Thinking of Investing in Real Estate: Here are some helpful tips to get you started.

When it comes to real estate investing, it's important to carefully consider the potential return on investment (ROI) of a property before making a purchase. In the Oklahoma City market, there are a few key strategies and formulas you can use to determine whether a home is a good investment.

One strategy to consider is rental income. If you're planning to purchase a property and rent it out, you can use the gross rent multiplier (GRM) to determine its potential profitability. The GRM is calculated by dividing the purchase price of the property by the gross annual rental income. For example, if a property is worth $200,000 and generates $20,000 in gross annual rental income, the GRM would be 10 ($200,000 / $20,000 = 10). A GRM of 10 or less is generally considered a good investment in the Oklahoma City market.

Another strategy to consider is flipping homes. If you're planning to purchase a property, make improvements, and sell it for a profit, you can use the 70% rule to determine its potential profitability. The 70% rule states that the maximum price you should pay for a property is 70% of the after repair value (ARV) minus the cost of repairs. For example, if a property has an ARV of $200,000 and the cost of repairs is $40,000, the maximum price you should pay is $100,000 ($200,000 x 0.7 - $40,000 = $100,000). A property that meets the 70% rule has a good chance of being a profitable investment.

Another useful strategy is to use the capitalization rate (cap rate) to determine the investment potential of a property. The cap rate is calculated by dividing the property's net operating income (NOI) by its purchase price. The NOI is the property's rental income minus its operating expenses, such as property taxes, insurance, and maintenance costs. For example, if a property has an NOI of $20,000 and a purchase price of $200,000, the cap rate would be 10% ($20,000 / $200,000 = 0.1 or 10%). A cap rate of 10% or higher is generally considered a good investment in the Oklahoma City market.

It's also important to consider the location of the property when determining its investment potential. Look for properties in up-and-coming neighborhoods with strong job growth and a high demand for housing. This can help ensure that the property will appreciate in value over time, resulting in a higher potential ROI.

Overall, deciding if a home will make a good investment in the Oklahoma City market requires careful consideration of its potential rental income, potential flipping profits, cap rate, and location. By using the strategies and formulas outlined above, you can make an informed decision and potentially find a profitable investment property in the Oklahoma City market.