I own properties on both the OKC and Tulsa markets. I also manage about 600 doors in these markets. Here are a few of the problems I run into with out of state investors.
1. I can get 2% rule in Oklahoma. Yes you can but the question is do you really want to be in that market. You almost have to deal with the local housing authorities and accept vouchers. This is fine if that is your target market. They typically pay more. The rub is we have had to pick up the pieces with OSS investors thinking they are getting a great deal. In fact they are often dealing with people doing a very poor quality, low end renovation and selling it as turn key. They then have a house that should rent for $800 per month but they get $1100 per month with the voucher. These houses can be bought for $70-80K turn key. The problem is they are not in good areas. The house will be worth the same or less in 5 years. On top of this they bought a house with a sub par renovation. Turn over cost on these houses tend to be double or triple that of a typical rental and occur almost annually.
2. The next call it get is "I want to buy a house that needs some renovation and do the BRRRR method" I think the BRRRR method is great....if you are there every day and managing the renovation yourself. If you are paying an OSS contractor you can still get a great reno but is going to cost you. Then you have to have someone checking in on them. Is that your realtor or PM? You will need to pay them to do this as well. This is how this usually works. House ARV is advertised as $130K. Purchase is $75K and needs $30K renovation. Well the $30K always ends up 25% higher because you are not here to manage the renovation and ARV ends up at $120K. Now you have a $120K house that you are all in at $115K that rents for $1000 per month. Still not a bad deal but you spent 90-120 days to get it there and in reality you could have bought a rent ready home on the mls with the same spread.
3. Next call "Can you manage and help me get this house leased. My realtor said it would rent for $1150 per month" Well your realtor has clearly never rented a house in that particular neighborhood because the rent will be $950-$1000 No matter who you are using to buy the house just call a PM that has no commission on the line if you buy that house and ask them the rent range for that neighborhood.
I love Oklahoma and I love OSS investors. Just don't come in with blinders covering your eyes. Do the due diligence. I think you can buy and average home in Oklahoma and significantly out perform other markets especially any state touching the Pacific Ocean. Good luck and welcome to Oklahoma. Just remember just like where you live...if it is way to good to be true, well you know.
OKC is absolutely great cashflow market. However I haven’t seen much natural appreciation; prices 10 years ago and now are almost the same on some properties. Will this trend change for the next 10 years?
Send some of those leftover deals my way! I’m looking to get started investing in okc immediately!!
Glad to hear such great reviews about OKC from people actually doing it!
I’m based in Tulsa Area, live in Broken Arrow. Get some leads in OKC Area, but mainly Northeastern Oklahoma now. When I first started I marketed more statewide, and would buy anywhere the numbers were good. Did some deals in Norman, OKC, Edmond, and up in Perry, & Blackwell. I pretty much bought anywhere along I-35 from NORMAN on the Southend all the way to WICHITA Area on the Northend, and anywhere East of I-35, or North of I-40. Now I’ve seller financed all my properties outside of my core area, except two rentals in Perry. My main market now is within three counties: Tulsa County, Wagoner County, & Muskogee. I usually just wholesale any good deals outside of that core target market.
Hey Phil, I know first hand they enjoy talking with you about real estate and your goals before you are ready to pull the trigger. I still talk with some of the table people on a weekly basis just running ideas back and forth. Ive bought several properties since my work with table (I'm blessed to have a solid network up in Enid, OK), and they are just as happy to talk about real estate whether it's their deal or not.
The listed price was actually $390K...$20K difference from the purchase price. I started at $360K, they dropped their price to $385K, and we went back and forth until landing on $380K if they paid all closing costs. We move forward and I get a home inspection that mentions the roof was worn way down for what it should be. I hired a roofing contractor to take a look and he said the whole thing needs to be replaced in 3-4 years due to hail and wind damage and not the best install job either.
After making the seller aware of this they used insurance to replace the whole roof because I said I wouldn't buy it otherwise. $17K later the job was done. The appraisal came back to value the property at $370,000 so I agreed to that paying my own closing costs.
The whole project was turnkey. I've been in California for several months and bought it while out-of-state. Each side rents for $1500/mo.
not to rain on your parade, but $3k gross on $370k purchase with 20% down is skinny (are you managing this yourself?). For something that was built in 2016 and already had a re-roof + sloppy install mention, i'd be questioning the rest of the structure as well.
Truth!! Oklahoma prices are great. Your money goes so much further here. All my rentals are 2% or better and I have more deals then I can buy myself. I literally cherry pick and pass up a lot of deals that would be better then west coast numbers.
I agree - I've looked elsewhere and have found Tulsa-area to be fantastic cash flow. Of course there are better appreciation markets if that's what you're looking for.
It's so cool to hear about all of the cool stuff people are investing in in the OKC area! I've been here for about 5 years and I think it's a pretty cool place. :)
On your Lake Hefner property it's hard to give you advice without knowing your numbers. Flips can do well over there, but it's also a desirable area for rentals. I would probably deter you from airbnb outside of the urban core unless it has a cool lake view or you plan to cater specifically to traveling medical professionals. There are several hospitals that are reasonably close to the area and I know several people that do longer short rentals that cater to the traveling medical professional crowd.
I'm a buy and hold kind of person. At those numbers, I would keep it as a buy and hold rental.
If you were looking at a $50k+ profit, then I would considering selling. 30k before taxes, realtor fees, closing costs, etc isn't worth getting rid of a cash flowing rental to me.
The listed price was actually $390K...$20K difference from the purchase price. I started at $360K, they dropped their price to $385K, and we went back and forth until landing on $380K if they paid all closing costs. We move forward and I get a home inspection that mentions the roof was worn way down for what it should be. I hired a roofing contractor to take a look and he said the whole thing needs to be replaced in 3-4 years due to hail and wind damage and not the best install job either.
After making the seller aware of this they used insurance to replace the whole roof because I said I wouldn't buy it otherwise. $17K later the job was done. The appraisal came back to value the property at $370,000 so I agreed to that paying my own closing costs.
The whole project was turnkey. I've been in California for several months and bought it while out-of-state. Each side rents for $1500/mo.
not to rain on your parade, but $3k gross on $370k purchase with 20% down is skinny (are you managing this yourself?). For something that was built in 2016 and already had a re-roof + sloppy install mention, i'd be questioning the rest of the structure as well.
You're absolutely right. Thankfully, the rest of the property checked out perfectly. I just needed a place to park my money.
I just logged into search the same thing! We have rentals NW of OKC. Do you live here? I’d love to meet up at some point. Currently rehabbing one right now.
I’m also looking to connect with BP peeps in Oklahoma. In fact, I just left the Lowe’s in Yukon! I’m from Oklahoma and am working on rehabbing some rentals as we speak.
@Alex Waugh thanks I just joined BP and reading this book now. I'm still learning and this site contains tremendous amount of info for newbie investor like myself. I'm about to put my property in Seattle WA on the market and with the profit I would like to start investing in real estate.
I am also looking into getting into rehabbing and investing in Oklahoma, I welcome meeting new investors in that market, I am in the Dallas are currently. What do you all think of Durant as an area for rental?
A big thank you to all who have posted. I’m new to BP and currently have no investment real estate except for personal residence. I live in the Oklahoma City metro area and appreciate all of the insight on my local area. It has been a life time dream of mine to invest in real estate. Realistically I’m probably two years out from buying my first investment property. In the mean time, I’m trying to learn all I can and formulate a solid investing plan. Thanks again for the great discussion and helpful hints.
Jai Reddy, I would love to have a discussion with you. I literally just signed up on this site 5
@ Jai Reddy and anyone else in OK. I just signed up on this site at the recommendation of a friend because I needed to do some research. I'm thinking of doing a 1031 and buying a property in Edmond. I'd like to have a discussion to gain some information on investing there.
How many people are doing near 2% on their rentals in Tulsa or OKC? I'm looking to but but initially wasn't too sure about the price to rent ratios. Many thanks!