Rental season “window”?

Question

Hi all, after reading lots of books and listening to podcasts everyday and going to meet ups etc etc I think I’m onto the next level. Meeting with lenders and agents etc. I currently live in Seattle, expensive market. My plan is OOS investing through BRRRR method on SFR. Here is my question. It’s mid June right now. By the time I get my ducks in a row and start the BRRRR train, probably the earliest I can get the property on the rental market is likely after the “rental” peak season. What would you guys say I should do?

I’ll try to anticipate a few questions / comments. My target market is OKC or Indy. Targeting B class neighborhoods. Currently not a big fan of section 8 as a beginner. I know people say don’t fall into the “analysis paralysis” trap, but others say the first deal is very important to do it “right”, and don’t be in a hurry to just get a deal - any deal - under the belt. Don’t be desperate. I know myself; I’m not the person that is just a pretend investor. I am DEFINITELY going to jump in. No if, ands or buts. It’s just a matter of when. Some say timing is everything.

So, is doing it “right” waiting a little for the next “rental peak” - some say January? That would place my purchase around October, when supposedly good deals can be found? Or Buy next spring? Or buy now and figure it out? I’m not hurting financially, so I’m not desperate. I have a good paying and stable job. I want financial freedom in 10 years or so.  There’s TONS of stuff floating though my head right now...  Any advice is appreciated!

Cassi Justiz · Answer

I think @Jake Stuttgen has some good information. Try to more narrowly define what you are looking for. There are people looking to rent all year, but you may just have a smaller selection of people to choose from. To make up for that, just budget a little more for holding costs in the beginning. The hard part is that right now the houses are not only renting for a premium, they are also selling for a premium. Summer is definitely peak market time. House prices generally drop a little in the fall and winter, so I wouldn't be worried about waiting for a few months to pick up a property.

One thing to note is that OKC is not a great BRRR market. Overall, our market is really healthy right now and there just isn't a ton of distressed inventory that is coming available to people that aren't doing their own marketing or working closely with wholesalers. Even the off-market stuff I'm seeing right now ends up going for about 85-90% of ARV once you factor in repairs.

OKC is great for cashflow, but it's hard find true BRRR deals where you are going to be able to pull all of your money out without doing your own marketing.

Alyssa Dyer · Answer

@Edward C. my preferred property manager has leased everything I've sent him and I've seen other investors send him in 30 days or less. He quotes conservatively to make sure that happens, but I'd rather my numbers look good from a conservative rent quote and be surprised than have an excessive vacancy. I factor vacancy at 5% for my properties and I haven't had an issue with that. If it starts to look like something might take longer the property manager will reach out and say we should do a first month move in special to make sure it gets done in time!

Also Edward, where exactly are you considering B class in south OKC? If it's not a Moore school district in South OKC, it's not a good school.

Edward C. · Answer

@Megan Shay excellent tip on holidays for rentals. That’s a gem for me. Thanks!

Eddie

Megan Shay · Answer

Speaking from experience in the Seattle area, lots of people move in June when school's out. Worst time is late October - January, but it always depends year to year. And realistically, no matter what market, someone's always going to need a place. You never know when life happens and say, a couple splits and someone needs to find a place in the middle of December.

Don't let the timing hold you back. But if you can avoid trying to find tenants during the holiday season, do what you can. :-)

Edward C. · Answer

Guys, great points And I appreciate it. @Cassi Justiz you are describing exactly what I am hearing from a couple of my local investor friends in OKC. Deals are there, but not complete BRRRRs; some deals they are leaving around $5-$10K in the deal, which I am ok with. It’s the property type that I am a little picky about. Ideally I would like to BRR a B- house in B neighborhood in good school district. So far I like the south side of OKC.

And also, @Cassi Justiz thanks for the advice on summer inventory vs. fall inventory. If you don’t mind me asking, is there another rental “season” in January in OKC? Someone in my local REIA mentioned that January is another rental “season” in OKC. In seattle, the noticeable season is May-July. Obviously people move year round, but it’s not common in winter. Would you say in OKC January is another time renters are looking? I just want to do the first deal as “right” as I can so it doesn’t deter me from a 2nd deal.. Don’t necessarily want to be stuck holding my first property empty for months when I didn’t “time it” right. I can actually see it from BP forum: **Look Eddie, your problem for buying in August and finished with your BRRR in November is all about timing! Who moves in November?!?!** I don’t want to be that guy! Thanks guys.

Eddie

Jake S. · Answer

Hey @Edward C. I'd start with defining exactly what you want, and write a game plan for how you will get there. Then, when you are ready to buy and have found a viable property that fits your criteria, ACT ON IT. I wouldn't wait for peak rental season.

Rental season “window”?

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