All Forum Posts by: John Kunick

After reading through this very worthwhile thread, it seems that most of the responses are regarding fix/flip.  Since I am only a buy/hold and therefore looking to increase the value of my properties via both increasing rents and keeping the houses rented (especially via decreasing turnover), I wanted to add my two cents.  To me, the single best upgrade I've been doing over past two years is changing flooring and getting away from as much carpet as possible.  Like many of you, I prefer the WATERPROOF plank flooring.  Yes, it costs more up front.  But, in the long-run (what I'm focused on as a buy/hold), it actually saves me $ as I don't have to replace carpeting ever again.  It makes the houses look newer, cuts down on allergies and I can typically rent the houses both faster and for a higher rate.  Then, the question becomes when to do it..  For me, the best time is when there is turnover as the house is empty and doing the install is much easier.  But, I've also done this as an incentive or reward for long-term renters.  With this, especially if the tenant is awesome and I don't want to lose them, I say "if you sign an extension with a modest rent increase, I will proactively go in and replace carpet, in certain areas of your home, with plank flooring".  I even let them help pick out the color/type as it makes them take pride and "ownership" in the property.  Finally, if I have to specify areas of the house to replace flooring, it typically will be high traffic areas like family room and hallways.  Typically, I don't do this in bedrooms unless a tenant specifically requests it.  Hope my two cents is valuable!

@Devin Fakner and @Rhett Tullis, great post by Rhett - and Devin I will try to answer your question about Tulsa as I own and manage a large portfolio in Tulsa.  The biggest answer is "it all depends"!  It all depends on location, condition and also what the landlord's niche is (which hopefully is driven by their goals). 

For me, my niche is 3/2's in South Tulsa (primarily Bixby and Broken Arrow) that I can rent for anywhere from $1050-1300 (depending on location and condition).  As Rhett mentioned, the higher the rent the more time you can expect the house to sit simply because the "pool of eligibles" is smaller.  If I have anything over $1200 available, I can expect it to take 1-2 weeks to find a suitable tenant.

On the other hand, if I have a rental that is $1050-1199, I can usually find a suitable tenant in 1-2 days. So, when I've had the opportunity to buy additional properties, guess where I tend to focus? I've turned down a lot of realtors that call me begging me to look at their house that I can buy at a nice discount, but would have to rent for $1400+ in order to make same ROI. Of course, they ask me to look at the "built-in equity" that I am getting because their seller is desperate. My point back to them is I'm not buying to turn around and sell and make a profit! I am buying for rentals and that is my business model.

Having said all of that, I do have a friend who solely focuses on higher end rentals ($1300-1500). These are typically 4/2's with 2000+ sqft. But, he bought most of these houses many years ago and especially when the housing crisis was going on. He was buying most of these houses for under $110k and not having to do much work to them. Therefore, he's making a very good ROI, but he can't find that same house now to buy at anywhere near those same purchase prices.

To close, it depends on your location and condition of house.  But, in Tulsa, I think we have similar rental market as OKC.  For me, the 3/2's have been a significantly profitable niche that I don't care to stray out of.

This was in Tulsa World today.  As I posted back in late December, most of my rentals are in Bixby/Broken Arrow and I've been able not only raise rents, but have had zero problems finding quality tenants.  This information backs that up.  So, the lesson learned in real estate is location, location, location.

https://www.tulsaworld.com/new...

@Deren Huang, what have you seen with your personal portfolio?  I will tell you what I've seen with mine, but keep in mind the vast majority of my rentals are not in Tulsa per se, but rather the South Tulsa sub-market and primarily Bixby and Broken Arrow.  In those markets, I've seen a continuing steady increase in rent and demand.  When I've had rentals come up for renewal, I've had zero problem increasing rents (although I keep rent increases fairly modest if it is the same tenant).  When I've got turnover (one tenant leaving and another one coming in, then I've increased the rent more aggressively and have had zero issue getting it.  But, I continually do market surveys to see what rents are going for and try to stay at or slightly below the market.

Having said all of that, I would guess my rents from 2017-2019 are up 8%.  I could do research and pull up actual leases and get exact information, but 8-10% is a pretty good guess.

Hi Cylas, first, congrats on your first property! Like @BrianGraham, I'm also a real estate investor in the Tulsa area and have been doing REI for many years. I've both bought and sold properties with tenants in them. Nathan gave a great explanation of the best "legal" way to handle this situation so I won't repeat it (spot on, Nathan!).

I would like to offer the best "relational" way to handle this situation - which only supplements and doesn't substitute for Nathan's approach.

First, have the persons you are buying property from notify tenants of change in ownership as soon as offer is accepted.  Second, before closing, meet with the tenants at the property and let them know that you have been provided all of the lease information.  This is your opportunity to confirm the lease with them and make sure what you have been provided is consistent with their understanding.  This also gives you the opportunity to be in the house with them and see how they are taking care of it and if there are unapproved pets.  Third, this will also serve as your opportunity to put them at ease that you will honor the lease and will be receiving the security deposit.  This also gives you the opportunity to let them get to know you and how you manage your properties.  Fourth, after closing, send them a letter or email letting them know that the closing has taken place so they know how to pay rent to you and to communicate with you any repairs needed, etc..

Key to this whole topic is both communication and building a relationship based on mutual trust and respect.  In my experience, whether that is inheriting a tenant or just getting a new one on an existing property, it is best to start immediately building a solid relationship with clear expectations.

Best of luck!

@Brandy Bruce, first congratulations on saving significant $ and not just spending it.  Second, what are your goals for getting into REI?  I've been fortunate to do very well in REI and then help mentor several others to do same.  And, I always ask them the same question up front:  "What are your goals".  There are so many ways to make money in REI that you have to answer that question to help inform your strategies and next steps.   I am an REI in Tulsa market and can help you in this market if you will answer the question..

Jacob, can you clarify your question?  Do you mean for rental properties or someone who is moving here and looking  to buy a house to live in?

Hi Tyler, I've been fortunate to build a nice portfolio of SFH's in Tulsa area. So, I can only provide direct input on this market. But I have colleagues that own in OKC and, from when we compare notes, there are a lot of similarities (stable markets, modest appreciation, really nice cash flow, rents are rising, etc..). If you want to PM me, I will be happy to relay my experiences with both building and then running a large portfolio of SFH's in Tulsa and can let you know that you can expect. I will say that many of my out-of-state friends can't believe how much more affordable and lucrative Tulsa is compared to other states.

Guy, an interesting read, but I totally disagree that the solution is more government regulation or  oversight of rental properties - unless they are part of section 8 and are therefore offering a service in exchange for income.

IMO, the answer to your question of "When would you know....." is more based on personal integrity and ethics than a hard or fast "model".  Many years ago, we had a real estate investor in Tulsa, who was so motivated by greed that he did some very unethical investing.  Like Mr. Gatley, he ended up losing everything in bankruptcy.  The stories his tenants told, while not as bad as this article states, were still pretty sad.  

As I was interested in starting my SFH business, I actually interviewed this guy (a couple of years before his empire crumbled) to find out how he was able to build what seemed like a nice empire. He told me how he was doing it. My question back to him was "how do you sleep at night and also deal with your conscience"?

Fortunately, I have built a nice collection of SFH in Tulsa, but I learned what not to do primarily by doing the opposite of what this guy did. While I'm not trying to come off as a hero, I do think that rental properties is not just about the physical assets you own, but more about the service you offer to your tenants. Unfortunately, there are tenants that will try to take advantage of that approach.

One last thing to offer, I have personally found the media tends to demonize landlords and make it seem like all tenants are victims.  The Tulsa World recently did an expose on the high level of evictions  in Tulsa County which very much had that theme of victimhood.  So, I called the author of the article and he definitely had no idea what landlords deal with and admitted he had only done one side of his research when writing his article.  To his credit, he did a follow-up piece talking about the causes of evictions and that included some references to "not paying your rent means the landlord can't afford to let you stay in the house or to keep the house in top notch condition".

Would enjoy reading anybody else's thoughts on this question.  Thanks for asking it!

Hi Matt, I don't have any experience with the Bixby app, but do manage all of my SFH (got a bunch). I've got ~8 years experience doing it and have found things that work well and some that don't. I do have a handyman that helps me do repairs and he actually takes calls directly from the tenants to cut out the middle man (me). For me, I prefer to do my own management as no one has my best interest at heart like I do. That is not to discredit property managers as they offer a valuable service in cases where you either can't or don't want to manage yourself. There are definitely pros and cons, but for me the pros greatly outweigh the cons.