them. Threatening or jeopardizing the relationship doesn't achieve anything imo.
@Damian Young I go for the longest leases possible. If I can squeeze a 2 year lease, I go for it. Now I try to get close to a 2 year lease while making sure the lease termination ends in the spring or end of summer. Everyone tells me the summer is the best time to rent, but all of my data tells me otherwise. Also, people try to get discounts by signing two year leases but I tell them that what they are doing is locking in the rate for two years. This is Oklahoma, so insurance ALWAYS Increases and taxes never go down. Whether you own or rent, if they plan to be there for a while, its better to lock in the rate now. People don't ever dispute that argument.
Hi guys: new to this site and thanks for the interesting info from all. I am an investor in the Denver area but I am considering spreading out to Tulsa possibly(grew up and still have family there). I was curious - @Callum K and @John Kunick- what are your yearly percentages on properties you reference?
I know there are a lot of equations for this, but I use the simple: monthly rent minus expenses times 12 divided by purchase price(with any fix up costs added in). Are you guys consistently getting 10% or higher? Tough to get out here in the Mile High city!
Yes, I routinely get 15%+. Jeff, I have a daughter that lives in Denver and she has tried to get me to buy rentals out there. But, I can't get nearly the same ROI out there. The housing market in Denver appears to have sky-rocketed so the people that seem to be do really well are those that have owned rentals for many years and have seen their rents just go up and up.
I would suggest Brandon's book on land lording first. It is a great book and will help you with many of the problems and questions you will have for your immediate rental situation.
You can get it in BiggerPockets in printed, digital and audio book.
Then read his rental property investing book.
@Jeff Santee , Yes, the returns I have been getting started around 25-30% in the midst of the financial crises and has come down to the 12-15% now. The problem I am having is that it is a lot harder to find houses and I think the rental market has been saturated with builders dumping houses onto the rental market as well. I am also meeting people running out of state owned portfolios that are in the $5M+ range which I think is impacting the Supply/Demand curve.
I've just moved to BA from the Denver area, have three rentals back in Colorado, and am studying the landscape before diving in. Gonna be living in spreadsheet city for a while.
@Jeff Santee I used to live in Louisville. Say hello to everyone for me. Just curious what expenses you include in your simple formula? Are you just thinking monthly cash flow like utilities, management fees, etc, or are you doing the deep dive into taxes, insurance, capex, et al?
@Callum K. and @John Kunick. Thanks fellas!!! All worked out. Got the place rented for $925/month with pet fee. Deposit and 6 months rent up front with 1 year lease. I stand to make $245/month as of right now. Will up the rent to $975-$1,000 this time next year depending on the market at the time. So far, so good!
@Damian Young congrats! Glad it worked out for you!
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