Interested in Out-of-State Investing in Oklahoma City

[Andrés Aguilar]

Hi, this is my first post on Bigger Pockets. I've been interested in out-of-state real estate investing for a couple of months, and Oklahoma City, OK has been on my list. A couple of the things that I like about this city are:

- Population is growing (roughly 2% from 2020 to 2022, and roughly 20% from 2010 to 2022)

- Jobs are growing (18% over the last 3 years)

- Homes are affordable (Zillow's Home Value Index is $201,512)

However, some of the things that concern me are:

- Tornado risk

- Cash flow

Are houses built in Oklahoma City generally built to withstand tornadoes? I'd hate to have my first real estate investment get wrecked by one. Should I avoid investing here for this reason?

Is it hard to find cash flowing properties in Oklahoma City? From my research, it seems like Moore, OK (adjacent to OKC) may cash flow well. Are there any other neighborhoods/regions of Oklahoma City that have demonstrated good cash flow but also decent appreciation?

Thanks in advance for your responses. I'm excited to be a member of the Bigger Pockets community!

[Randall Alan]

Quote from @Andrés Aguilar:

Hi, this is my first post on Bigger Pockets. I've been interested in out-of-state real estate investing for a couple of months, and Oklahoma City, OK has been on my list. A couple of the things that I like about this city are:

- Population is growing (roughly 2% from 2020 to 2022, and roughly 20% from 2010 to 2022)

- Jobs are growing (18% over the last 3 years)

- Homes are affordable (Zillow's Home Value Index is $201,512)

However, some of the things that concern me are:

- Tornado risk

- Cash flow

Are houses built in Oklahoma City generally built to withstand tornadoes? I'd hate to have my first real estate investment get wrecked by one. Should I avoid investing here for this reason?

Is it hard to find cash flowing properties in Oklahoma City? From my research, it seems like Moore, OK (adjacent to OKC) may cash flow well. Are there any other neighborhoods/regions of Oklahoma City that have demonstrated good cash flow but also decent appreciation?

Thanks in advance for your responses. I'm excited to be a member of the Bigger Pockets community!

 I lived in central Oklahoma the first 20 years of my life.  Broadly speaking, no house will survive from a direct hit from a tornado.  (It may still be standing, but it will be wrecked.)  The good news is the people inside often survive.  But you are talking the roof will get ripped off, etc.  With that said, the odds of your house getting by a tornado are very low.  By far, less than your house having a fire I would say.  Sure, lots of homes get hit by tornadoes... but there are 1.7 million homes for the tornado to choose from... so if a couple of hundred homes are impacted by tornadoes in a year, that is 0.00011% of the houses in Oklahoma getting hit... but just like hurricanes it makes for great tv coverage, so it's easy to see where you would try to worry about it.  In Oklahoma, you really don't worry about tornadoes.  You respect them, and hide from them, but you just live your life.  No different than any other natural disaster... hurricanes in Florida, wild fires in California, Volcanoes in Hawaii, etc.

Regardless, your property insurance will rebuild your house if it is hit by a tornado... so ultimately there is no reason to avoid the area because of that risk in my opinion.  But just poking the bear... Moore, OK gets hit by a crazy number of Tornadoes! Not joking.  It still wouldn't stop me... but seems like they like that part of the state!

Your research on Oklahoma is actually reflective of 95% of the United States with regard to cash flow.  It's funny... beginners read all the literature written about the housing market from 3 years ago and they say, 1% rule, lots of cash flow, but don't realize none of that works when the housing prices have doubled the last 2 years, as have interest rates.   In short, if you are coming into the real estate business in 2023 you need to realize you are catching the market in the high / expensive part of its cycle.  Relatively speaking, it's a horrible time to be trying to do much of anything as to real estate investing (especially compared to 2 years ago when interest rates were 1/2 what they are now).  But as they say, "real estate is cyclic".  The Fed will eventually allow interest rates to fall, and all that extra interest showing up in your payment calculations will shift back into the profit column (where it usually hangs out).  

The two biggest things that drive the US economy are housing sales and car sales.  By the Fed raising interest rates it slows those major asset purchases down... which is why you are not finding many cash-flowing deals.   

All the best!

Randy