• by The VRET Team

A Complete Guide to Investing in Real Estate in Oklahoma

What if you were overlooking one of the best investments you could make?

That’s what is happening if you have no retail investments. As home prices soared even during the pandemic, one thing was clear: real estate is one of the safest possible investments.

And there are few places riper for real estate investment than Oklahoma. By buying a property (or more than one) here, you can help to secure your financial future.

Ready to learn more so you can get started? Keep reading to discover everything you need to know about real estate in Oklahoma!

Why Invest in Real Estate in Oklahoma?

Our guide will walk you through the more important elements of real estate in Oklahoma. First, though, we need to answer the big question: why would you want to invest in Oklahoma homes in the first place?

First, Oklahoma is filled with many growing areas. This includes Oklahoma City, a metropolitan area powered by a strong economy. And that economy grows every year, and you can be part of it by investing in real estate in the right areas.

Second, Oklahoma has a solid market for you. It is a state with low unemployment and solid real estate. Whether you wish to rent or sell, you’ll find the tenants or buyers you are looking for!

Third, and finally, the rental market is taking off throughout Oklahoma. This means that after you become a real estate investor, it will be easy to turn your Oklahoma homes into sources of passive income.

Popular Types of Real Estate in Oklahoma

If you’re reading this, then you may be considering real estate investment in Oklahoma. But ask yourself: have you considered what types of properties you’d like to invest in?

Different kinds of investment opportunities come with different benefits and drawbacks. Let’s take a closer look at some of your different Oklahoma real estate options so that you can make the best investment decision.

Single-Family Houses

A single-family house is the kind of real estate most people think about when they imagine real estate investment. With this type of investment, you are buying a home much like the one you live in and trying to find the right people to either sell the home to (especially if you flip it first) or rent the home to.

For the most part, a single-family home is often the best choice for your initial real estate investment. It is easier to buy, repair, and manage than multi-family properties (more on this soon), and this lets you discover whether or not you enjoy real estate.

If you do enjoy this kind of investment, though, you may find more opportunities when you invest in multi-family properties.

Multi-Family Properties

Multi-family properties are just that: properties designed to accommodate more than one family. This may refer to anything from a duplex to an apartment complex.

On paper, multi-family properties are more complex than single-family properties. They tend to be more expensive to buy and more difficult to renovate. And, of course, if you hope to rent the different homes out, you will have multiple families to deal with.

Fortunately, investing in multi-family properties in Oklahoma can also be more lucrative for you. You get both more income and more reliable income. And multi-family homes tend to appreciate more than single-family properties do, making them a better long-term investment.

Commercial Buildings

In terms of investing in real estate, commercial investment is high risk and high reward. That is because these tend to be the most expensive investments. They can also be the most lucrative, but only if you focus on the right investments.

For example, industrial real estate is a very strong investment and retail real estate is a weak one. And no matter what kind of commercial real estate in Oklahoma you invest in, you should make sure it doesn’t have a high vacancy rate.

We recommend researching the area and any potential commercial real estate opportunities. Remember, there is nothing wrong with purchasing a single-family home to get started and working your way up to something as ambitious as commercial real estate.

To Flip or Not to Flip

Let’s say that you make your mind up to invest in some Oklahoma real estate. What do you plan to do with it after the purchase?

Many investors turn around and rent homes for the long term. This helps them create passive income streams. The alternative is to sell your home, and if you plan to sell, you may be tempted to “flip” the house.

As any TV fan knows, flipping is about buying cheap real estate, renovating the property, and then selling for a high profit. This may be a solid option for anyone hoping to generate a quick profit rather than a passive income.

With that being said, flipping requires that you have a lot of working capital for renovations and a lot of experience with the handiwork involved. You also need to know the area well enough to know whether or not you can flip the house and still generate a profit.

If you’re comfortable with all of that, and you’re looking for fast profits, flipping may be a great idea. In general, though, we don’t recommend trying to flip for your first real estate investment in Oklahoma.

Factors You Should Consider Before Buying a Property

It’s easy to go into real estate investment thinking this will be a simple model of “buy low, sell high.” But to get the most out of your investment, you need to know what to look for when it comes to buying Oklahoma properties.

For example, you should know the appreciation value of a property. This helps you know how valuable it will become over the next few years.

You should also research whether the local population in the area is growing or diminishing. A growing population is a sign of a strong economy, making this a good investment. A dwindling population, however, means this may not be the best area to invest in.

Last, but not least, make sure you understand the relevant property taxes for any real estate you are interested in. This is important information to know when it comes to any prospective real estate purchase! 

Short-Term vs. Long-Term Rentals

Have you decided to rent out a property in Oklahoma after you purchase it? In that case, you need to decide whether you wish to focus on short-term or long-term rentals.

For the most part, long-term rentals are your best bet. This helps generate a passive-income stream and make it last as long as possible. With that being said, you may want to experiment with short-term rentals as a way of exploring the break estate investment market on a much shorter scale.

How would this work? If you already have a spare home, or if you don’t mind using your primary residence, you can use it for short-term rentals through services like Airbnb or VRBO.

Depending on where you live, these short-term rentals can help you generate easy profit. But this also gives you valuable experience in getting spaces ready for renters, securing payments from others, and dealing with possible rental issues.

In short, such rentals can help you figure out if you will be comfortable renting for the long term. If the answer ends up being “no,” then you might save yourself from making a very expensive mistake!

Becoming a Landlord: Pros and Cons

Once you buy a home and decide to rent it out to other people, you have to make an important choice. Specifically, you need to decide whether you want to be a landlord or whether you wish to hire a property manager.

If you want to maximize your profits, then becoming your own landlord is a good way to do so. You won’t have to pay anyone else to manage the property. Of course, you’ll need to be hands-on and good with tools to help handle some of the issues a property manager would handle.

For most investors, it all comes down to how much they wish to interact with tenants. Some landlords like these interactions and checking in on the property. Other landlords think making their own repairs and speaking to tenants takes the “passive” out of “passive income.”

Hiring the Right Property Manager

Decided against being a direct landlord? In that case, you need to hire a property manager. And there are a few concrete steps you can take to make sure you’ve hired the right one.

The first thing you should look for in a good manager is experience. It’s good to hire someone with a lot of property management experience under their belt. Simply put, if they have a lot of experience, it can make up for your own lack of experience.

The second thing you should look for is somebody who knows the area. A strong level of local knowledge can help the manager deal with tenants. It can also help the manager find the most affordable contractors in the area.

The third thing you should look for is someone who has a good reputation. Be sure to check for references so you can discover what previous clients’ experience was like. And don’t be afraid to check for online reviews and to see what people are saying about the manager on social media!

Determining the Right Rental Price For Your Property

Excited about renting out a property in Oklahoma? Before you can do so, you need to set the price. To do that, all you have to do is follow a simple formula.

Begin by taking the median property price for the area and then dividing it by the annual median gross rent. This lets you know what the price/rent ratio is for the area. If you’re still picking properties, it’s good to pick one in an area with a low price/rent ratio.

Knowing the ratio can help you determine how much to charge for your rental property. It’s possible to tweak how much you charge upwards a bit, especially if other rental prices are rising. Your ultimate goal in setting a price is to help you pay off the mortgage on the property with ease.

Pay Off Your Own Home First

Speaking of paying off mortgages, here is something the beginning real estate investor often overlooks. Once that passive income starts rolling in, it’s important to pay your own home off before you pay the rental home off.

Why is that? Once your own home is paid off, it will be easier to gain capital for future properties. This is one of the reasons many would-be investors focus on paying off their mortgages before investing.

Once your own home is paid off, it’s easier to pay off your rental properties. This is the beauty of real estate: your tenants are paying your different mortgages for you! Over time, this helps you buy more real estate and increase your passive income.

Always Set Aside Emergency Funds

Once that passive income starts rolling in, it’s easy to look at it as nothing but pure profit. However, much of those early payments will go towards paying off the property. On top of that, you need to set emergency funding aside with each payment.

These funds are needed because every property needs repairs and maintenance. And once you own the property, the cost for repairs and maintenance will have to come out of your pocket!

As a landlord, you never want to take out a loan to pay for things like replacement appliances. Instead, set emergency funding aside so you’ll have it whenever you need it.

Invest in Real Estate in Oklahoma Today!

Now you know almost all about real estate in Oklahoma. But do you know where to find the best homes to invest in?

Here at the Virtual Real Estate Team, we’re here to help you take the first steps on an exciting new journey. To discover how we can help you get started, just contact us today!