All Forum Posts by: Guy Yoes

@Victor S.

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.

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.

@Jai Reddy

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.

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.  

@Dave Foster

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. 

If you own and operate a business other than real estate, it is considered active (by the IRS). However, if you own and operate your real estate business (buy, sell, manage and day to day procedures) it is considered passive by the IRS unless:

! The work you do is entirely related to acceptable real estate practices and

2 you can document over 750 hours in those practices and those hours exceed the number of hours you work in your profession (outside of RE)

This was set up to prevent people from using REI as tax havens.

NO investment is entirely passive. Time spent on your investments (stocks, bonds, lending, researching, acquisition etc.) are all active because of the time factor.

Most REI are content to work their day job and collect a salary (because the enjoy (or should) their job). They invest in real estate for a variety of reasons (namely additional income and post retirement opportunities).

The dearth of time one involves in this endeavor is the crux of what is passive vs. active.

Just a suggestion. Tell the tenants that the current lease is in effect until Sept. 2020 (correct?) Let them know that if they find a new house in 1, 3, 5 months whatever time it is... that they will be held to the terms of the lease. They could have to pay you rent for a long time. You could start the rehab after they move out and collect the rent as it would not be rented. With this information they may wish to sign a month and agree to the renovation (on your terms).

I you are lucky, you can meet the terms of the hard money loan just paying interest and still have monies to do the renovation. I wish you the best.

Why would you sell your property and pay capital gains when you can 1031X them and defer all taxes and depreciation?

You make money in REI in many ways. You can deduct repairs and improvements which increase property values. You can collect income from rent. There are numerous write offs and tax advantages.

Best of all you can own your own business and control your destiny.

If you spend more time on your day job, it is passive. Last year I qualified as a RE professional. I bought and/or  sold 10 doors in 8 months. I was only able to do so because I retired two years ago. I now manage and do maintenance on all my properties. the recent ones are located in the Branson Mo area and I live in Springfield. I spend about 3 days a weeks there. Next month I will close on my fourth duplex in the last 12 months. I totaled 1057 hours and over 14000 miles driving. 

I'm really enjoying my new career. I'm learning how to do carpentry, plumbing and even enjoy the business side. I am taking an accounting course and learning to use QB. 

When I owned 3 SFRs it was passive. Now it is anything but.

It is your property and you have the right to say who stays there. IF they are not on the lease and you allow him to stay, you may have difficult time getting him out later.

I have similar issues with two sister in a duplex. One has a granddaughter who was there when I bought the property. I was okay with her at first (she's 23) Then a noticed a string of boys in and out of the property over several months. i did maintenance one morning and caught them in bed. I was obvious  he had been staying there for more than a few days. 

After a discussion with the sisters. they fessed up that they did not want him there but he refused to leave. I confronted him and told him he was trespassing. I gave him 2 hours to vacate or I'd call the cops. He and the granddaughter left after cussing me out and threatening me.

The sisters pay on time and never cause any issues. I don't want to lose them as tenants. I let them know they were on the lease and the granddaughter and boys are not. If there was any damage or illegal activities they would be responsible. 

Sounds like you may need to consider whether the boyfriend poses any risks. If so, talk to your tenant and let him know your concerns. If not, put him on the lease and raise the rent to cover additional costs.