Question about Real Estate investment in Atlanta metro (Buckhead: section 8, renters)

[FromGA]

This is just a general question related to buying property in metro Atlanta for investment / renting out purposes.

From what I see on this forum, real estate investors may be buying properties in distressed areas (or where prices are ridiculously low). However, what I also see in the news, property values in distressed areas are still falling.

If someone bought an investment property in 2009, 2010 or even until mid 2011 -- how are they doing with their investment?

Or have these investors generally been smart enough to avoid distressed areas, and are able to focus on the cheap properties in better areas?'

What have you done, seen, or heard?

[ATLTJL]

Good question. Also, I'd like to know if short-term value is even important to investors.

If you can get a tenant in place quickly and generate income from them, do you even necessarily care what the property value does in the short-term?

[tamlym]

Purchased properties in ATL in early 2010 ranging from 20K-31K (all needed various degrees of work). I'm sure I would be able to turn around and sell those today for what I put into them since (luckily for us), they all have tenants now, which is a value added in this market.

But why would I sell them if they're pulling in 15-18% returns? As long as rents stay in the $600-800 range and the rentals are occupied, we do not care about short term property appreciation. Our money is made back in 4-5 years.

You cannot even build a house for this amount....the insurance on the house is for a $100k replacement value!

You have pockets within what you might call distressed neighborhoods where it's actually pretty nice. That is where you can look...and have a realtor that knows the areas and knows when to steer you clear of certain properties. Have seen BEAUTIFUL $15k homes fully renovated in bad areas, and have been advised to pass up. But what's the point of buying if even renters won't want to live in that area? Neighborhoods can drastically vary in 2-3 blocks, all within the same zip code.

Our strategy was cash flow. I don't think the properties will really increase in the next 10 years even. If appreciation is the goal, I'd say buy in the nice suburbs (but for us, this strategy is cost and ROI prohibitive for us)

[mrpanda]

Tamilyn,

I agree with you. Your comment below is my strategy.

If appreciation is the goal, I'd say buy in the nice suburbs (but for us, this strategy is cost and ROI prohibitive for us)

[sc29928]

Buy yourself a loft in downtown Atlanta for 75k. You can actually find loft complexes that have relatively low monthly HOA fees from $175-$225 because the maintenance and amenities are minimal. Ask $1000-$1100 for rent and run to the bank with the first $950 that comes along from a tenant with stable rental history. Hold it for two years and list it for 99k and enjoy the profits.

Or buy a 1 bedroom in Buckhead or Midtown for 100k and it will be worth 150k in a few years. However, you would have rental restrictions to consider as most places only allow 25% of the units to be rented. This keeps out the classless section 8 crowd that can and will erode property values. Demand is coming back super strong for true 1 bedrooms in these areas and inventory is dwindling quickly.

Real estate agent and investor here, so that's my advice.

[ATLTJL]

Demand is coming back super strong for true 1 bedrooms in these areas

No it isn't.

removed - don't insult groups of people/occupations

For the past 3 years, even as the sky was falling, we've heard the cries of "deamand is starting to really pick up, I sold four last month alone, jump in now before prices skyrocket!"

Yeah, they ain't gonna any time soon.

[learning11]

In general your rental real estate ROI is commensurate with the risk, and as tamlym stated if cash flow is your goal buy when the numbers meet your criteria. There are many successful investors in both the low end and high end rentals as well as buy/rehab/hold/ resell homes, as the real estate crash has presented once in a lifetime opportunities to buy property at a fraction of replacement costs. The many investors who lost money/real estate were highly leveraged , had marginal cash flows and generally inexperienced/poorly operated businesses. When the ROI is high enough you don't have to worry about an area going down in value for long as all the investor will jump in and get a piece of the action creating a bottom or making prices go up...but the concern with rentals is making sure a neighborhood which is now full of rentals doesn't start to deteriorate.

[ehoez]

Originally Posted by tamlym

Purchased properties in ATL in early 2010 ranging from 20K-31K (all needed various degrees of work). I'm sure I would be able to turn around and sell those today for what I put into them since (luckily for us), they all have tenants now, which is a value added in this market.

But why would I sell them if they're pulling in 15-18% returns? As long as rents stay in the $600-800 range and the rentals are occupied, we do not care about short term property appreciation. Our money is made back in 4-5 years.

+1. Same here, we buy around $10k to $15k + $5k in work., and get around $600/700 a month in rent.

The Mortgage is only $150 a month +/-.

[FromGA]

What general areas would it be worth buying property for under 30K, as some of you have mentioned.

[FromGA]

Originally Posted by sc29928

Buy yourself a loft in downtown Atlanta for 75k. You can actually find loft complexes that have relatively low monthly HOA fees from $175-$225 because the maintenance and amenities are minimal. Ask $1000-$1100 for rent and run to the bank with the first $950 that comes along from a tenant with stable rental history. Hold it for two years and list it for 99k and enjoy the profits.

Or buy a 1 bedroom in Buckhead or Midtown for 100k and it will be worth 150k in a few years. However, you would have rental restrictions to consider as most places only allow 25% of the units to be rented. This keeps out the classless section 8 crowd that can and will erode property values. Demand is coming back super strong for true 1 bedrooms in these areas and inventory is dwindling quickly.

Real estate agent and investor here, so that's my advice.

Would these said lofts have rental restrictions?