• by The VRET Team

Oklahoma City Opportunities: How to Start Investing in Real Estate

Do you ever have days when you dream about quitting your job and letting real estate income let you gain financial freedom to do what you always wanted to do?  Being a landlord and having your property manager collecting rent while all you have to do is let them change out air filters and occasionally call a plumber.

Investing in real estate, especially in Oklahoma City, can be a great way to grow your wealth. Read on to learn more about how to start your real estate investing career the right way.

Why Invest in Oklahoma City?

When you’re getting ready to start investing in real estate, one of the first places you should look at is Oklahoma City. If you’re planning to become a landlord, you’ll be pleased to learn that Oklahoma City laws tend to protect landlords over tenants. There’s also a high demand for rental properties in Oklahoma City, making this a hot market for potential investors!

If you want to stay more on the home-ownership side of things, you’ll find that Oklahoma City is an amazing place to buy a home. The city boasts unemployment levels below the national average, as well as real estate values that are growing every day. The city is also working hard to bring in new developments that will improve life for all of its current and future residents. 

Your First Steps

If you plan to start investing in real estate, your first step shouldn’t be getting your realtor’s license or learning how to be a good landlord. Instead, you need to start closer to home – much closer, in fact. There is no need for you to pay off your own home, just start saving for that initial investment.

Real estate investing can be lucrative, but only if you handle the finances right. With interest rates at historic lows, there is no need to pay cash for any house you plan to buy.  You use leverage to achieve positive cash flow that can be tax deferred. This means leaving your home mortgage alone.  So focus on paying off any high interest debt that keeps you from achieving your dreams.

Diversify Your Finances

Once you’ve got a solid chunk of cash saved, you also need to focus on building a diverse financial profile. While real estate offers some amazing opportunities, like any other investment, it can’t be your only option. You need to have your eggs spread out across a variety of proverbial baskets, so if one market goes upside down, you don’t lose everything. 

Make sure you have healthy investments going in-stock profiles, retirement accounts, and some other long-term investment options. Be sure to choose low-risk options based on your goals. This will give you the solid financial base you need to handle the ups and downs that come with real estate investing.

Start with Long Term Rentals

If you’re considering becoming a landlord or taking on other rental-based investments, you may want to start with some long-term rentals. These rentals can be a great way to dip your toe in the waters of real estate investing with relatively little risk. They can also be a great way to bring in some extra cash while you’re trying to get your high-interest debt paid off and your nest egg set up.

You can work with trusted professionals like The Virtual Real Estate Team that offers you a proven turnkey solution with over 2500 success stories. Think of these as a way to lower risks and have specialists handling every aspect of your investments. You can own and rent a property and not be responsible for the day-to-day management. 

In Oklahoma City, we can offer rental properties from single-family homes to duplexes and quadruplexes and we can detail the advantages of each one. If you’re looking to get into short-term renting, start by analyzing your market area and see if it is the right area for the kind of investment.

Set Up a REIT

If real estate sounds like a smart investment to you but you really don’t want to have anything to do with the actual handling of the real estate, you might like a real estate investment trust (REIT). These investments behave more like a traditional stock portfolio than they do a standard rental arrangement. However, they do give you an opportunity to take advantage of the relative reliability of the real estate market.

When you set up a REIT, you pay money into a trust that other investors can then use to buy and operate income-generating properties. These trusts are sold on the major stock exchanges like any other asset. Not only do they provide all the benefits of real estate investing without any of the hassles, but they can also give you access to opportunities most private individuals couldn’t normally buy into, such as malls and commercial properties.

Use an Online Real Estate Platform

If you like the idea of an REIG but you don’t want to deal in the rental market, you might consider using an online real estate platform. These sites are real estate crowdfunding in the purest sense of the term. You and a variety of other investors all contribute money to buy an investment property together and then share the profits.

Online real estate platforms can be a great way to dip a toe into the world of real estate investing when you don’t necessarily have the capital to purchase a house yet. You pay a manager to coordinate and handle your investment for you and then you sit back and get the profits. While, as with any of these online options, you don’t get quite as large a portion of the profits, it does also require a less up-front investment. Be careful, though, and have an expert evaluate the return on investment promised and also the risks involved.

Single Family Versus Multi-Family Rental Property

After you get your financial base built up, you may be ready to consider a full dive into being a landlord. Depending on how much of a nest egg you’ve built up, you might want to buy a house in Oklahoma City and rent it out. Keep in mind that in order to make this investment work well for you, you’ll need to pay cash for the house. 

If you have the extra down payment needed for a multi-family property, you might consider buying a duplex. You can live in one half and rent the other half out to help cover the mortgage. However, do be sure you can cover the entire mortgage on your own in case you have a period when you go without renters. 

Flip Houses

Since the golden age of HGTV has begun, flipping houses has become an enormously popular form of real estate investing. In fact, there’s a whole television show on the DIY Network dedicated to recording the struggles and triumphs of people flipping their first house. And if you’ve ever watched any of these shows, you’ll know that flipping houses can be lucrative, generating a full year’s worth of income in just a few months.

However, there’s a reason we all love watching First-Time Flippers so much, and it isn’t because the people on the show are good at what they’re doing. Flipping a house takes a lot of skill, and the only thing you can count on is that some unexpected problem (or problems) will arise. You need to make sure you have a strong financial pad and plenty of know-how before you tackle a house flip. 

Focus on Appreciated Value With Positive Cash Flow

One of the best things about real estate investing is that property values almost always go up over time. Unless a property is neglected or damaged, you can expect that it will be worth more in five years than it is today. Make sure when you’re making decisions for your real estate investments that you keep your focus on this appreciated value.

If you plan to buy a property and rent it out, in addition to the positive cash flow over expenses, you’ll be gaining the equity that builds in the house over time. If you invest $50,000 into a long-term rental, you can most likely expect to get more than that back when you get ready to sell with the appreciation and the reinvested positive cash flow. Keep your eye on the long-term profit opportunities in addition to the immediate, especially if you invest in REIGs or REITs.

Brush Up on Taxes

As you start your real estate investing career, you may also want to spend some time brushing up on your local tax codes. It can be easy to forget, but the money you make from your investments counts as income, too. You need to be prepared to pay those taxes when April rolls around, so be sure to put some of that money in the bank to cover those expenses. 

Real estate taxes can get tricky, especially since there are certain tax breaks you may be able to take advantage of like the depreciation schedule of the property less the land cost. If you plan to deal with more than one investment or if you aren’t very comfortable with tax codes, you may want to consider hiring an accountant to help you file your taxes. They’ll be able to help you navigate any tax breaks you may be eligible for and ensure you pay the proper amount at the end of the day.

Prepare for the Unexpected

When you first start investing in real estate, you may think you’re in for smooth sailing. You’ll buy a house, collect rent payments every month, and do routine maintenance as needed. Or maybe you’ll put a few fresh coats of paint and some new floors in a run-down house, sell it for a mint, and laugh all the way to the bank.

But the only certain thing in real estate investing is that unexpected things will happen. You need to leave yourself plenty of financial space to deal with these problems when they do come up. Put aside a healthy emergency fund for when the water heater in your rental property explodes, and always leave a healthy pad in your house flipping budget to cover the asbestos you find under the kitchen floor.

Start Small

It can be easy to get caught up in the dream of real estate investing and start to get impatient with the process. You may want to go buy a house to rent or flip right now, not ten years from now when you’ve paid off your mortgage. You might also feel like you can handle the demands that come with these projects as long as the profits are so good.

But it’s best to be patient and start small with your real estate investments. Rent out a room of your house or join one of the online investment options we’ve discussed here. If you plan to flip a house, maybe tackle a couple of projects around your home before you sign away your life savings to a home that needs new plumbing and electrical from top to bottom.

Learn to Start Investing in Real Estate

Investing in real estate can be a lucrative opportunity, especially in Oklahoma City. Make sure you start small and get your finances in good order before you dive in on flipping a house or becoming a landlord. Keep an eye on the long-term benefits of your investments and make sure you have your tax requirements handled and you’ll be able to enjoy your profits for years to come.

If you’d like to start investing in real estate yourself, check out the rest of our site at The Virtual Real Estate Team. We can provide you with a proven plan for financial wellness through real estate in Oklahoma City. Schedule an appointment with us today and start growing your nest egg, achieving financial security, and retiring on your own terms.