Flipping houses is a great way to make money in real estate, even if you’re relatively new to the industry. It doesn’t require a professional background in real estate or formal education, although you must be willing to do research and put in hard work to be successful.
With a population of over 4 million people and over 1.7 million units of housing, there is ample opportunity to flip houses in Oklahoma. However, making money in real estate takes hard work and dedication. Before you flip your first house, it's important to check out the local housing market data and understand how this business works.
To help you in your pursuit, here is everything you need to know about flipping houses in Oklahoma.
Flipping houses is a real estate investing strategy that involves buying a property at a discounted price, renovating it to market standards, then selling it at a higher price. Flippers buy houses being offered at a price lower than the standard market rate, usually because the homeowner is behind on the mortgage or they have deferred maintenance.
Once they purchase the home, they’ll put money into renovating the property to meet the demands of the market and sell it to homebuyers looking for a primary residence or investment property. If done correctly, they can often collect a substantial profit, even after paying for the repairs and other associated costs.
Oklahoma is an excellent state for first-time flippers for many reasons. The median price of a home in Oklahoma was $242,200 as of March 2023, up 5.5% compared to the previous year. This means it’s relatively affordable to purchase a home compared to the rest of the US.
According to Zillow, 56.3% of sales were under the listing price, translating to negotiation power in favor of buyers (as of March 2023).
If you're thinking about flipping houses in Oklahoma, the recent performance of the real estate market suggests this could be a golden opportunity. In the last quarter of 2022, Oklahoma experienced a notable total appreciation of 0.75% in home prices, with an average annual rate of 3.02%. This growth is among the highest compared to the rest of the United States.
Over the past year, the local market has seen a remarkable total appreciation of 13.17%, demonstrating the potential for high returns in a short period. Even more impressively, the total appreciation over the past two years has reached 30.85%, with an average annual rate of 14.39%.
The positive trend extends to longer time frames as well. In the last five years, total appreciation was 48.46%, averaging 8.22% annually. Over the past decade, Oklahoma homes have appreciated by a total of 71.28%, with an average annual rate of 5.53%.
From the beginning of 2000 to the end of 2022, the total appreciation rate was a whopping 144.10%, with an annual average rate of 4.00%. These numbers reflect the consistent and promising growth of the Oklahoma real estate market, making it an appealing destination for house flippers.
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If you want to learn how to flip houses in Oklahoma, consider the following step-by-step guide.
Finding a mentor to help walk you through your first few deals is always recommended for beginners. Although flipping houses is a real estate investing strategy that anyone can learn in time, it does carry risks. If the home doesn’t sell for as much as anticipated or the construction costs go significantly over budget, the shortfall will come from your profits.
This can have severe consequences if you financed the deal or brought in other real estate investors and didn’t make enough to pay them back on time. So it’s wise to find a mentor who can help you avoid common mistakes and stay on track.
Even if they ask you to split the profits or pay them for their time, it’s better than getting in over your head, and as you gain more experience, you can rely on their expertise less and less.
The next step is to thoroughly research the Oklahoma real estate market and get a solid understanding of housing prices and other factors. Understand the trends that impact the market value of a home, such as demographic data, school districts, property taxes, zoning laws, etc. Also, learn how to spot a good deal and what to look for when scouting off-market properties.
The best way to find this information is to learn from other investors and real estate professionals. You can start with anyone you may know in your personal network or join local real estate-based organizations like the National Association of Realtors (NAR) or a Real Estate Investors Association.
Popular Oklahoma-based NAR chapters and REIA’s include:
Once you’ve done your research and established a network, you’re ready to begin scouting properties. There are a few formulas you’ll want to familiarize yourself with before you start looking for foreclosures and other off-market properties, including:
ARV is short for after-repair value, the amount the home would likely get on the open market once it’s renovated to market standards. You can calculate ARV in a few different ways. The best method involves pulling comps and estimating a rough price per square foot which you can apply to any properties you’re considering. Here are the steps for calculating ARV:
You can either find the information by checking free listings sites like Zillow, or you can enlist the help of a real estate agent with access to the MLS.
Your MAO (maximum allowable offer) refers to the most you could pay for a property and still make money on the deal.
The MAO formula is:
MAO = ARV - Fixed Costs - Rehab Costs - Desired Profit or Equity
The most you can afford to pay is the estimated home price minus expenses and the amount you’d like to make on the deal. Fixed costs refer to the costs associated with owning the property in the short term while you make the necessary repairs, such as loan interest, utilities, taxes, etc. Rehab costs refer to the amount you spend on the remodel; your desired profit is whatever you’d like to make (typically 10-20%).
While the more accurate you are, the higher your profits will ultimately be. However, if you’re in a hurry, you can use the 70% rule.
The 70% rule states that your MAO should not exceed 70% of the ARV minus repairs. So, if the ARV of a property is $200,000, you should not offer more than $140,000 to give yourself a comfortable cushion.
Unless you have spare cash burning a hole in your pocket, you’ll need to find a way to finance the deal. Here are a few of the most common ways investors fund a fix and flip:
Finally, once you’ve found the perfect deal and secured financing, you must close the sale. Oklahoma is not an attorney-close state, which means a lawyer is not required to transfer ownership. However, if you decide to forgo having an attorney present, you may need to hire a title company to transfer ownership.
You will meet with the buyer at the closing to sign all the paperwork and transfer the title. You’ll both be shown a settlement statement listing all the outstanding costs which you’ll be required to bring to the closing. Once the funds are exchanged and the title has been transferred, you’re ready to begin renovating.
While finalizing the closing, you’ll want to begin creating a construction schedule and get everything in place so you can start working as soon as you get the keys. Time is money when it comes to rehabbing a home, so you’ll want to hit the ground running.
You’ll also want to develop some system of checks and balances to ensure you stay on budget and avoid holding onto the property too long. Creating a solid team of contractors, sub-contractors, real estate agents, and other professionals, you can turn to for advice is often wise.
You should also pay attention to the market and determine what improvements will add the most value to the home. Common renovations buyers expect include new paint, flooring, bathrooms, and kitchens. You can look at the comps and see what upgrades will add to your profit margins.
Read Also: How To Choose The Best General Contractor?
After renovations are complete, you’ll need to find a new buyer. Typically, the buyer for a house flip is an average homeowner looking for a primary residence. However, if the area has a solid rental market, you might consider selling to a landlord looking for a rental property.
Although you can market the house as an FSBO, many flippers are better off hiring an agent. Hiring an agent will decrease the time the property is left sitting on the market, saving you money in carrying costs that may diminish your profits. Once you start noticing buyer interest, the last hurdle is to pass the buyer’s inspection.
As long as your team did quality work, you shouldn’t have any issues, but if problems are uncovered, you may need to return to the drawing board. However, if everything checks out, all that’s left is to close on the sale and collect your profits.
Investors can find houses to flip in Oklahoma in a few different ways. One option is to work with wholesalers who will scout properties for you in exchange for an assignment fee. You could attend bank auctions or check public records for homes that are in foreclosure. You can work with a real estate agent and check the MLS or other investors to leverage their network.
You could also send direct mailers to distressed homes or knock on the door and ask to speak to the owner. There are countless methods that produce results, including both free and paid tactics, so you’ll have to experiment and find a strategy that makes sense for you and your budget.
No, a license is not required to flip homes in Oklahoma unless you plan on offering brokerage services in exchange for a fee. Brokerage services include negotiating prices, fielding offers, marketing a home, and performing other tasks on behalf of another party to facilitate the sale of a property.
Although it isn’t easy, it’s possible to flip houses in Oklahoma without risking any of your own money. If you find a private money lender interested in your deal, you could offer to do all the work in exchange for a split of the profits if they provide the financing.
Many hard money lenders are also willing to be flexible with income and credit requirements as long as the underlying deal makes sense and the property has value. You could also start as a real estate wholesaler and work your way up to flipping houses by saving your fees. You might also consider crowdfunding money from smaller investors online, then splitting the profits at the end of the deal.
If you're interested in house flipping in Oklahoma, it's essential to understand the local markets and their potential for return on investment. Several cities in Oklahoma present unique opportunities for house flipping due to their consistent population growth, economic stability, and affordable housing values. Currently, the best cities to flip houses in Oklahoma are:
Embarking on a house-flipping journey in Oklahoma can be challenging, but the rewards can be substantial with the right mindset, a strong work ethic, and the support of a knowledgeable team. The potential for fast returns is enticing, yet it's crucial to approach this venture with a clear understanding of the landscape.
That's where the experts at Real Estate Skills come into play. Our seasoned professionals can provide the guidance and support you need to navigate the complexities of house flipping and wholesaling in the Oklahoma market.
The nuances of house flipping in Oklahoma are many, but by leveraging the insights and strategies available at Real Estate Skills, you can equip yourself with the knowledge necessary to succeed. So, whether you're a seasoned investor or just starting out, let the experts at Real Estate Skills be your guide. Through comprehensive learning resources and expert guidance, we're here to help you turn your dream of flipping houses in Oklahoma into a rewarding reality. Start your journey with us today.
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