Tips to Consider Before Investing in Oklahoma City
When you have decided that you are ready to purchase a second property to use as an investment (renting out to tenants), you need to examine data on various regions and see what is the most financially sound move. If you are moving to Oklahoma City and want to purchase a home for investment, there are a few things to consider. Let’s explore how to determine if our real estate market is the right on for you.
Does high rent translate into revenue?
High rental rates does not guarantee high revenue, because the real estate markets have to be stable and the costs associating with owning a particular property might be far more than the fair rental rate for the area. Calculating gross yield as the cost of the property divided by the annual rental income, a property in New York County only returns 3%, while the figure is 4% for San Francisco County. This is far below the double digit figure most investors tend to aim for.
Where is your main residence?
While today’s technology age makes it easy for transactions to be completed online and there might not be recurring reasons for you to be close to your rental property, some scenarios will make you wish it was a short drive away. Weigh the pros and cons and see what area is close that also isn’t too expensive. If you aren’t going to be close, you probably want to work with a property management company who will answer the phone at any hour to fix any household problems that arise.
Are you trying to earn a living off of it?
Succeeding in the business of rental properties requires a certain set of skills and desires, and making a living isn’t always as easy as others would lead you to believe. If you want to earn a living, for example the equivalent of a $50,000 salary, you’ll need to profit more than $4,000 per month.
Do you have the funds to purchase and maintain a rental property?
Having the cash to buy the property outright is not necessary, but if you have the money and are willing to invest in your own business, it will be much easier to generate a positive cash flow. Double mortgage payments are not really an ideal scenario for anyone, and if you are unable to find a tenant you might see yourself overextended to make ends meet.
So how does Oklahoma City stand against other markets?
Oklahoma City has one of the most heavily tipped emerging real estate markets. Rents are low across the state, with $689 as a fair market average for a two bedroom property. This rises to $723 in Oklahoma City, where landlords can expect yields around 10%. House prices are expected to rise by 16% in Oklahoma City over the next three years. This is built on healthy levels on employment across a range of sectors including higher education, tech and the energy industry. These jobs make the state increasingly attractive to millennials, which is why Oklahoma City ranks as one of the fastest growing metro areas in the country.