All Forum Posts by: Nate Garrett

I should add that any PPE (property, plant equipment) i.e. real estate, computers, office furniture, vehicles, etc etc would be in addition to the 2-3x SDE if the whole business is sold.

@Andrew Johnson @Peter Tverdov

If you have management contracts in place that allow assignment to another property manager, the value of each contract (asset) is roughly 1.0x annual gross management fees (no leasing).

It is unlikely that you would be able to sell a PM "business" with only 10 contracts. However, you might be able to find a PM company that would pay you the above-mentioned price for the 10 contracts.

Once the company attains 100 (give or take) doors under management, the business itself may have attained a market value of roughly 2-3x seller's discretionary earnings. This is the point in which the entire business becomes marketable because the gross revenues can support a full time property manager. However, most established PM companies would still look to acquire the 100 contracts with a claw-back clause. It would most likely be a new entrant to the PM industry that would buy a company of that size.

10% certified funds due the day after the auction. 90% remainder due at confirmation approximately 3 weeks later. 

You will most likely need a commercial or hard money loan because of time constraints and lack of access to the property preventing a full appraisal. 

The title should be passed clear as a result of the foreclosure but there can still be higher priority liens (IRS liens, OK Tax liens) that have rights of redemption. An attorney's title opinion can be obtained during the 3 week period prior to confirmation and the court file will also most likely contain such information.

Bottom line, buying at auction carries significantly more financial / title risk than a traditional sale. It behooves a bidder to be well informed of the process and understand title theory and real property law. 

For the patient, well-informed, savvy buyer, it can be a source of the occasional exceptional deal.

Additional info about the Tulsa county auction process can be found here: http://www.tcso.org/tcsoweb/Auctions.aspx

The court files can be viewed at this link: http://www.oscn.net/dockets/Search.aspx

I know a few investors that have been quite successful with section 8 housing in the Tulsa area. However, they live locally, manage and maintain the properties themselves and know which specific neighborhoods offer the best returns. In my opinion succesfully acquiring, managing, and maintaining a portfolio of C or D class properties in a state where one does not reside would be very difficult.

Tulsa rental market continues to significantly outpace inflation

As 2016 comes to a close, we took a look at the performance of the Tulsa rental market (and suburbs) over the last few years and discuss some factors influencing the market moving forward. Using raw data provided by , we created a series of charts to assist Tulsa-area single family property owners in understanding current rental trends in the Tulsa metro area.

Impact of the 2007 housing crisis on the Tulsa rental market

The Tulsa rental market was not as severely affected by the 2007-2008 housing crisis as other markets, but after the crisis, rents were somewhat stagnant until 2012, when a period of strong rent appreciation began. Since then, rents have continued to grow strongly year over year in the Tulsa metro.

Strong rental growth in the suburbs

The above chart shows a strong overall upward trend in rents beginning in 2012 and continuing until the present. But it is clear that some of the suburbs have fared better than others over the last 4 years:

This data meshes nicely with our observations of rental growth and leasing activity in the Tulsa metro. Jenks and Bixby both offer excellent school districts and properties in these two suburbs have had great rental price appreciation and tend to lease very quickly.

Tulsa and Owasso have also had excellent rent appreciation over the last 4 years. The Broken Arrow rental market has underperformed a bit, but has still managed to outpace inflation.

Tulsa Rental Market Outpaces Inflation

The good news for real estate investors in the Tulsa area is that rental growth has continued to grow faster than inflation for the last 4 years. The average annual inflation for the last 4 years has been very low:

2012 - 2.1%

2013 - 1.5%

2014 - 1.6%

2015 - 0.1%

2016 - 1.0% (Jan-Aug)

Source:

This is excellent news for Tulsa real estate investors, especially those that have their properties financed with long-term, fixed interest rates. In this case, the monthly principal and interest payment has remained the same, while rents have been steadily increasing.

Looking forward

Local economic conditions play a critical role in the Tulsa rental market. Low oil prices remain a threat to employment levels, which could negatively impact the rental market.

However, as has been noted by several , the housing crisis and other demographic trends have fundamentally altered the housing market nationwide. Homeownership levels are down significantly and forecasts point to increased numbers of renter households for the foreseeable future. As a result, we believe it is likely that there will continue be strong demand for single family rental homes in the Tulsa metro area in the near to mid-term.

In short, no, not at the 70% LTV level, if the rehab is done right. There might be a few deals a year at the sheriff sale that meet those criteria, but not many.

In my experience, you can usually generate 15-20% equity on a fix and hold deal in good neighborhoods in Tulsa (assuming a ~100k ARV). So you probably will still have 5-10% out of pocket on the refi.

I'm sure that there are people that will tell you it's possible to be all in at 70% LTV consistently but my guess is they either 1.) did a partial rehab and will have substantial deferred maintenance down the road or 2.) did the majority of the rehab work themselves and hence derived additional equity from their labors or 3.) are buying in lower end neighborhoods where 30% equity amounts to only $7-9k. Remember, builders seek to make a 10% profit margin, so if it was possible for them to make 20-30% consistently on $100k fix and flips they would probably stop building and start rehabbing. There are no successful builders that I'm aware of that are active at the Tulsa sheriff sale.

I would look to find a local business partner vs. using a broker as you will probably only find these deals at the sheriff sale or via off market transactions and I would want an equity partner that I can trust overseeing the rehab locally.

@Renee Huffaker

We are big fans of the Jenks and Bixby rental markets. Great school districts have led to strong rent appreciation, as I'm sure you've seen with your properties.

Here are a few graphs that you might find interesting. We took Zillow's raw rental data for Bixby, Jenks, Broken Arrow, Owasso and Tulsa and put the data in a graph format showing what rents have done over the last several years. We will be including these in a forthcoming rental market update that will be posted on our company blog soon. All data is courtesy of .

Hi @Renee Huffaker

Welcome to BP. What areas of town do you invest in?

Regards,

Nate 

Welcome @Zack Ellard, I think you will find Tulsa to be a great place to own rental property!

You are right. $30 oil is significantly different than $60 oil.

Somewhat of an update, although not specifically focused on oil:

http://www.freddiemac.com/multifamily/pdf/mf_outlook_second_half_2015.pdf