Rental Property Investor · Altus, OK · Member since 2021 · 21 posts · 14 votes
To start off the market I live in (Hollis, OK) is dead and the town has always been declining but I do have the opportunity to invest in other towns close by but they are still small towns which don't really work for the brrrr method.
Should I start looking into long distance? I've definitely considered fort worth, Oklahoma city, and Lubbock since there's more opportunity and they are growing cities not declining. My biggest issue is trying to learn these cities without being in them. I plan to go to some rei events to hopefully network and find people that are like minded.
In the meantime my plan is to buy properties locally and attempt to flip them to fund the purchases in these bigger cities. Does this seem to be a good idea or is it better to just stay in these smaller towns that I know? I just feel it's going to be hard to grow fast in these smaller towns.
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
5y
Love when people say it "can't be done" in small town USA. I have made a blessed living for 30+ years investing in rentals and flips in smaller communities. While people here hope to find 1% rentals in bigger cities, all of my rentals are 3%+ with a few over 6%. Flipping is all about the by in small towns. As long as you can buy at the right all in price, there will always be a buyer
My rule of thumb is no less than 15,000 population and must have the metrics I feel are appropriate like avg price per sqft, avg time on market, avg listing sqft
I find that in moderately sized cities with a shortage of excellent condition homes almost always benefit from a new construction over a flip since the potential flip houses are almost always over priced.
There are some plays to be made in smaller towns, but beware any real estate strategy that banks on the future of a declining town. I am from such a town and there have been many good plays made in the short term there (flips, BRRRR, and similar strategies), BUT if you are wanting appreciation OR a guarantee that the value of a property is probably the same or greater in 15, 20, or 30 years then decline is your worst enemy. Especially given the trends in Oklahoma over the past thirty years (and most other states across the country) of being zealous or urbanization, I would not be keen on investing in a small town that wasn't directly attached to or fed by a large down (think Chickasha : Oklahoma City or Bartlesville : Tulsa)
Rental Property Investor · Altus, OK · Member since 2021 · 21 posts · 14 votes
5y
@Will Fraser that's my worry I'm wanting cash flowing properties that will have appreciated over the long term and be able to sell them 15 to 20 years from now.
Altus isn't bad but the only thing keeping this town alive is the base which should be around for a long time but the town has been losing population over the past 10 years.
I think I may try flipping a few houses in altus to buy properties around the city.
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
5y
Flipping in Altus could be a good play! Be wary of the thing that happens in many small towns accross the country: materials will cost you what they cost you, which is roughtly the same coast to coast. What varies is labor, which is frequently lower in a small town. BUT, it is common to find homes across small town USA that were built in the 1910's to 1940's that need . . . everything. "Everything" on a 2 bedroom 900 square foot home will cost you 10-20% less in small towns than in larger towns (like Altus vs. OKC) BUT property values are about 50%. What I've found all too many times is a $20,000 home that needs $80,000 worth of work to be worth $75,0000. That's a losing proposition 10/10. Be diligent to know the end-value of the properties and work backwards from there.
Rental Property Investor · Altus, OK · Member since 2021 · 21 posts · 14 votes
5y
@Will Fraser thank you for the input. I've been trying to find homes that have the possibility to be flipped and so far I've found one that has the possibility. The other 2 they are asking to much to flip it perfect for somebody wanting to live in it but not enough money left at the end. I've debated on trying to get one that I'd be lucky to break even on after reno and just renting it out until appreciated enough but that seems like a terrible idea when there is other markets.
Hollis, OK · Member since 2019 · 5 posts · 4 votes
5y
Hey Tanner swing by and talk with me some time brother. After we close hopefully next week that will be 17 properties in southwest Oklahoma 14 of which are in Hollis, one in Gould. The problem is finding the right one flipping is almost impossible in Hollis I have been working with Larry Taylor and it has work on a few houses, he fixes I buy and hold, but he is not making much maybe $5,000 a house, if that, that is because he does all the work himself. I will not buy anymore in Mangum, I have one left there. Altus is hard to find deals we own one single family and a 62 door storage unit there. We lucked out on both of those. I am going to try Main Realty for my next purchase I really like them, I talk with them a lot but we have not found anything yet that fits me. I have been looking at Lawton but I am not comfortable enough to go that far yet. But you know where I'm at most of the time. I can give you some info on a few properties I have looked at but not had time to deal with.
@Tanner Cole I buy in a small market, under 10,000 but it’s turning into a big second family home community for the Boston area. People have “discovered” us. Our rental market couldn’t be hotter.
If I were you I’d look toward some bigger markets that are growing and build my team there for my investing a little further away from home. You can still do some of the management perhaps depending on the market you choose but will have appreciating markets and a reasonable tenant pool to choose from.
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
5y
I'm glad so many people think the way you do, that BRRRing and rental properties in small towns can't work. Less competition for me. But some from overpriced bit cities are starting to move into my area of small towns.
Rental Property Investor · Altus, OK · Member since 2021 · 21 posts · 14 votes
5y
@Eric James I know rental properties in small towns work. I know a few people that have rental properties in small towns but trying to do a cash out refi on property after renovations and the property ends up appraising under 100k banks don't want to cash out refi under the 100k mark. At that point I can't pull my money back out of the deal.
@Eric James I know rental properties in small towns work. I know a few people that have rental properties in small towns but trying to do a cash out refi on property after renovations and the property ends up appraising under 100k banks don't want to cash out refi under the 100k mark. At that point I can't pull my money back out of the deal.
To start off the market I live in (Hollis, OK) is dead and the town has always been declining but I do have the opportunity to invest in other towns close by but they are still small towns which don't really work for the brrrr method.
Should I start looking into long distance? I've definitely considered fort worth, Oklahoma city, and Lubbock since there's more opportunity and they are growing cities not declining. My biggest issue is trying to learn these cities without being in them. I plan to go to some rei events to hopefully network and find people that are like minded.
In the meantime my plan is to buy properties locally and attempt to flip them to fund the purchases in these bigger cities. Does this seem to be a good idea or is it better to just stay in these smaller towns that I know? I just feel it's going to be hard to grow fast in these smaller towns.
You are correct in thinking that a small town that far from a major city is not a good play long term. As @Will Fraser, short term investments can be a good investment, but unless the town is a hidden gem, soon to be revealed through social media outlets and "Top 10 Places to Visit", then I would look elsewhere. It's a bit of a catch 22 because the small towns need more investments and interest moving into it to grow, but because it's small and stagnant, no one wants to really invest in it.
Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
5y
Love when people say it "can't be done" in small town USA. I have made a blessed living for 30+ years investing in rentals and flips in smaller communities. While people here hope to find 1% rentals in bigger cities, all of my rentals are 3%+ with a few over 6%. Flipping is all about the by in small towns. As long as you can buy at the right all in price, there will always be a buyer
Rental Property Investor · Altus, OK · Member since 2021 · 21 posts · 14 votes
5y
@Greg H. Hollis has a population of around 2000 and the closest major city is about 2 hours away. I'm not saying it cant be done here but in 20 years the major cities will still be there. I can't say that hollis will still be here 20 to 30 years from now. So I don't want my investments to go down in value over the long term instead of up.
Had to look it up as I could not remember the cities but I flipped a property in Shattuck OK and Locust Grove OK in the past couple of years which are very small communities. Again, if purchased at the right price almost any property can be flipped with or without rehab
Rental Property Investor · Altus, OK · Member since 2021 · 21 posts · 14 votes
5y
@Carlos Gonzalez I havent given that a thought yet. I currently like where I live but don't see it as worth while to invest in the town I live. Maybe that seems like backwards thinking but it's currently my dilemma. I also know people invest long distance and it works for them so it seems like a better bet to go that route.
Rental Property Investor · Altus, OK · Member since 2021 · 21 posts · 14 votes
5y
@Greg H. That is awesome and definitely gives me hope that I'm viewing this all wrong. I'm still in the learning phase and haven't decided for certain if I want to flip or rent. Id much rather rent and take the cash flow than flip and get the big payout. The big payout thou does give a much better return to buy a bigger/more properties.
Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
5y
You've already received a lot of advice considering the pros/cons of small town vs big city investing. I'd like to chime in on a few of your target markets. I have rental property in Lubbock and OKC. Lubbock seems to be SLIGHTLY less competitive (but still competitive). If you are looking for C/D class rentals/BRRR properties, Lubbock seems to have more of them available for lower prices than OKC. Rents in Lubbock seem to be higher. My VERY limited rehab experience in Lubbock seems that the pricing is quite a bit higher for materials (Flooring pricing was wild, even at the "investor friendly" places). Home purchase prices are pretty similar. HOWEVER, taxes in Lubbock are almost double the OKC tax rates. This varies a bit based on what specific parts of each town you are investing in, but it's a good ballpark.
Either option could be good. It will just depend on what you are looking for and the connections you can make in each market.
Flipper/Rehabber · San Antonio, TX · Member since 2020 · 16 posts · 6 votes
5y
@Tanner Cole
What about purchasing mineral rights at a discounted price and reselling it to oil companies. In Oklahoma isn't it a 2 year option and then a 6-month option after that? They would give you a couple years to generate enough interest. Say you purchased the minerals for 50 bucks per acre and then turned around and sold it for $300 an acre. I hear there's some recent activity and interest in the area with regards to drilling from oil companies.
Sometime back in 2008 we raised 1.5 million dollars for roughly 4,000 acres release the mineral rights my numbers may be off a little but we purchased the acreage for a 386 an acre and then turn around and sold it for $770 an acre and we ended up being the operator on the project and retaining 18% override. That was between Creek County and okfuskee County I'm not sure where your county is with regard to that.
I'm sure a lot of the residents are not going to be with it considering there's an aquifer there but some of the residents may be struggling financially and they might be willing to let you lease the acreage for really cheap.
That may be something you want to look into while you're pursuing other markets in real estate. There may not be much oil there but you never know what these things. Obviously there's some kind of interest there. Anyway not trying to deter you from what you're trying to pursue just a thought.
Love when people say it "can't be done" in small town USA. I have made a blessed living for 30+ years investing in rentals and flips in smaller communities. While people here hope to find 1% rentals in bigger cities, all of my rentals are 3%+ with a few over 6%. Flipping is all about the by in small towns. As long as you can buy at the right all in price, there will always be a buyer
There you go. My last couple purchases in small towns were SFH for $13k and $8k. About $20k in rehab and then appraise for around $60k and rent for $800.