All Forum Posts by: Ron Daugherty

No problem Patrick,  don't let me completely discourage you.  Like I said, I do have 3 in Del City.  Once you jump through the hoops initially it's not a bad area.  You just have to prepare for it when you plan your numbers out.  That's why I only go for the really good deals, that way anything they come up with isn't a big deal do my numbers.

As a newbie, I would look at Midwest City to start.  Same type of houses in the Air Depot to Douglas, and 15th to 29th corridors.  And a lot less hassles when dealing with Midwest City.  If you find the right deal in Del City, give it a go.  Just make sure to add extra $$$ to the budget and you'll be OK.

Rhett is referring to the housing program Del City has currently.  In a nutshell, each time a tenant moves in (water service request triggers it), a city inspector comes out and inspects your property.  They can come up with some off the wall stuff that they will make you repair before you can move someone in.   They routinely apply current building codes to homes built in the 50's that will be required before a tenant can move in.   Basically, City Hall in Del City is not very landlord friendly, especially if you are an out of state landlord.

With that being said, I have 3 properties in Del City.  I have complied with their inspection process to get tenants in, one required me to fix a neighbors fence that wasn't on our property but was leaning into our property just to give an example of what they can come up with.   

I only buy the really good deals in Del City because of that process.  It's honestly not worth the trouble and extra expenses on the marginal deals, not to me anyway.

We're still working on that house, probably going to make it a rental and not sell it. The ARV we came up with for the offer was 125k.

It's only a low ball offer if it worth more than you are offering.  But with that being said, you don't want to throw offers out there that are unsubstantiated, you will quickly become that guy and nobody will take you serious.  

I have had 2 recent situations with that from both the buyer and seller side.  We sold a property last fall that we flipped.  Comps told us the house was worth 215k, my realtor listed for $219.900.  In 30 days we got an offer for 195k and they wanted 5k in closing, in essance an offer for 190k.  I told my realtor to decline it and not counter.  Of course their agent came back and asked why no counter.  I told my realtor to tell them to give me a comp that supported their offer, otherwise they were wasting my time.   They didn't.   That house got an offer 2 weeks later for 210k, we took it because the holidays were coming and the offer was close to what we wanted anyway.  So that's your example from the seller side,  if you are going to submit a lowball offer be prepared to back up why your offer is what it is.

The next house we bought was listed for 92k, but had some signs of water damage and needed a roof.  We ran our numbers and felt we could pay no more than 80k, the house had only been on the market 3 weeks at the time if I remember correctly.   We submitted an offer of 70k and my realtor explained to the other realtor the work we felt was needed, what it would cost as the basis for our offer.   They countered at 75k which we quickly accepted since we were willing to pay as much as 80k.

So that's both sides of the situation.   Don't just throw a number out.   Run YOUR numbers, make the offer but be prepared to back up what you are doing.   Just throwing stupid numbers out to see what sticks will get you the wrong reputation in a hurry.

10% return is difficult in this market where everyone is overypaying for properties.  Just like the 2% rule that changed to the 1% rule, to now investors think any cash flow is good.

Just keep looking, you'll find something.  Just don't expect them to be easy to find any more.

Like Cassi says, Midwest City is a decent area, but I would be careful being an out of State investors.  I would consider that part of Midwest City a high D or C area.  At that rental rate, tenants will be everything and being out of State just adds to that headache.  Your property manager will make or break you.

Also, not seeing where you are getting a 10% return.  If you paid cash, have no repair contingency, and don't have a PM, your return is 9%.   You should be adding those into your figures for the return.

I see a lot of properties in that area go up for sale from out of state investors for the reasons above, Del City is a similar type area.  Tenants with rents under $700 are 50/50 at best.  Most people only have luck with those properties when they are local and can keep an eye on things.

Cassi gives good advice, it could be a great investment, depending on your appetite for risk.  I can see it going sideways really quick if you get a bad tenant or property manager.  

I also wouldn't plan on appreciation in that area.  Oklahoma City stays pretty steady, no big swings one way or another.  As an example, that particular property sold for 27k in 1998.  In 2015, it sold for 42k.

$850 on a 100k investment in a small town, think I would pass on that.  You can do better in the city where your pool of renters will be much better, lower days on market when empty.

For me, local knowledge and most importantly I monitor days on market for rentals.

I don't have any personal experience with Norman, but I have heard from others on here that Norman was oversaturated with rentals a few years back and that's it not as good a market to get into as it once was.  Because of that, I have specifically stayed away from buying any rentals in Norman.  I think Moore is approaching this same saturation, seeing rentals on market for longer periods of time there than I did a year ago.

Sounds like they are telling you they aren't really for sale, unless you want to overpay.

I get this all the time from wholesalers on some of my properties.  Especially after one of these scam seminars blows through town and gets a few fools to attend.

I do the same thing, just to basically get them to cross me off their list and not bother me anymore.  Everything is for sale for a "price", if you don't like my price find something else.  Usually gets rid of them.