Oklahoma City Cap rate

5 Replies

Salaam Walekum, @Emad Fawzy !  After many years of asking the same question over and over again here is what I'm learned:

Single family: cap rates are useless in single family in my opinion. You can cover your debt on many investments in Oklahoma City and then cashflow to varying degrees (from almost nothing to an extreme amount) based on location, type of single family home purchased, and tenant base. In general, the higher the cashflow you're getting the lower the appreciation.

Multifamily: you'll see lower B class to mid C class properties selling at anything between 6.4% and 8.5% cap rate. 8.5% is great, and paying 6.4% for these types of properties seems insane to me and well within the "speculation" zone of local real estate. New construction retail properties with Class A construction are appraising between 5% and 6.25%, so paying anything close for degraded and wearing out properties is probably not a great idea.

Larger multifamily properties that have recently been repositioned are selling between 5.75% and 6.75%.  

As with all real estate, multifamily properties in OKC vary widely in value based on . . . location, location, and location.

Happy to help with any and all things OKC!

Thanks will

Basically as I am overseas my finance options are limited , so for a small purchase , under 100 k it will be cash.

For larger purchases 100-300 K will be cash first then refinance , but seems the best I can get is. refianace at 40% equity.

so Cash flow is important and protecting the capital is equally important.

@Emad Fawzy We work with multiple international clients and LTV on a refinance (especially after a value add project) is always a challenge for them. It takes some work, but typically the best option is a Non QM loan product on the secondary market through one of the non institutional lenders. Most of these allow foreign national borrowers and fall into the 65-75% LTV range.

Also, I'll second what @Will Fraser says. CAP rate on SFR is pretty useless unless it's calculated at the portfolio level across 10+ properties.

Don't forget that you have to house people in the investments you are buying. If you don't have enough cash flow to properly maintain your property the city will come after you. There is more and more citizens pushed to get slumlords out of the city. This works across the board don't forget when you invest in houses you invest in people and cities and with that comes responsibility. Flow enough cash to properly maintain your property or do not buy it.