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.
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!
2% is tough. You MIGHT be able to get it if you get something with undervalue rent rates, you over-improve, convert a garage to another bedroom and get approved for section 8. With all of that combined I could see you potentially qualifying to charge as much as 1200/month on a 3 (now converted to 4) bedroom that you only payed 65k for. Of course there will be the cost of the cash deposits along the way. On average we're hitting the 1% rule with no rehab more than deferred maintenance clean up.
@Anthony Murphy Why don't you give LaNell Long at First United Bank a try. Let her know I told you about her. She has been absolutely wonderful to work with. Very personable and super responsive! I was working with Guaranteed Rate and they've totally screwed me over. Had to push my closing date 3 times. LaNell stepped in on my very first phone call and is currently in the process of getting my loan pushed thru with an expedited closing..we're closing in 10 days total time! She rocks. Give her a try.
I would love to connect with someone to run numbers on a property I am buying here. Any experienced owners in OK that can give me a few mins? I will message you. Thank you.
Also, just want to give a shoutout to @Alyssa Dyer and Kiera Underwood, my husband and I worked with them to acquire our first two buy-hold rental properties in Del City just last year. They were extremely professional and responsive. Kiera was an amazing resource for us -- her knowledge, patience, and responsiveness were exactly what we needed as beginner OOS investors. The properties we acquired are performing as expected.
Also, @Guy Yoes and @Tracy Streich is spot on with his points about OOS investing. If you're not careful, thorough, and as accurate as possible in your due diligence, you can end up with a mess in your hands. And yes, having everything taken care of for you remotely (rehab, PM, etc) comes at a cost that eats at your profits. But if you live in an area where it's impossible to have even any kind of cashflow (lookin at you, Cali), investing OOS and paying a premium for those remote services may make sense for you.
It’s nice to revisit this post after a year to see what happened and was said a year ago may not be applicable now any more LOL... The market is getting so hot that any deals that you think expensive 6 months ago are now making sense to buy.
Yes, and Table Investments has a great team to work with. Cheers to Kiera and Alyssa.
Well, I gave my notice to vacate to my tenants in California finally. Listing my properties for sale soon and buying in OK. Thinking of Edmond or Yukon. Any thoughts?
@Rina D. and @Son Tran thank you for the mentions!! Such a great thing to read mid day. We appreciate both of you so much. @Dorothy Monette are you having any issues with the notice to vacate? We had some buyers recently that are looking at 6 month delays in getting tenants to vacate in CA.
Hi, I'm an investor from California looking to buy in/ around okc. I put in an offer on a SFH in Edmond as an investment home. Almost turn key. Anyone have issues with rental saturation there?
I live in Oklahoma! Born and raised. I am just starting my real estate venture and am looking in the Shawnee area. Decent sized town with a college and other attractions I believe would be conducive to rental success. I am also meeting with a friend of a friend next week that invests in the area to pick their brain!
Hey I know this post is old, but I live in Harrah and would like to meet up with you, I buy rentals as well