All Forum Posts by: Jerry Peng

For point 2 yes the homes are much older. You'd be hard pressed finding a rental built after 1910. But all of that can be eliviatred on the original rehab. Just make sure you take care of all outdated items and you won't have a problem.

Point 3 umm it litterally changes by the block so that's tough to say. Some great areas are Trolley, Triangle. and Cool Springs. For "Okay" I would say Little Italy, Baynard Village, Brandywine Village are fine. Everywhere else you're gonna find it hard to justify the purchase if you're banking on appreciation and not pure cash flow. I mean granted this market is nuts right now and typically some areas that wouldn't sell for much are flying off the shelf but in general I'd lean towards those areas.

"Downtown" has two main distinctions Market St and The Riverfront. Those areas are pretty much all changed and the Riverfront is building new things by the day.

Would love for someone else to chime in with their experience as well.

Tyron,

Thank you for the detail you were able to provide me on my questions. In regards to the market being nuts right now, I think that's the case across the nation, I've been talking to friend with properties in OKC, Dallas, Memphis, Birmingham, and Tulsa and it's hot seller markets right now. Low interest rates and people not wanting to sell and move during a pandemic is causing a lot of demand and not a low of inventory.

Are you trying to ride out the wave or still able to find deals that are worthwhile? For example, I'm seeing properties in your "Okay" neighborhoods costing around $90,000 + $20K (estimated rehab) and renting for $1000.

With the lower property taxes in DE than anywhere else, these units still cashflow decently. One thing I have heard is that you need a property manager who actually lives in Wilmington. If this is the case is Property Management a lot more than the usual 8-10%?

1 Vote

I've been saving up some money since leaving college and now have enough capital to deploy in buying a SFH/Duplex property. I'm interested in Wilmington after analyzing rent to cost ratios. I've realized that most top 100 US metros are being oversaturated with investors and DE in general seems to have really low property tax and good rental rates.

I'm looking for some help in hearing people's opinions on the following 3 things:

1. How landlord friendly is Wilmington? By this I mean what is the cost range and ease of an typical eviction, how easy is it to get a permit for renovations/rehab, what is the number of weeks before you need to return a security, etc.

2. What are the types of costs that are unique to Wilmington? For example, I've heard with the downtown older homes, there's good amount of CapEx that needs to be sunk in a lot of the time with maintenance and repairs.

3. What are people's opinions on the growth prospects in Wilmington and what neighborhoods are considered A,B,C or D class? I've read in previous blog posts 3 years ago about a new Chief of Police coming in and BPG building up the downtown. How did that turn out?

Much thanks to anyone who can give me any information on any of the three above questions.

Just some background info, I'm not a speculative buyer and will likely be looking to find a home with minor cosmetic upgrades needed before it's make ready. Forced appreciation and steady cash flow is the name of my game.

1 Vote

Originally posted by @Nate Sanow:

@Jerry Peng

Glad to hear that Tulsa is on your radar. There are a lot of great people to work with in the area. I'm here to assist in OOS needs but also would welcome you if something else is a better fit, I'm personally always just excited to see our attention increase.

To respond to your points:

1. I'm not sure where you are getting data on rents increasing, and I'm not sure how much "so much" means. That sounds critical but I'm just honest; I don't think we have high rents, and I have lived elsewhere. There are plenty of articles etc that demonstrate our lower cost of living compared to most of the US, and we are certainly in that list of lowest cost of living. As for the trends, I would admit job growth isn't what we would like, but it isn't stagnant, and unemployment is lower - yes even now in this wild year - than the national average.

I'm not as sure if what job growth we foster is related to simply larger companies as much as it is being very start up / entrepreneur friendly.

2. Yes, insurance is always something to carefully consider. I might add, foundation cost is almost always a thing if you are looking at doing a Brrrr type remodel or a flip. Our soil is largely made of clay and our temperatures while mostly moderate have extreme cold and heat within shorter periods of time. This creates resettling under properties. I've been in many a home where the foundation bid is the most expensive factor in being able to determine a fair offer. It's almost easy to spot, but usually the best course of action is to bring in a foundation company and possibly a structural engineer.

3. I just did a market report on total signed leases recorded via our MLS vs total SFH sales and sales trumped rents by far. Perhaps you have seen growth in some facets I'm missing; I'm not claiming to be all knowing but this point of yours caught my attention. Also the MLS accounts for 90% of home sales but in the leasing world there is likely a lot of non-recorded leases. As for if we are transient, yes, to an extent. That is also an interesting observation. E.G. many of our energy companies have their tie's to Texas and so there is a significant amount of relocation we constantly share with that state.

I've read interesting studies that point to our population migration patterns pointing to slightly greater persons moving to the area than from it. Historically, younger professionals have looked to move somewhere else, not necessarily for economic reasons as much as wanting to live near a beach etc. We often see many of these people come home... I myself am one of them :)

Again thanks for bringing up Tulsa and good luck as you analyze further and begin to nail down your criteria.

Nate,

First off, thank you for such an in depth response to my questions! This is the kind of great information I was looking for!

What I meant by rent rising so much is that rent rose by a higher percentage this past year than almost any other city (From Realtor.com). This is a great thing for investors like myself who are interested in rentals since it helps increase our income without adding to fixed expenses.

What I'm trying to get at, is to understand if the rent increase this past year will last or if it was a spike due to a factor that someone like a local agent such as yourself would know as opposed to an OOS investor like myself.

2 Votes

Originally posted by @Ben Scott:

Hey @Jerry Peng, I'm a licensed agent in Oklahoma City but lived in Tulsa for many years. They are very similar markets. I know Devon Energy in OKC merged with WPX Energy recently and that eliminated many jobs in the Tulsa market. In fact, WPX was building a skyscraper in downtown Tulsa and scrapped plans. That move may have trickle down effects in the Tulsa economy.

Insurance costs can often be higher in the midwest due to hail storms. In my experience, Tulsa isn't a very transient city. Most people who live in Tulsa were born in Tulsa (or the surrounding communities).

At the end of the day, it's a city that lives and dies with oil and gas.

Ben how reactive do you find the market to be to oil and gas? I'm asking for a lag time between a sustained X number of months of low gas or oil prices and production and when property prices start dropping? For example, if oil production remain low for 6 months then you should start seeing property values reflect that 3 months later?

0 Votes

Originally posted by @Remington Lyman:

Originally posted by @Jerry Peng:

I've been saving up some money since leaving college and now have enough capital to deploy in buying a SFH/Duplex property. I'm interested in Tulsa after analyzing rent to cost ratios based on zipcode/metro area. Of the top 10 markets, Tulsa was in the price range, had a low enough property tax and didn't have crazy tenant-friendly policies.

I'm looking for some help in hearing people's opinions on the following 3 things:

1. Why exactly is rent rising in Tulsa so much? Are the driving factors macro-economic trends such as fluctuations in the Energy sector, COVID-19, and lower income taxes or is it trends that are specific to Tulsa, such as major company opening up jobs in the area?

2. What are the types of costs that are unique to Tulsa? For example, I've heard wind associated costs on roof are important to factor in when looking at how old a roof is in Tulsa versus say in Arizona.

3. Why are people not buying houses at the same rate individuals are renting properties? Is it due to the types of jobs in Tulsa where it's hard to save for a down-payment, is Tulsa more of a transient city, before moving to a larger city like OKC or Dallas, or is it something else I'm completely missing?

Much thanks to anyone who can give me any information on any of the three above questions.

Was Columbus, Ohio in one of your top 10 markets?

Great question. For anyone interested the top ten are listed below and I have copied an image of my spreadsheet as well. Columbus ranked 46th actually based on the data. Anyone who is interested in my methodology or where I got my data (Zillow) feel free to connect with me and I'm happy to share.

1	Memphis, TN
2	Jackson, MS
3	El Paso, TX
4	Winston-Salem, NC
5	Greensboro, NC
6	Scranton, PA
7	Lakeland, FL
8	Tulsa, OK
9	Dayton, OH
10	Chicago, IL

8 Votes

Originally posted by @Lane Kawaoka:

@Jerry Peng I have an apartment in OKC which I think is a little bigger market than Tulsa. Overall the state of OK is pretty slow growth. At one time when Dallas was going bonkers it was getting a lot of the overflow but now things are little more steady in Dallas if anything.

If you are investing OOS from NY I would take a look at Birmingham, Atlanta, Indianapolis, St Louis, Kansas City, Memphis, Little Rock, Indianapolis, Greenville, Jacksonville, Tampa, Houston, San Antonio, Little Rock, Milwaukee, Cincinnati, Dayton, Cleveland, Ohio, or other secondary or tertiary markets. If you need help let me know.

What led you to consider those secondary or tertiary markets? Was it your network or simply those areas having 'good deals'? If it was the good deals, what sort of strategies were most successful there? I typically would like to focus on SFH or Small Multi-families but struggle to find areas that fit the 1% rule anymore that would fit the buy/hold model for most investors.

1 Vote

One of the biggest struggles that I'm sure many landlords and investors are facing during COVID-19 is the ability of our tenants to pay rent on time in the same manner they did prior to the pandemic. While many of us resent working on payment plans with our tenants, the government's stance on evictions has forced many of us to comply and work on payment plans or offer cash for keys to our tenants with varying degrees of success.

Some landlords (not all but some) are operating with the mindset that come January 01, 2021 all of these tenants with late rent/unpaid rent will finally be evicted and they can find new better and great tenants again. I really doubt this is likely to occur. I don't think the market has properly adjusted for just how long all these eviction cases will take the process. Beyond just the shear number of cases that have been backlogged over any 9 months, the past 9 months are particularly heavy in eviction processing due to the loss of jobs in many investor friendly Mid-Western and Southern markets.

I think that come February, a lot of these landlords who aren't seeing their tenants evicted yet, will become distressed sellers and be great targets to finding excellent off-market deals. I would recommend that anyone you find that has filed an eviction notice in Q4 of 2020 to keep track of their names in late Q1 2020. They will likely not have their eviction hearing until a significantly later time since most courts work in first come first serve processes.

I'd love to hear people's thoughts on this theory. I'm obviously new to market trend analysis, but I can't help but do the math in my head and have it play out this way. Obviously this is assuming the government doesn't extend the eviction moratorium past Jan 01, 2021.

0 Votes

I'm looking for some help in hearing people's opinions on the following 3 things:

Much thanks to anyone who can give me any information on any of the three above questions.

5 Votes

All Forum Posts by: Jerry Peng

Jerry Peng has started 3 posts and replied 8 times.

Post: Wilmington, DE, the Cash Flow seems great, am I missing something

Post: Wilmington, DE, the Cash Flow seems great, am I missing something

Post: Investing in Tulsa, OK as Serious OOS Investor

Post: Investing in Tulsa, OK as Serious OOS Investor

Post: Investing in Tulsa, OK as Serious OOS Investor

Post: Investing in Tulsa, OK as Serious OOS Investor

Post: How a Backlog of Evictions in 2021 will impact Rental Properties

Post: Investing in Tulsa, OK as Serious OOS Investor