The next big affluent neighborhood

[ChrisHayes]

What would you say is the next neighborhood to experience really good housing price appreciation like the Paseo District? As I've said before, I'm interested in getting into real estate investing and would like to invest in these neighborhoods.

[rezman]

I'm no expert, but IMO, while there are affluent folks who own property in the Paseo district, it is hardly what I would call an affluent neighborhood, and has a long way to go before it would ever be considered as such. It was a high crime area in the not too distant past and there are still some pretty rough streets in and around the area. But, as far as investing in properties, I imagine now is as good a time as any before it does take off.

[ChrisHayes]

There are some million dollar homes in Paseo. But many are also over 200,000. Affluent may have been a bad phrase

[bchris02]

The Paseo is still "up and coming" though its closer to gentrified today than it was a few years ago. The "rough" streets are becoming fewer and fewer.

What about the Plaza area closer to Classen or south of 16th St? Its a great area but seems to still be kind of marginal the closer you get to Classen or 10th. As popular as the Plaza is I think its just a matter of time before the entire area becomes gentrified.

[chuck5815]

I think Capitol Hill has a lot of potential, but that's potentially a 15-20 year play.

[Richard at Remax]

Invest how? Flip, rent, owner occupied?

[ChrisHayes]

Probably mostly rentals but flipping as well

[rezman]

There are some million dollar homes in Paseo. But many are also over 200,000. Affluent may have been a bad phrase

That would be more the exception than the rule as there are many more valued well below $150,000.

[Richard at Remax]

Two years ago I bought a house in Central NW Highlands (36th and Francis) for $75,000. Put about $24K in it, but got back around $19K from rent. Sold in in June for $118,999. After some concessions and such I got around $110,000. Not a bad turnaround.

The margins in flips are really low in OKC so unless you get it at auction or know someone in the know where you can get a property before it hits the market, I would suggest the "renovate and rent" strategy.

[BLJR]

Worthy Cook, we need to talk!!! You are right on the profit margin!!!

I am currently flipping a house near NW 63rd and Meridian. I bought it for $85K, I will have about $22K in it, and will sell for around $131K. After the realtor beating I will take at 5%, I will net around $17K. This is the best margin flip I will have had in a while. I got lucky and found it word of mouth, bought directly from the seller. The thing that is going to kill me on this is mine will be totally remodeled, while most in this area sell with minimal updates, lowering the $ sq/ft comps, plus there was someone else looking at it, so I raised my offer some.... probably too much.

To answer the question asked, I really don't know. I have seen a huge spike in the asking price of 2BD 1BA, around 800-1,000 sq ft houses, what I would call a starter home. In fact, as soon as I am done with the above house, I am going to look for one of these 2BD 1BA houses to rent for a while, because they seem to be renting well, just have to screen hard, and hope I get a good renter.

[ChrisHayes]

Rent houses will, by far, be my main objective. What I'd really like to do is go on to be a developer and repurpose older buildings into apartments but that's a ways down the road. Why are profit margins for flips so low in OKC?

[aDark]

I had a great experience buying in Classen Ten Penn and selling 2 years later. I'm happy to share more info if you want to message me privately.

[warreng88]

Yeah, I would think CTP would be a good investment area if you can find something in there that's reasonable. I know there is a lot of movement around the Linwood Blvd area and I could see that becoming the next Plaza. But it would have to be a long term hold, I would guess five years. There is also a lot of activity in the Military Park neighborhood, but it's pretty hit and miss.

[Teo9969]

Rent houses will, by far, be my main objective. What I'd really like to do is go on to be a developer and repurpose older buildings into apartments but that's a ways down the road. Why are profit margins for flips so low in OKC?

Because the sf of what is considered "a premium" is low in OKC. $150/sf is on the high end for most of the metro area.

If a flip-home sells pre-reno for $60/sf in OKC, in a better market it might bring $75-$85/sf. That home sold post-reno might bring $90/sf-$100/sf here and sell for $150/sf in a better market.

People will pay a premium for a move-in ready house. But when $140/sf is considered a premium for most of the market.

When you have such a low ceiling, it means that certain basic costs cover a larger percentage of the potential profit. 100 square feet of tile is not likely going to cost more in Denver than it does in OKC. But if you buy for $60/sf and sell for $90/sf vs. buy for $80/sf and sell for $120/sf even though you increased value by 50% in both, the raw cost of your materials was not 30% higher in the better market.

OKC is still a long play city. Renovate and Rent is a far better strategy in OKC right now because the opportunity for appreciation is high. You don't even have to hold on to something for 5+ years, but trying to turn something around in under 12 months is not a great idea in this market, especially in the core, where appreciation still has a solid trajectory forward.

The big problem there is obviously cash getting tied up, but because buy and hold is how the big money plays in this market, it forces the hand of the individual investor as well.

[Richard at Remax]

The 2 bed 1 baths are my best money makers. I highly suggest the Grady Musgrave area just north of 63rd and May. Area is full of 2/1 and are all usually in the low $100Ks. I bought all of mine for $100, $100, and$108/ft. Many are selling now in the $110's which makes me pretty happy. Most houses usually need some kind of refreshing, but none are total disasters. All three of my rentals in there get >$1,000/month. The reason is that there are very little apartment competition and you are still very close to plenty of desirable locations. Should keep you eye out in there for some.

[BLJR]

The 2 bed 1 baths are my best money makers. I highly suggest the Grady Musgrave area just north of 63rd and May. Area is full of 2/1 and are all usually in the low $100Ks. I bought all of mine for $100, $100, and$108/ft. Many are selling now in the $110's which makes me pretty happy. Most houses usually need some kind of refreshing, but none are total disasters. All three of my rentals in there get >$1,000/month. The reason is that there are very little apartment competition and you are still very close to plenty of desirable locations. Should keep you eye out in there for some.

Yes, that is one of my target areas I always look at. I have always been outbid though....

[Colbafone]

The 2 bed 1 baths are my best money makers. I highly suggest the Grady Musgrave area just north of 63rd and May. Area is full of 2/1 and are all usually in the low $100Ks. I bought all of mine for $100, $100, and$108/ft. Many are selling now in the $110's which makes me pretty happy. Most houses usually need some kind of refreshing, but none are total disasters. All three of my rentals in there get >$1,000/month. The reason is that there are very little apartment competition and you are still very close to plenty of desirable locations. Should keep you eye out in there for some.

Before I just purchased my house in Edmond, I rented two houses in The Village. I know that's not this EXACT same area but very similar/close. First house I paid $950 a month and the second I paid $800. Both houses had been LOOOONG owned by the owners and therefore long paid off. They EASILY could have pulled in closer to $1200 for either house. And I would have paid $1200 for either house.

But anyway, my point is, having just been on the renter side of things, renting a home with a friend or significant other and having no kids, the 63/May area and The Village is absolutely awesome. Smack in the middle of the city. Eaay access to highways. Restaurants and grocery and activities all around. As someone who did rent in these areas, it's the best place in the metro to rent, sans renting for good public schools. Here in the next 5 years to 10 I will absolutely start looking into buying a house in these areas and pull the long con of renting/renovation. Obviously it can be hard to get good renters, but I lived in both of my houses for 2 years, and while that isn't a long time, I did no damage to either house, got 100% deposits back, and my second landlord even helped me find a lender for the house I've just bought. There are good renters out there, I promise! My second landlord did a credit check, and wouldn't allow anyone below a 640 credit score to rent from him. Which I thought was a pretty good idea.

[turnpup]

The 2 bed 1 baths are my best money makers. I highly suggest the Grady Musgrave area just north of 63rd and May. Area is full of 2/1 and are all usually in the low $100Ks. I bought all of mine for $100, $100, and$108/ft. Many are selling now in the $110's which makes me pretty happy. Most houses usually need some kind of refreshing, but none are total disasters. All three of my rentals in there get >$1,000/month. The reason is that there are very little apartment competition and you are still very close to plenty of desirable locations. Should keep you eye out in there for some.

That's where I bought my first house, back in 1996. 3100 block of NW 68th. At the time, it was transitioning from original owners who had built the homes in the '50s (who were either dying or relocating to elder care facilities), to people like me who were starting out. The nine years I lived there it was a great blend of young and old who shared experiences and helped each other out. I'll always have good memories from that time.

It didn't seem like there were a ton of renters there when I owned the house, but I could be mistaken. Worthy Cook, would you say it's a majority of renters now, or just an increase? I have noticed there are tons more cars parked on the street than there used to be.

[Richard at Remax]

Just from looking at properties owners when I did a mailout there not too long ago, I would put it around 30-40% of the homes were owned by some kind of entity that had "LLC or Property" included in the owners name.

But unlike a lot of areas with a lot of rentals, the higher price of rent in the area keeps the quality of renters up, resulting in properties being taken care and therefore values, at minimum, staying put or slightly increasing year to year.

As for cars in the streets, plenty of houses have converted the one car garages to livable space. So that's my only guess why there could be an uptick to go with more rentals.

[turnpup]

^^^^^

Gotcha, thanks! Glad to hear the renters are higher quality, too. It's funny, isn't it, how these homes were family + multiple children homes back when they were built, when people lived comfortably within 1500-1600 square feet of space. Then, in my era, they were considered "starter homes" for young couples who didn't have children. Now, I guess people are seeking even larger homes to start out in (to purchase), which is probably why you're seeing more renters.

[BLJR]

^^^^^

Gotcha, thanks! Glad to hear the renters are higher quality, too. It's funny, isn't it, how these homes were family + multiple children homes back when they were built, when people lived comfortably within 1500-1600 square feet of space. Then, in my era, they were considered "starter homes" for young couples who didn't have children. Now, I guess people are seeking even larger homes to start out in (to purchase), which is probably why you're seeing more renters.

This is why I also think another correction in the market is coming... people are getting approved for more than they can afford... (unless you want to eat the cocking out of the windows). I don't think it will be near as bad as the last correction in 08, but it is coming!!!

[BridgeBurner]

What does everyone think of the square mile directly west of the Plaza district? The neighborhoods between Penn and May and 23rd and 10th?
I currently live in the area (Youngs-Englewood) and constantly see houses being re-done and a few being torn down and rebuilt while walking my dog.
Granted, I am biased because I live there and want to see more of this, but it does seem to be a trend.
I paid $88/ft for my place and paid more than double what the previous owner bought it for in 2001 (though I believe it was purchased as and converted from a duplex as 2 bed, 2 bath houses in the area are fairly rare), I feel like I stand to make a decent profit off of it in 5-7 years but could be mistaken.
Be interested to see what some of you who buy/rent professionally think of the area.

[Richard at Remax]

It's def an up and coming area, but problem is progress has been really slow. The Plaza is really active, as well as as Linwood and even Crestwood. I think where you live it is starting ramp up, because both sides are closing in. As long as it's kept in good shape I see not problem with the value continuing to rise. Only thing is in that area people have had rentals there for a long time and probably have no desire to update the property. So you will see a few nice houses followed by one that looks like it's about to fall over. It will take some time, but they will be eventually bought out or pressured to make their property look good.

That being said, not all but a few properties I have shown buyers in that area that we're marketed as "flips", we're just a sham. A true flip is obviously doing cosmetic, but also fixing problems such as foundation issues, plumbing, electrical, ect. Too many flippers, not just there, are doing all the easy cosmetic stuff and expecting to get top dollar. That all comes crashing down when they get hammered during inspections.

[Ross MacLochness]

How do you feel about Classen North Highland Parked? It's still in its early stages of growth but i't smack in between Downtown, the Capitol and OUHSC. Several new homes have been built and many are being rennovated right now; and the Walcourt is about to be rehabbed. Seems like it could be a good place to build/buy.

[Canoe]

What does everyone think of the square mile directly west of the Plaza district? The neighborhoods between Penn and May and 23rd and 10th?
I currently live in the area (Youngs-Englewood) and constantly see houses being re-done and a few being torn down and rebuilt while walking my dog.
Granted, I am biased because I live there and want to see more of this, but it does seem to be a trend.
I paid $88/ft for my place and paid more than double what the previous owner bought it for in 2001 (though I believe it was purchased as and converted from a duplex as 2 bed, 2 bath houses in the area are fairly rare), I feel like I stand to make a decent profit off of it in 5-7 years but could be mistaken.
Be interested to see what some of you who buy/rent professionally think of the area.

The problem with Young's Englewood is the school, gangs and the bedbugs. If you want a chance to make money then work on the school and drive out the gangs.