Did should like buy this condo for "house hack" - Norman OK

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Did should like buy this condo for "house hack" - Norman OK

Mbaye Diaw
Specialist · Washington, DC · Member since 2019 · 4 posts · 2 votes

Hello all,

I am a young professional single no kid and I have not been able to sleep since I discovered BiggerPockets and the concept of house hacking !

I tried to push the numbers in excel and I find this to look like a good deal what do you think ? 

This a condo near Oklahoma University, walking/biking distance to my work and campus. I think I am having analysis paralysis because:

1) I am a complete noob, I am afraid of making dumb financial choices 

2) The university of Oklahoma went on a frenzy building an absurd number of new student housing too expensive for many student  (according to This article occupancy rate were 28% !)

3) this property has close to zero appreciation according to Zillow ?!

Am I missing something ? how would you approach your due diligence in this case ?

your advice would be greatly appreciated.

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Rhett TullisBusiness Member
Property Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
7y

stay away from condos .  especially here in okc metro.  many dont like rentals and many will and have passed rules that do not allow rentals when there is a change of ownership.  be sure and read the bylaws carefully and talk to someone on the board with the hoa as well.

[email protected]405-283-6522
Integrity Oklahoma
WebsiteView Page
4Reply
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  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    7y

    I would be cautious about using Zillow for appreciation, but if the occupancy is really that low, I would be concerned. That being said, the first two months on your pro forma are really closing/rehab costs and are capital expenses. It looks like your cash flow per month is $341/month, which is pretty good. But almost all condos have HOA fees and I don't see those on your pro forma. Do you know what the HOA fees are?

    As far as condo investing goes, I would recommend reading my article on the subject: https://www.biggerpockets.com/renewsblog/are-condos-good-investments/  

    Podcast Guest on Show #121
    2Reply
  • Kara C.
    Investor · Norman, OK · Member since 2014 · 20 posts · 13 votes
    7y

    Hey, I'm a local Norman resident, real estate investor, and former condo owner. I'm very familiar with the condo complexes in town. Right off the bat I would say that the rental income seems extremely high and the water costs seem low. And as Andrew mentioned, you didn't include HOA fees, and those can run a couple hundred or more a month. I do believe that the zero/low appreciation assumption is accurate. Condos here have not historically appreciated like single family houses have done. If you're willing to provide a link to the listing information or even just let me know the address or what complex it's located in, I can give more advice.

    2Reply
  • Mbaye Diaw
    OP
    Specialist · Washington, DC · Member since 2019 · 4 posts · 2 votes
    7y

    Hi Andrew and Kara,

    Thanks for looking into this. I think I have been using the wrong vocabulary so I reorganized the expenses (following Andre w's wording in his article). I have also:

    1) decrease the monthly rent to $400 (previously assumed 485 per bed based on add on their website)

    2) rent Income is now #beds x 3 (previously was x4) , thank you Kara for pointing out the rental income seemed high. If I live in one unit of course I am not receiving that Income

    3) increased water to $50 (previously was $32: my current water bill in 2bed 2bath apart in the area)

    My cash flow is now -$160 a month but compared to my current -$1,012 a month rent apartment I would still take it.

    The condo it self is the edge at Norman. 

    1Reply
  • Staci Kou
    Rental Property Investor · Norman, OK · Member since 2017 · 12 posts · 13 votes
    7y

    I stay away from condos, I'd look for a duplex, people in Norman prefer duplexes to condos, and I would run from anything with a condo association. It might be difficult to find an affordable duplex within walking distance to OU, but there are duplexes along Highway 9 (Trails neighborhood area) that I've considered-quick drive or a committed bike rider. I wasn't looking to house hack so I stick to SFH, but for you I'd look at a duplex in a neighborhood with good schools-so you can rent to students or a family. Apartments were overbuilt so rents will be low for a condo, people are willing to pay more for their own yard, even if it is small, and attached garage. I've been investing the past few years, and living, in Norman so that's my humble take, hope it helps. And congrats on getting started! It is a fun journey but you just have to stick to the numbers and be realistic as opposed to hopeful, as well as assume all repairs will cost MUCH more than you anticipate and take that into account. Also, OK revolves around the oil and gas industry, and with gas prices down, I'm assuming housing will take a hit and prices will continue to drop as they have been the past two years, so if you don't find anything now, waiting might be to your benefit. Good luck!

    2Reply
  • Mbaye Diaw
    OP
    Specialist · Washington, DC · Member since 2019 · 4 posts · 2 votes
    7y

    @Staci Kou

    I think you have a good point I am seeing prices dropping daily factor in the over supply in the area, recession signs everywhere in the global economy and oil shocks maybe the smart move is to wait to see how low pricing go to avoid « catching a falling knife ».

    Will expand my search and include duplexes as well just to see what is going on in that market.

    Thanks

    0Reply
  • Rhett TullisBusiness Member
    Property Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
    7y

    stay away from condos .  especially here in okc metro.  many dont like rentals and many will and have passed rules that do not allow rentals when there is a change of ownership.  be sure and read the bylaws carefully and talk to someone on the board with the hoa as well.

    [email protected]405-283-6522
    Integrity Oklahoma
    WebsiteView Page
    4Reply
  • Mbaye Diaw
    OP
    Specialist · Washington, DC · Member since 2019 · 4 posts · 2 votes
    7y

    @Rhett Tullis

    I am ashamed to say this but I was so focused on not paying rent and punching numbers in excel that I completely overlooked my exit strategy. That was going to be a really dumb mistake, that I am sure someone out there made.

    Note to self : don’t focus on CFs only think about the exits strategy as well. I don’t plan to leave forever in the first place i buy.

    Thanks a lot this forum is amazing !

    0Reply
  • Cam Jimmy
    Investor · Anchorage, AK · Member since 2016 · 222 posts · 294 votes
    7y

    @Mbaye Diaw Don't be discouraged, keep reading books, listening to podcasts, reading forum posts, and asking questions... You will get your first deal soon enough. Good luck brother!

    0Reply
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