Oklahoma City - Cash Flow Being Experienced

6 Replies

Hey there BiggerPockets Community!

Hoping to find some good information on Oklahoma City rent. Can anyone here tell me what kind of cash flow they are seeing for buy and holds in OKC? To my knowledge, it is a good cash flow market with decent appreciation. I am not familiar with taxes or insurance of the area, and I don't know the tenant quality of the B or C class areas in the city that would affect monthly repair costs. To be more specific, assumptions below:

Property Value: $180,000

B or C Class Area

Mortgage on the property of $135,000 (Either refinanced through BRRR or Retail Purchase Through Traditional Lending)

Managed by property management company

Net Cash Flow: ??

@Zac Celli Your property value will vary based on the area of the city, obviously.  Most C-class areas will be much less than $180k; mine are in the $85k-$120k range, and all are probably C/C- neighborhoods (and most are Sec 8 tenants).  Insurance rates are higher than you may expect, because of the risk of hail and tornadoes; there are previous posts (including one I made myself) asking for recommended insurers.  You can pull up some random properties in the areas you're looking to see tax rates, just check the county assessor's website. 

Cash flow is usually an apples-to-oranges comparison... depends on what you define as "cash flow". Some people just take their monthly gross rent and subtract PM fee (if applicable) and PITI, while others (including me) also set money aside for reserves/maintenance/CapEx/vacancy. Keep in mind a pricey maintenance item or repair in a single month could easily wipe out that month's cash flow, and quite possibly more (hence why many of us set a portion aside every month for when those come up). After accounting for everything, I look for a minimum of $150/mo, hopefully closer to $200 or $250 in cash flow (pro forma).

@Pete M. well said, sir!  I also set aside some preventative funds before "distributing" cashflow, as this is going to give me (and my partners) the best expectations and most stability in our investments and earnings.

However, most people who are advertising to woo clients are not doing that because they would rather promise you $400+ in monthly cashflow per door and then experience $200/month in average "Cash calls".  Let's not be woo'd by poo.  Poo aught not woo.  

Laughingly yours,

You've already got some great info on here, but I thought I would add in a little bit of my personal experience. Cash flow is super specific to each person and how they run their numbers. I have some investors that want to budget 50% of gross rents to "expenses" and they do cashflow based off that, while other investors just calculate rent over mortgage payment as "cash flow." I have had several investors purchase homes as rentals in this price point, so I can give you some example deals and you can calculate your numbers. 

For $180k you can get a new/newer construction home with upgraded finishes and highly rated schools.  Depending on the specific neighborhood, time of year, leasing agent, etc these homes are renting out from $1250-$1600/month. I had an investor buy a new construction home in Yukon for $181k which rented for $1395/month. A similar style home was purchased by another investor last month for $179k and is currently up for lease at $1295/month. Similar homes in the neighborhood were leasing out for $1600/month in the Spring and Summer months. 

Taxes typically run between 1.0-1.3% for the OKC metro area. It will depend a little bit on the specific area, but that's a good ball park. When I'm doing rough numbers I will ball-park taxes at $1/sq ft per year. Typically you will get it for less especially if the home is new/newer construction. But that will provide a little buffer as you run your cashflow numbers. 

The property managers in this area run between 8-10% of collected rents/month unless you go with someone charging a flat fee. 

Hopefully that helps! 

Updated almost 2 years ago

*Updated. Taxes run off assessor's appraised price. That's the 1-1.3% of purchase price per year. The insurance is what I budget at $1/sq ft per year.

@Zac Celli As a general rule, we expect around $200 per SFR (net) after a value-add/BRRRR project, with an average ARV of $87k. Keep in mind, at a value of 180K, you may not be much higher than that on your net. That's definitely on the higher end for a SFR here.

Hey @Zac Celli

At that price point for a single-family home your cash flow is going tobe low. 180k will be an A class property and it just eats into returns. You will likely have the comfort of new major mechanicals and lower maintenance, but I'd guess you'll be close to $150/month. There are so many variables that play into this of course, so huge generalization here! 

A duplex at the price point will yield better. However, duplexes that are actually good deals are hard to find.

After ongoing maintenance, insurance, taxes, vacancy, and your mortgage payment you're likely looking at about 100 - 150 per door per month. 

I like to stay at under 120k. It's easier to get rent rates at 1% rent to vale ratio when you stay under that!