I spoke to a friend who mainly does buy and hold in OKC and he told me that his average ROI is 6%. Although he said his houses are super easy to rent out, he wouldn't recommend me investing in OKC because of the low ROI. To be specific, his properties are mostly in Norman, a mix of 2b and 3b SFH's, and he manages his properties by himself. I am surprised to hear that his ROI is only 6%. I'd expect something around 10% range. I will be an out-of-state investor for Oklahoma, meaning i will have to hire PM's all that. That means my ROI will be even lower.
Is this ROI common? Is it just Norman coz property value is slightly higher? I'd appreciate if you can share your ROI and your neighborhoods. Thanks!
My CoC in Midwest City is 9%
While I don't currently invest there, I do know a bit about the market there, and 6% seems low for OKC. I agree with John that you ought to be able to do much better than that in places like Midwest City or SW OKC. I've been looking at Moore, and the ROI there is a bit lower than Midwest City but is still above 6%. Keep looking. I think it's a more profitable market than that.
6% is low side , very low in my experience but it does depend on the type of property you have and where you are. i would guess he has newer properties on the higher end of the rental scale so that would change things, it should reduce his capex over the short term though. I have some personal properties that I am well over a 10 cap and some that are currently losers and are around an 8 cap but nothing that is a 6. i have folks we manage for that are around a 6 cap but again those are dictated by your purchase price and type of home and area. alot of folks just go by what "their agent said it would rent for" and don't really research the market. that is when they get this kind of nasty surprise.
Thanks for sharing everyone!
Alfred, good to know that Midwest City and SW OKC are good for ROI.
Rhett, I think you are right. Talking to this friend, I don't think he is very selective at buying his properties. Selective meaning doing math and looking at ROI carefully before buying. And his properties are at the newer side.
Overall, thanks for confirming that 6% ROI is at the lower side in OKC metro.
Hey Yumi! I've overseen hundreds of investors coming to the OKC metro in the last year and not even one of them bought in Norman. The prices are inflated due to the University. You can see up to 10% cap rates in different areas of the city!
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