Should we pull the trigger on these properties? First time investor in Tulsa

Tulsa, Oklahoma
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Should we pull the trigger on these properties? First time investor in Tulsa

Sunny Karen
Member since 2023 · 15 posts · 11 votes

We are new to real-estate investing in the Tulsa area (have a couple properties in CA, MI)

Why Tulsa? Conservative appreciation, reasonable cash-flow and long-term outlook for the city looks good. No crazy growth and hopefully no crazy downfall. The economy looks to be slowly diversifying away from Oil and unemployment is low in OK. I consider it a hybrid for appreciation and cash-flow. We have friends and family in the area who can help out though we will be OOO and use a PM company.

We are mostly targeting SFH, Duplexes, Fourplexes. I am evaluating 2 deals out there, and was hoping to get feedback on.

3/2 duplex - new construction in Sand Springs neighborhood (hopefully low capex for first decade). Purchase price: $365K; Rents: 1600 * 2 (3200); With 25% down - PITI would run about ~$2200; Property Management (8%) + Vacancy (5%) + Capex & Maintenance (8%) - I would cash-flow about ~200/month.

2/2 duplex - new construction in West Tulsa neighborhood. Purchase price: $300K; Rents: 1250 * 2 (2500); With 25% down - PITI would run about ~$1800; Property Management (8%) + Vacancy (5%) + Capex & Maintenance (8%) - I would cash-flow about ~100/month.

Cash-flow right now isn't very important for us (as long as it's not negative). Our plan is to hold long term (10+ years) and likely pay it off in 5-10 years to act as supplemental retirement income which we plan to get to with a couple more properties paid-off in Tulsa eventually.

Would you pull the trigger on these two properties based on our goals? I trust the builder and will get a through inspection done.

1Reply
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Clay O.
Investor · Tulsa, OK · Member since 2017 · 102 posts · 88 votes
2y

I live in Sand Springs, have properties in Sand Springs and West Tulsa. If the duplex that you’re considering is the one I am thinking about then all the below apply. They built 5 or six of them right together right off of highway 97. The guy that built them is  an upstanding guy and does the right thing. I have spoken with him a few different times at the investor meet ups. I question how much you can get for rent.  1600 seems a little high to me for a duplex in this area but if you can get it, that just raises what I can get for mine. Some things to consider, trailer park behind the duplexes, highway directly in front. Trailer park is good and highway is not super busy as it just goes between Sand Springs and Sapulpa. Schools will be a great draw for this property and you can be on I-44 in about three miles so if you work in Tulsa no big deal. I currently live about two miles from there and was considering keeping this property for a rental. It’s 3bd 3bth garage and about 1700 sqft. Complete remodel in last year fenced in back yard.  I was thinking I could get 1600 to 1800 in rent and my agent also said the same thing. I am not sure the price difference you can get between duplex and sfh but I think  you can rent a  house for about that same price, if you can find one. Rentals don’t last long in this area. I do know one of these have been for rent for a few months but there are tenants in one of the other units.   Again this all applies if it’s the one I am thinking about. If you want to give me the address or approx location of the one in west Tulsa I can give you info about that one as well  

Good Luck. 

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  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    2y
    Quote from @Sunny Karen:

    We are new to real-estate investing in the Tulsa area (have a couple properties in CA, MI)

    Why Tulsa? Conservative appreciation, reasonable cash-flow and long-term outlook for the city looks good. 

    Tulsa  is a good choice overall. I'd like to see cash flow a minimum of $300 a month, becasue when you have a vacancy you lose at least a month's cash flow. I have a bias though. I only purchase off market, never put money down and I don't use banks, so my model is very different.

    1Reply
  • John Kunick
    Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes
    2y

    @Sunny Karen, I've been a long time investor in Tulsa and live here.  All of your characterizations of Tulsa area are correct (stable appreciation, not volatile, good cash flow, etc.).  It's a great place to live, raise a family and invest.  My only concern about your two deals is location.  While I can't tell unless I had specific addresses, Sand Spring and West Tulsa can be iffy.  There are some good areas and some bad areas.  But, your game plan sounds solid.
    All of my "homeruns" have been in South Tulsa, Bixby and Broken Arrow.  Remember, "location, location, location"!

    2Reply
  • Clay O.
    Investor · Tulsa, OK · Member since 2017 · 102 posts · 88 votes
    2y

    I live in Sand Springs, have properties in Sand Springs and West Tulsa. If the duplex that you’re considering is the one I am thinking about then all the below apply. They built 5 or six of them right together right off of highway 97. The guy that built them is  an upstanding guy and does the right thing. I have spoken with him a few different times at the investor meet ups. I question how much you can get for rent.  1600 seems a little high to me for a duplex in this area but if you can get it, that just raises what I can get for mine. Some things to consider, trailer park behind the duplexes, highway directly in front. Trailer park is good and highway is not super busy as it just goes between Sand Springs and Sapulpa. Schools will be a great draw for this property and you can be on I-44 in about three miles so if you work in Tulsa no big deal. I currently live about two miles from there and was considering keeping this property for a rental. It’s 3bd 3bth garage and about 1700 sqft. Complete remodel in last year fenced in back yard.  I was thinking I could get 1600 to 1800 in rent and my agent also said the same thing. I am not sure the price difference you can get between duplex and sfh but I think  you can rent a  house for about that same price, if you can find one. Rentals don’t last long in this area. I do know one of these have been for rent for a few months but there are tenants in one of the other units.   Again this all applies if it’s the one I am thinking about. If you want to give me the address or approx location of the one in west Tulsa I can give you info about that one as well  

    Good Luck. 

    4Reply
  • Dahlia KhalafBusiness Member
    Member since 2018 · 71 posts · 42 votes
    2y

    @Sunny Karen Hello! I am an investor and real estate broker here in Tulsa specializing in investment property. I don't know if you have someone helping you already but my input would be there isn't much of an appreciation or cash flow play on either of these properties. If I was going to suggest purchasing new construction where I know its unlikely you will cash flow then I would be looking for long term appreciation and I would suggest that in some other locations we could discuss if you are interested. Please feel free to private message me or email me at [email protected]

    [email protected]918-815-2342Podcast Guest on Show #2
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    0Reply
  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    2y
    Thanks for putting in your long term goals. That has a huge impact on what you should be doing right now. A couple of considerations to add to the other posts:
    1.Are you paying cash for the down payment or borrowing? That would need to be factored in.
    2. Your cash on cash returns are low, but you are looking for equity build. That's ok so long as you have a solid plan for when you have a cap ex. Factoring it in to the budget is necessary, but it'll be a while before you build up the cap ex account. You need to be prepared for a new furnace now. If you are, then financially I don't see a problem with them.
    3. Lastly, if you are planning to expand your portfolio, these may limit you because of the low returns.
    0Reply
  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    2y
    Thanks for putting in your long term goals. That has a huge impact on what you should be doing right now. A couple of considerations to add to the other posts:
    1.Are you paying cash for the down payment or borrowing? That would need to be factored in.
    2. Your cash on cash returns are low, but you are looking for equity build. That's ok so long as you have a solid plan for when you have a cap ex. Factoring it in to the budget is necessary, but it'll be a while before you build up the cap ex account. You need to be prepared for a new furnace now. If you are, then financially I don't see a problem with them.
    3. Lastly, if you are planning to expand your portfolio, these may limit you because of the low returns.
    0Reply
  • Sunny Karen
    OP
    Member since 2023 · 15 posts · 11 votes
    2y
    Quote from @John Kunick:

    @Sunny Karen, I've been a long time investor in Tulsa and live here.  All of your characterizations of Tulsa area are correct (stable appreciation, not volatile, good cash flow, etc.).  It's a great place to live, raise a family and invest.  My only concern about your two deals is location.  While I can't tell unless I had specific addresses, Sand Spring and West Tulsa can be iffy.  There are some good areas and some bad areas.  But, your game plan sounds solid.
    All of my "homeruns" have been in South Tulsa, Bixby and Broken Arrow.  Remember, "location, location, location"!


     Thank you John! Glad to hear about your long-experience with Tulsa market and insights.

    I have been scouting the Broken Arrow area without too much success yet. With the current interest rates being cash-flow positive even with 20-25% down with conservative underwriting has been hard. The appreciation potential in these areas looks promising though.

    What is your take on the Pratville area and the area north of the river around 4th and Grant in Sand Springs?

    0Reply
  • John Kunick
    Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes
    2y
    Quote from @Sunny Karen:
    Quote from @John Kunick:

    @Sunny Karen, I've been a long time investor in Tulsa and live here.  All of your characterizations of Tulsa area are correct (stable appreciation, not volatile, good cash flow, etc.).  It's a great place to live, raise a family and invest.  My only concern about your two deals is location.  While I can't tell unless I had specific addresses, Sand Spring and West Tulsa can be iffy.  There are some good areas and some bad areas.  But, your game plan sounds solid.
    All of my "homeruns" have been in South Tulsa, Bixby and Broken Arrow.  Remember, "location, location, location"!


     Thank you John! Glad to hear about your long-experience with Tulsa market and insights.

    I have been scouting the Broken Arrow area without too much success yet. With the current interest rates being cash-flow positive even with 20-25% down with conservative underwriting has been hard. The appreciation potential in these areas looks promising though.

    What is your take on the Pratville area and the area north of the river around 4th and Grant in Sand Springs?


    Sorry, I have no take on Pratville nor Sand Springs.  Have never owned there or actually spent much time there.  Best of luck!
    1Reply
  • Sunny Karen
    OP
    Member since 2023 · 15 posts · 11 votes
    2y
    Quote from @Benjamin Aaker:
    Thanks for putting in your long term goals. That has a huge impact on what you should be doing right now. A couple of considerations to add to the other posts:
    1.Are you paying cash for the down payment or borrowing? That would need to be factored in.
    2. Your cash on cash returns are low, but you are looking for equity build. That's ok so long as you have a solid plan for when you have a cap ex. Factoring it in to the budget is necessary, but it'll be a while before you build up the cap ex account. You need to be prepared for a new furnace now. If you are, then financially I don't see a problem with them.
    3. Lastly, if you are planning to expand your portfolio, these may limit you because of the low returns.

     Thank you Benjamin!

    We are more conservative investors at this stage and plan to using our cash to pay for the properties. The low cash-on-cash return is a little concerning but longer term (10-20+) horizon and appreciation + rent growth is what we are looking at. Agreed on the expansion, we are planning to get a few units (<20) at this stage and aggressively pay it off in the next 5-10 years to act as supplemental retirement income.

    0Reply
  • Sunny Karen
    OP
    Member since 2023 · 15 posts · 11 votes
    2y
    Quote from @Dahlia Khalaf:

    @Sunny Karen Hello! I am an investor and real estate broker here in Tulsa specializing in investment property. I don't know if you have someone helping you already but my input would be there isn't much of an appreciation or cash flow play on either of these properties. If I was going to suggest purchasing new construction where I know its unlikely you will cash flow then I would be looking for long term appreciation and I would suggest that in some other locations we could discuss if you are interested. Please feel free to private message me or email me at [email protected]


    Thank you Dahlia. I did see your episode some time ago on BiggerPockets podcast. I will reach out soon when we start getting serious in the area. 

    0Reply
  • Alex Clark
    Member since 2024 · 32 posts · 60 votes
    2y
    Quote from @John Kunick:

    Hey John what are your thoughts on buying a new construction house and renting it out in bixby?

    @Sunny Karen, I've been a long time investor in Tulsa and live here.  All of your characterizations of Tulsa area are correct (stable appreciation, not volatile, good cash flow, etc.).  It's a great place to live, raise a family and invest.  My only concern about your two deals is location.  While I can't tell unless I had specific addresses, Sand Spring and West Tulsa can be iffy.  There are some good areas and some bad areas.  But, your game plan sounds solid.
    All of my "homeruns" have been in South Tulsa, Bixby and Broken Arrow.  Remember, "location, location, location"!


    0Reply
  • John Kunick
    Investor · Broken Arrow, OK · Member since 2016 · 210 posts · 314 votes
    2y

    @Alex Clark, it would all depend on what you bought and how much you paid vs. how much you could rent that specific property for.  Overall, Bixby is a terrific sub-market with high demand for quality rentals. I've not had a turnover of any of my properties in Bixby  for several years as tenants just keep renewing leases..  So, I keep renewing them with reasonable increases in rent and I make sure to take good care of tenants by always maintaining the properties and being responsive whenever a need arises.  I try to not give them a reason to want to leave - and that keeps the cash cows producing!

    1Reply
  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    2y

    The maintenance/cap ex is too low.  20% total for both together will be closer.  1% properties at current rates  do not cash flow in virtually all markets.  

    Using 50% rule:

    - Property 1: p&i ~$1800, expense $1600.  Negative $200/month
    - property 2: p&i ~$1500, expense $1250. Negative $250/month.  

    I would consider purchase if neighborhoodscout showed appreciation to be at least 9/10 for last decade or 10/10 for this century.  
    neighborhoodscout for Tulsa 5/10 for last decade, 4/10 for century.  

    Historically at best average appreciation. Negative cash flow.  What would be purpose of the purchase?

    the goal is to make money.  The goal is not to own properties.  

    Good luck

    0Reply
  • Brandi Russell
    Member since 2024 · 2 posts · 2 votes
    2y

    Based on your long-term goals and the stable market in Tulsa, both of these properties seem like solid investments. The expected cash-flow and potential for long-term appreciation make them worth considering. As long as the inspection checks out and the builder has a good reputation, it may be a good idea to pull the trigger on both properties. Good luck with your investments!

    1Reply
  • Heather Gates
    Investor · Gore, OK · Member since 2022 · 35 posts · 25 votes
    2y

    I'm also a small multifamily investor in the Tulsa area. I calculated negative cash flow on both of these properties I'm also really conservative. I still really want the Sand Springs duplex to work and since there are multiple and brand new, that's the direction I would focus. I don't know if you could get that high of rent right now but as the area develops it might be possible. I think someone else mentioned the trailer park close to there so I would suggest calculating lower rent in the beginning. Best of luck! There seem to be more and more multifamily coming to the market so I'm sure you'll find something that works. 

    2Reply
  • David Woodell
    Investor · Tulsa, OK. · Member since 2024 · 3 posts · 0 votes
    2y
    Quote from @Account Closed:
    Quote from @Sunny Karen:

    We are new to real-estate investing in the Tulsa area (have a couple properties in CA, MI)

    Why Tulsa? Conservative appreciation, reasonable cash-flow and long-term outlook for the city looks good. 

    Tulsa  is a good choice overall. I'd like to see cash flow a minimum of $300 a month, becasue when you have a vacancy you lose at least a month's cash flow. I have a bias though. I only purchase off market, never put money down and I don't use banks, so my model is very different.

     

    @Mike Hern

    I'm just starting out would love to know more about the no money down model as that is what I would like to be doing too. thanks David

    0Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    2y
    Quote from @David Woodell:
    Quote from @Account Closed:
    Quote from @Sunny Karen:

    We are new to real-estate investing in the Tulsa area (have a couple properties in CA, MI)

    Why Tulsa? Conservative appreciation, reasonable cash-flow and long-term outlook for the city looks good. 

    Tulsa  is a good choice overall. I'd like to see cash flow a minimum of $300 a month, becasue when you have a vacancy you lose at least a month's cash flow. I have a bias though. I only purchase off market, never put money down and I don't use banks, so my model is very different.

     

    @Mike Hern

    I'm just starting out would love to know more about the no money down model as that is what I would like to be doing too. thanks David

    Actually, we don't do "no money down". It costs on average $30,000 for each Subject To that we do. That is because the seller gets some money, there are closing closts, there are mortgage payments, usully there is some rehab work. Electric, water, gas, sewer all have to be paid. Insurance has to be bought.

     And we have to have some in reserve in case we can't get it rented quickly or something like that.

    0Reply
  • David Woodell
    Investor · Tulsa, OK. · Member since 2024 · 3 posts · 0 votes
    2y

    oh thats odd why would you say that you "never put money down" when you acually do a normal expense assumptions? Not sure why someone would want to say things that are misleading why lie about doing a model that seems just like a typ model out there not sure what the purpose would be.  Anyway I'm new to these forums just hope the rest of the advice in the BiggerPockets forums aren't as misleading as this one was.

    0Reply
  • Tracy StreichPro Member
    Real Estate Broker · Tulsa- OKC Oklahoma · Member since 2017 · 868 posts · 801 votes
    2y
    Quote from @Sunny Karen:

    We are new to real-estate investing in the Tulsa area (have a couple properties in CA, MI)

    Why Tulsa? Conservative appreciation, reasonable cash-flow and long-term outlook for the city looks good. No crazy growth and hopefully no crazy downfall. The economy looks to be slowly diversifying away from Oil and unemployment is low in OK. I consider it a hybrid for appreciation and cash-flow. We have friends and family in the area who can help out though we will be OOO and use a PM company.

    We are mostly targeting SFH, Duplexes, Fourplexes. I am evaluating 2 deals out there, and was hoping to get feedback on.

    3/2 duplex - new construction in Sand Springs neighborhood (hopefully low capex for first decade). Purchase price: $365K; Rents: 1600 * 2 (3200); With 25% down - PITI would run about ~$2200; Property Management (8%) + Vacancy (5%) + Capex & Maintenance (8%) - I would cash-flow about ~200/month.

    2/2 duplex - new construction in West Tulsa neighborhood. Purchase price: $300K; Rents: 1250 * 2 (2500); With 25% down - PITI would run about ~$1800; Property Management (8%) + Vacancy (5%) + Capex & Maintenance (8%) - I would cash-flow about ~100/month.

    Cash-flow right now isn't very important for us (as long as it's not negative). Our plan is to hold long term (10+ years) and likely pay it off in 5-10 years to act as supplemental retirement income which we plan to get to with a couple more properties paid-off in Tulsa eventually.

    Would you pull the trigger on these two properties based on our goals? I trust the builder and will get a through inspection done.

    Welcome to Tulsa real estate investing! Tulsa is a prime investment destination, with rental rates averaging around $1.00/sqft in the metro area. This rate fluctuates based on location, property condition, and amenities. New construction tends to command even higher rates. If you have any questions or need further guidance, don't hesitate to reach out. 

    [email protected]918-728-8080
    1Reply
  • Brendan Harrison
    Real Estate Broker · Tulsa, OK · Member since 2020 · 157 posts · 67 votes
    2y

    Welcome! Tulsa, OK is a fantastic area to explore for investment opportunities. With its growing economy, diverse neighborhoods, and affordable housing market, there's plenty of potential for success.

    Feel free to reach out if you have any specific questions or if you'd like to chat more about real estate investing in Tulsa. I'm here to help and share any knowledge or advice I can offer.

    2Reply
  • Jeff Filali
    Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes
    2y
    Deal 1- $91K down payment for $1200-2400 yr cash flow…NOPE! Not a good deal for Tulsa area. Also would be amazed if you could actually get $1600 mo rent there. 

    Deal 2- $75K down payment for $600-1200 yr cash flow…NOPE! Not a good deal for Tulsa area. Depending on exact location west side can be very high crime or a good blue collar area. 

    Tulsa is a great market overall.  But this isn’t Cali.  We can get good CASH FLOW here, I don’t touch anything under $300 per door.  Our appreciation is decent but isn’t as high as Cali. There’s lots of competition here for GOOD deals, but there’s probably a reason us locals aren’t buying these two.  Best of luck! 
    1Reply
  • Sunny Karen
    OP
    Member since 2023 · 15 posts · 11 votes
    2y
    Quote from @Dan H.:

    The maintenance/cap ex is too low.  20% total for both together will be closer.  1% properties at current rates  do not cash flow in virtually all markets.  

    Using 50% rule:

    - Property 1: p&i ~$1800, expense $1600.  Negative $200/month
    - property 2: p&i ~$1500, expense $1250. Negative $250/month.  

    I would consider purchase if neighborhoodscout showed appreciation to be at least 9/10 for last decade or 10/10 for this century.  
    neighborhoodscout for Tulsa 5/10 for last decade, 4/10 for century.  

    Historically at best average appreciation. Negative cash flow.  What would be purpose of the purchase?

    the goal is to make money.  The goal is not to own properties.  

    Good luck


     That's good feedback, thank you!

    0Reply
  • Sunny Karen
    OP
    Member since 2023 · 15 posts · 11 votes
    2y
    Quote from @Heather Gates:

    I'm also a small multifamily investor in the Tulsa area. I calculated negative cash flow on both of these properties I'm also really conservative. I still really want the Sand Springs duplex to work and since there are multiple and brand new, that's the direction I would focus. I don't know if you could get that high of rent right now but as the area develops it might be possible. I think someone else mentioned the trailer park close to there so I would suggest calculating lower rent in the beginning. Best of luck! There seem to be more and more multifamily coming to the market so I'm sure you'll find something that works. 


    Glad to connect with you, thanks for the feedback!
    Given your knowledge of the area would you move forward with a deal like this?

    Being a multi-family investor, what's your criteria/buy-box in the B type neighborhoods? 

    0Reply
  • Sunny Karen
    OP
    Member since 2023 · 15 posts · 11 votes
    2y
    Quote from:
    Deal 1- $91K down payment for $1200-2400 yr cash flow…NOPE! Not a good deal for Tulsa area. Also would be amazed if you could actually get $1600 mo rent there. 

    Deal 2- $75K down payment for $600-1200 yr cash flow…NOPE! Not a good deal for Tulsa area. Depending on exact location west side can be very high crime or a good blue collar area. 

    Tulsa is a great market overall.  But this isn’t Cali.  We can get good CASH FLOW here, I don’t touch anything under $300 per door.  Our appreciation is decent but isn’t as high as Cali. There’s lots of competition here for GOOD deals, but there’s probably a reason us locals aren’t buying these two.  Best of luck! 

     Thank you Jeff. What rent-to-value ratio (1% rule) do you target for good blue-collar neighborhoods in the Tulsa metro area?

    For context: I don't plan to BRRRR in the area but buy things that are close to rent-ready already.

    0Reply
  • Tom O'Stasik
    Real Estate Agent · Tulsa, OK · Member since 2019 · 130 posts · 66 votes
    2y

    Hi @Sunny Karen, 

    Truth be told, cash flow is tough to find these days in Tulsa. Your best bet to find cash flowing deals are either off market, or a BRRRR strategy. Anything on the positive side right now is good. You'll want to be certain on your rents though. If you're holding out for more than $200 a month cash flow, you're going to be on the sidelines for awhile.

    1Reply
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