Anyone buying rental properties in Oklahoma ?
Nesconset, NY · Member since 2016 · 25 posts · 11 votes
Anyone buying rental properties in Oklahoma ?
Most Popular Reply
Tracy StreichPro Member
Real Estate Broker · Tulsa- OKC Oklahoma · Member since 2017 · 868 posts · 801 votesI 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.
146 Replies
- 6yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Dorothy Monette, Looks like your friends recommendation to check out Bigger Pockets was spot on! 4 pages of OK investors in 4 days - Oklahoma is ... OK :). like most cash flow markets, OK isn't the greatest for appreciation. But depending on where you're coming from appreciation has run it's course and it's time to be looking for cash flow ports ahead of any kind of a storm. I've had several 1031 clients going into and out of OK this year. More out than in but none of them were doing it because there was anything wrong with their properties performance. It was all lifestyle decisions to relocate. Which make me wonder about Sooner land. But being from Kansas I can't throw stones!. @Guy Yoes, you can speak to this if you can take a break from fishing. What do you think about the OK market?
The 1031 Investor5140 Reviews - Member since 2020 · 20 posts · 8 votes6y
@Dave Foster, thanks for the comment. I'm so new I'm still trying to learn navigating this site. I haven't decided on a location to invest. I am selling 2 properties here in CA and looking at Edmond OK and the surrounding Dallas area. One of my tenants just gave notice, so it accelerated what I expected to do in June or July. I need to shop next month.
- Member since 2020 · 1 post · 0 votes6y
@Son Tran
You have 7 properties in Oklahoma?
@Dorothy Monette
PM me and we can talk for sure. Want to know what made you pick Edmond?
Yes, I’ve not seen this long a discussion regarding Oklahoma in a while. The 1031 outflow @Dave Foster mentions is good insight.
He is consulted for 1031 and so gets a valuable perspective we do not. Similarly, CPAs and tax preparers develop insight into which professions/investments generate good returns because they are privy to other investors financial returns.
- 6yChris ClothierBusiness MemberRental Property Investor · memphis, TN · Member since 2009 · 2k+ posts · 3k+ votes
@Anthony pe
@Anthony Petrozzellaundefined
We love the Oklahoma market. We started specifically investing in the greater Oklahoma City area about 18 months ago and Tulsa about 9 months ago. We have roughly 130 units under management in Oklahoma City and another 80 in Tulsa.
I personally love this market because of their efforts to diversify the economy away from agriculture and energy and into other sectors. It has a strong aerospace, healthcare and IT presence and an economic output that has nearly doubled in the last 15 years. Being a capital city, roughly 25% of the jobs in ok. city are government or military, which is good thing for relative stability. Its' proximity to the rest of the country is a boon for economic growth as well so I am a big fan of those two cities and the state in general.
I think you can already see from the other responses that this a great market. Best of luck!
Thanks for the tag Dave!
FYI, Dave is the 1031 GUY!
I moved my business from Tulsa to Branson last year and his knowledge of deferring costs and building equity, allowed me to literally double my rentals.
I have lived/worked/owned property in Tulsa area, OKC area and Enid. They are all nice places to live and are very affordable compared to 90% of other towns their size. That said, If you don't live there or have spent considerable time there, think twice before jumping into the market. It appears that Oklahoma is the new REI utopia.
Houses are cheap/ rent is high/ appreciation is +3%/ and so on. What could go wrong?
Reading these comments hurts my heart. I don't want to say things about REI in Oklahoma that might upset someone... So let me tell you a real life Oklahoma story that I personally experienced.
In 1978 during a national oil crisis, an oil man in Oklahoma discovered a way to get more oil out of a well. By 1979, Okla. was booming. Thousand of people moved there to find great paying jobs. Hotels were full 24/7 They rented rooms for 12 hours instead of 24 (honest). People brought in campers and rented them for $200 a week. By 1980, towns like Enid, Glenpool (Tulsa area) Guthrie (okc area) were exploding with residential and commercial growth. The price of any property quickly doubled in value. The entire state was full of investors, speculators and fortune seekers. Everyone was rushing to join the party and cash in. (Think California gold rush)
In 1982 the oil field went bust. Overnight the towns dried up. Before the end of 1982 1/5 of the jobs in the state disappeared (OIl workers plus business that provided services : hotels, stores, restaurants, etc). It was a heavy financial blow to the state and towns big and small.
But the ones who got crushed were the fortune seekers and the late comers. Out of state investors built a 60 room motel in a town of 1200 people ( it closed within 2 years). A house (in Enid) that was renting for 1200 a month in 1981 sold for 90,000 and by 1983 sold for 47000 and rented for 450.00 ( know the guy who sold it in "81). There was even a story of someone who sold an oil well to 3 different investors that he didn't even own!
What I learned having lived through that time and working in the oil field myself is:
The people who made the most money did it by investing (using) other people's money and not their own.
They made it appear very simple and easy to get rich using their "risk" free model.
They were willing to modify the terms to get you qualified.
They always had a long list of satisfied customers with great reviews.
They use the term "Turn Key"!
So now that you have read my post and think i'm a total jerk about investing in Oklahoma, I'm really not. Lived there most of my life and it's a great place. I did very well buying and selling properties there. The caveat is that I know the area. All of my properties were within 10 miles of my house. I drove by every week. I did the repairs, vetted renters and was available when needed. I understood the local market and what houses should cost and fair rents. I AM AN ACTIVE INVESTOR!
When someone says "I own 10 houses in three different states" it really blows my mind. Have you actually been in those houses? If so. how often? Do you really know the entity managing them for you?
I do have out of state investments. They are first position notes. They return 9% interest only per month. I don't pay for insurance, repairs, management fees, taxes or deal with tenants. The multi-family properties I own and manage are close to where I live. I am there at least 3 days a week overseeing the operations. I know all the tenants by name and I have never had to evict a tenant. I have never had a property damaged or a tenant skip out on me. And I have been doing this for a long time! I feel I get out of my properties what I put into them. To own $500,000 in property 1200 miles away and rely on a company someone I met online recommended....
I wish everyone the best in your out of state investments. I just hope you're not too late to the party.
- 6yRhett TullisBusiness MemberProperty Manager · Oklahoma City, OK · Member since 2013 · 1k+ posts · 617 votes
@Guy Yoes good comparison to the oil bust. not sure we will go there again but prices certainly are up quite a bit and i fear the "best" time to buy has been missed by us all. I drive by areas i should have bought and could have bought while streets in a few years back and wish I had.
Dont get me wrong there is still money to be made but all the "out of towners" are certainly skewing things a bit for us locals. I also see lots of folks on here pushing our market with unrealistic expectations and estimates. There is money to be made still and always will be but do not be lulled into thinking it is easy or fast here in okc. This is a LONG TERM buy and hold market and you will have dry months and even years sometimes depending on the type of property you buy, Just ask the guy that bought a duplex a few months back with a realtor and just had to spend 7k ripping up the slab to redo all the drain lines under the house.
- Real Estate Agent · Tulsa, OK · Member since 2016 · 88 posts · 72 votes6y
Wow, this will probably make some would be investors heads spin! Lots of information and most of it is really spot on. I agree with Guy, for the most part. It is way better to invest in an area you know. I talk to lots of investors who like what they are hearing about OK real estate, but love it when I hear they have at least been here once or twice. Oklahoma tends to weather the ups and downs much better than other markets. We don't have the crazy high price inflation, but also don't have the dramatic loss of value either. Cash flow is decent, and properties are reasonable priced compared to most other parts of the country. Thanks to Bigger Pockets, the bargains are a little harder to find, but that is to be expected, once the word is out on a good market.
Originally posted by @Guy Yoes:
Thanks for the tag Dave!
FYI, Dave is the 1031 GUY!
I moved my business from Tulsa to Branson last year and his knowledge of deferring costs and building equity, allowed me to literally double my rentals.
I have lived/worked/owned property in Tulsa area, OKC area and Enid. They are all nice places to live and are very affordable compared to 90% of other towns their size. That said, If you don't live there or have spent considerable time there, think twice before jumping into the market. It appears that Oklahoma is the new REI utopia.
Houses are cheap/ rent is high/ appreciation is +3%/ and so on. What could go wrong?
Reading these comments hurts my heart. I don't want to say things about REI in Oklahoma that might upset someone... So let me tell you a real life Oklahoma story that I personally experienced.
In 1978 during a national oil crisis, an oil man in Oklahoma discovered a way to get more oil out of a well. By 1979, Okla. was booming. Thousand of people moved there to find great paying jobs. Hotels were full 24/7 They rented rooms for 12 hours instead of 24 (honest). People brought in campers and rented them for $200 a week. By 1980, towns like Enid, Glenpool (Tulsa area) Guthrie (okc area) were exploding with residential and commercial growth. The price of any property quickly doubled in value. The entire state was full of investors, speculators and fortune seekers. Everyone was rushing to join the party and cash in. (Think California gold rush)
In 1982 the oil field went bust. Overnight the towns dried up. Before the end of 1982 1/5 of the jobs in the state disappeared (OIl workers plus business that provided services : hotels, stores, restaurants, etc). It was a heavy financial blow to the state and towns big and small.
But the ones who got crushed were the fortune seekers and the late comers. Out of state investors built a 60 room motel in a town of 1200 people ( it closed within 2 years). A house (in Enid) that was renting for 1200 a month in 1981 sold for 90,000 and by 1983 sold for 47000 and rented for 450.00 ( know the guy who sold it in "81). There was even a story of someone who sold an oil well to 3 different investors that he didn't even own!
What I learned having lived through that time and working in the oil field myself is:
The people who made the most money did it by investing (using) other people's money and not their own.
They made it appear very simple and easy to get rich using their "risk" free model.
They were willing to modify the terms to get you qualified.
They always had a long list of satisfied customers with great reviews.
They use the term "Turn Key"!
So now that you have read my post and think i'm a total jerk about investing in Oklahoma, I'm really not. Lived there most of my life and it's a great place. I did very well buying and selling properties there. The caveat is that I know the area. All of my properties were within 10 miles of my house. I drove by every week. I did the repairs, vetted renters and was available when needed. I understood the local market and what houses should cost and fair rents. I AM AN ACTIVE INVESTOR!
When someone says "I own 10 houses in three different states" it really blows my mind. Have you actually been in those houses? If so. how often? Do you really know the entity managing them for you?
I do have out of state investments. They are first position notes. They return 9% interest only per month. I don't pay for insurance, repairs, management fees, taxes or deal with tenants. The multi-family properties I own and manage are close to where I live. I am there at least 3 days a week overseeing the operations. I know all the tenants by name and I have never had to evict a tenant. I have never had a property damaged or a tenant skip out on me. And I have been doing this for a long time! I feel I get out of my properties what I put into them. To own $500,000 in property 1200 miles away and rely on a company someone I met online recommended....
I wish everyone the best in your out of state investments. I just hope you're not too late to the party.
Good history lesson, for sure. It's crazy to think that a company like Chesapeake, which was the place to be not even 10 years ago, is now a penny stock on the verge of BK. Devon appears to be doing somewhat better, but had massive layoffs a few years ago (I was worried how this would affect the economy, but we've pulled thru) and is continuously leaning itself out (I don't think that tower is even half occupied). Sandridge had gone thru one BK already. Continental is doing ok. Overall, though, it feels like we're not so energy space dependent anymore, like you've mentioned. Aerospace has been a huge boon, especially for Midwest City. There is definitely a lot more work to be done (we have not seen Dallas-like growth yet) to keep attracting more business here.
- Property Manager · Edmond, OK · Member since 2019 · 20 posts · 21 votes6y
Originally posted by @Anusone Saenphimmachak:
@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'm glad I could help! Keep hustling.
This is an excellent chain. So glad it got started. Is there any interest in starting an email chain of OKC investors where we can bounce ideas and thoughts off each other, analyze deals, set up calls and generally be a resource for each other? If so, please send me your email and I will start the group.
- Investor · CA · Member since 2019 · 27 posts · 17 votes6y
@Austin Culver
I’m in the process of acquiring a 79 unit right outside of Shawnee , was there a few weeks ago for inspections. Got some great info on the ground would be happy to share.
- New to Real Estate · Mcloud, OK · Member since 2020 · 7 posts · 5 votes6y
@Sara S Jung
That would be great!
What @Guy Yoes describes, as an 80s to 90s oil boom and then bust in Oklahoma has surely happened even in the last decade 2001-2017. I was laid off from Devon Energy in 2015, so I experienced the most recent bust.
However, the city has been growing in areas outside of oil and gas, in fact, oil and gas is as low as can be fathomed, I do no think there is ever going to be another boom in oil (supply meets demand and can even out pace it.
So, inspite of being in an oil bust since 2015, the city has been growing exponentially, still hidden behind the shadows of the growth in Dallas.
I was a software engineer by trade and Ive seen more tech jobs (and new tech companies) here. Paycom is an Oklahoma City company, recently added to the S&P 500.
Bottomline, OKC doesnt see high appreciation because the greed isn’t there yet. There is plenty of land adjoining the city where new neighborhoods are being built and selling well. Taxes are lower, land is relatively cheap but hazard insurance is relatively high.
In response to my not so positive comment about out of state investing in Oklahoma, I would like to hear from an out of state investor who has owned a SFR in Tulsa or OKC for the last 12 to 24 months. My questions are:
What was the cost and how much equity do you have in the property?
What is the cash flow ( rent - fees, taxes, insurance, mortgage and maintenance = ROI )
It is not my intent to disparage companies or people who are pushing out of state investors. People are free to make their own choices. However, knowledge is power and this site is dedicated ( or so I believe) to providing ethical and realistic opportunities to create wealth and improve the image of REI.
I submit a recent case of a young man who bought a property next mine in Nov of 2018.
3 bd/2 bath 1324 sqft all brick 2 car garage built in 1977.
purchase price 110,000. 20% down plus closing cost 31K
Rent $900.00 monthly
Monthly Cost of Business: mortgage 454.00/insurance 75.00/ prop taxes 110.00/5% reserves 45.00. Total 684.00
That leaves $216.00 about half of the mortgage payment. If it is managed that is another 90.00 leaving 126.00 ROI per month.
Cost of business goes on each month whether rented or not. And if vacant include cost of utilities.
It is conceivable to have more going out than coming in monthly.
If you paid cash and had someone manage it for you, you should clear 450.00 1/2 of rent paid. Not bad return if it stays rented all year.
I would be remiss to paint a rosy picture where someone works your rental for you and sends you a big check every month.
If you bought in Tulsa or OKC and live out of state, please share your experience. Good or bad it benefits everyone considering this venture.
In response to my not so positive comment about out of state investing in Oklahoma, I would like to hear from an out of state investor who has owned a SFR in Tulsa or OKC for the last 12 to 24 months. My questions are:
What was the cost and how much equity do you have in the property?
What is the cash flow ( rent - fees, taxes, insurance, mortgage and maintenance = ROI )
It is not my intent to disparage companies or people who are pushing out of state investors. People are free to make their own choices. However, knowledge is power and this site is dedicated ( or so I believe) to providing ethical and realistic opportunities to create wealth and improve the image of REI.
I submit a recent case of a young man who bought a property next mine in Nov of 2018.
3 bd/2 bath 1324 sqft all brick 2 car garage built in 1977.
purchase price 110,000. 20% down plus closing cost 31K
Rent $900.00 monthly
Monthly Cost of Business: mortgage 454.00/insurance 75.00/ prop taxes 110.00/5% reserves 45.00. Total 684.00
That leaves $216.00 about half of the mortgage payment. If it is managed that is another 90.00 leaving 126.00 ROI per month.
Cost of business goes on each month whether rented or not. And if vacant include cost of utilities.
It is conceivable to have more going out than coming in monthly.
If you paid cash and had someone manage it for you, you should clear 450.00 1/2 of rent paid. Not bad return if it stays rented all year.
I would be remiss to paint a rosy picture where someone works your rental for you and sends you a big check every month.
If you bought in Tulsa or OKC and live out of state, please share your experience. Good or bad it benefits everyone considering this venture.
crap I posted my comment twice. So sorry
FYI the Oil bust is an example of how quickly things rise and fall.
when timing markets follow this rule: early is on time, on time is too late.
When investing follow this rule: Always be the first to get paid, never the last.
You are correct. It is a good place to live, lots of opportunities and low cost of living. All of these benefit people who live there. PSST let's not tell anyone about the tornadoes.
Originally posted by @Guy Yoes:
In response to my not so positive comment about out of state investing in Oklahoma, I would like to hear from an out of state investor who has owned a SFR in Tulsa or OKC for the last 12 to 24 months. My questions are:
What was the cost and how much equity do you have in the property?
What is the cash flow ( rent - fees, taxes, insurance, mortgage and maintenance = ROI )
It is not my intent to disparage companies or people who are pushing out of state investors. People are free to make their own choices. However, knowledge is power and this site is dedicated ( or so I believe) to providing ethical and realistic opportunities to create wealth and improve the image of REI.
I submit a recent case of a young man who bought a property next mine in Nov of 2018.
3 bd/2 bath 1324 sqft all brick 2 car garage built in 1977.
purchase price 110,000. 20% down plus closing cost 31K
Rent $900.00 monthly
Monthly Cost of Business: mortgage 454.00/insurance 75.00/ prop taxes 110.00/5% reserves 45.00. Total 684.00
That leaves $216.00 about half of the mortgage payment. If it is managed that is another 90.00 leaving 126.00 ROI per month.
Cost of business goes on each month whether rented or not. And if vacant include cost of utilities.
It is conceivable to have more going out than coming in monthly.
If you paid cash and had someone manage it for you, you should clear 450.00 1/2 of rent paid. Not bad return if it stays rented all year.
I would be remiss to paint a rosy picture where someone works your rental for you and sends you a big check every month.
If you bought in Tulsa or OKC and live out of state, please share your experience. Good or bad it benefits everyone considering this venture.
mistake #1 - $900 rent on a $110k house. this doesn't even pass the 50% expense "rule" with his financing.
$9k in closing costs? did he pay the seller's cc as well? lol insurance appears to be low, unless he's doing acv (typical to see 1% of square footage times $100/sq. ft cost to rebuild for a rcv quote). 5% in reserves is extra low. do at least 15-20% and he's negative $9/mo after accounting for a 10% pm fee.
Actually it was worse than I stated. He paid 25% down (required by bank due to credit score). Closing included appraisal, inspection, points paid, etc.
He was not out of state but lived in the area. I think he was mid 20's and graduated from ORU. I know he was friends with his REA (which may or may not be a good idea).When I saw him last, he was still working it. Doing most of the repairs. management and maintenance himself. Might be he is renting it while getting it ready to move into. If so, that's not a bad plan. Someone else is making his payments while he fixes it up. Kind of an alternative house hack.
The point is that I don't believe some of these posters are truthful. When someone posts all the money they are making using this company and buying this price range.... And they do the work for you!!!
When it sounds too good to be true, it usually is.
Not sure if you are a RE pro or new investor, either way I wish you the best in you REI adventures.
- Investor · Nashville, TN · Member since 2016 · 42 posts · 68 votes6y
@Guy Yoes - Bought my first house in Norman in 1987 at what I thought had to be the bottom of the market. Paid $82,000 for nice brick 1700 sq. foot new home 3 bed/2 bath. It even came with a custom bedspread and drapes because it had been on the parade of homes. Approximately 5 years later, I sold the home for what I owed against it. Today, 33 years later, it apparently is worth $181,000. The oil bust was deep and prices kept falling. So as you said be prepared to hold a LONG time.
@Guy Yoes Out-of-state investor here, have eight SFRs in greater OKC. I do BRRRRing, so the numbers work better. After PITI + PM fee + vacancy/CapEx/tax withholdings, I look for at least $150-$250 per door in monthly cash flow to be worth my time. Most are Sec 8 tenants, so always comes with painful turnovers having to deal with housing, but get a good one and they will stay a long time. We buy out there for cash flow... if you want appreciation, there are much better markets.
@Jeff Filali
I grew up in Stillwater and I m looking into the Stillwater and surrounding area.
What do you think about investing in Stillwater.
I currently live in Texas and the market is ridiculous here.
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