All Forum Posts by: Andrés Aguilar

@Andrés Aguilar I think you've got your answer below as far as tornados. If you want to prevent insurance claims I'd just look for a brick exterior and make sure your roof is insurable before close! 

You can look to a bit higher risk areas for more appreciation potential while coming closer to cash flowing today. Are you set on investing with the long term strategy or are you also open to short term? 

Welcome!

Seattle is indeed an expansive city, but a great way to build wealth through appreciation. Cash flow does catch up eventually.

I used to invest in the midwest (TN) for cash flow, however appreciation was flat and I quickly realized I was not going to be able to save up enough downpayment to build a portfolio with which I could retire on. Like many investors, I've moved my portfolio back to WA (or high appreciation markets) to expedite the new worth built.

No right or wrong way to approach REI, just something to consider long term.

Hi Andres, 

All good questions/observations.  I feel the responses you've received in regards to tornados are accurate.  If you invest here in Oklahoma yes you risk the chance of the house being hit by a tornado! However, that's what insurance is for.  I've lived here for thirteen years now and have been in the tornado shelter and or took cover maybe five times in those years and fortunately have only suffered a broken window amongst all the storms.  As far as cash flow goes, it depends how much cash flow are you looking for. Is cash flow more important or appreciation and equity?  There are properties that cash flow well and the okc market is fantastic for appreciation especially if your looking in the growing communities and or most sought after.  I'm a realtor and investor if you ever want to chat feel free to message me. 

 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