BiggerPockets

My post got cut off...

Anyway, according to the forecast, Atlanta is at the bottom in the forecast, predicting -18% home price down.

Is the reason only that lots of REOs are going to be out in the market so much so that a home price is expected to be up in a few years after the banks' inventories are cleared up?

Or is there any other economic driver that I am not aware of, which explains this decline such as major employers moving out of the state or something?

I'm also surprised at the findings from this report as I'm looking to buy multiple REO's in Atlanta and have been told that rental demand is strong and unemployment stable...and that there is a shortage of decent inventory..does somebody have any info to the contrary?

When I was doing BPO's I did hundreds for Clear Capital. Clear Capital is a BPO mill that send reports to brokers and agents for a fee.

What these gross data reports do is averaging for an area.For out of state investors they look at this data and it is confusing.This is why you need someone LOCAL who understands market conditions for urban areas block by block,for suburban areas every mile,and for rural areas every few miles of where you are investing.

You can drill down even further then that but finding a local with intimate market knowledge is worth their weight in gold to protect your investing purchases.

Paul, Joel is correct in his advice. I am an investor from Florida working the Atlanta market for the last 3 months. I started in the areas you mentioned and moved to the North West side of Atlanta after much research and networking. There is a world of difference in 30k needing everything in war zones to 60k rent ready in most cases. I am closing on my 1st property this week. Happy to advise in what I am doing.

If Decatur is a war zone to you, I don't really know what you want in life. Maybe the crappiest parts of 30032 on the East Side of Candler road (Which until 2 years ago weren't so bad actually, I made damn good money there)... but west of Candler you start seeing good potential for rentals. Heck, there are flippers starting to dip their toes into the East Lake Terrace and Longdale park neighborhoods in Decatur 30032.

Of course, if you talk about incorporated Decatur (30030) being a war zone you need to get your head checked out. 30030 and 30317 inside the incorporated areas are back to 2007 pricing with speculative building waayyy outta control. Also, I just sold a house in 30317 (Atlanta) that was spitting distance from City of Decatur and made a tidy profit.

Houses in 30032 can be had sub-30, and sub-20 if you are careful. 30317 can be had sub-70 with good flip potential.

All parts of Atlanta are NOT war zones. Yeah, ride through West End and Cascade and you better be packing heat and a bullet proof vest. Peeplestown and Pittsburgh are still pretty bad too.

But.... go drive through R-town, C-Town, Inman Park, East Atlanta, Kirkwood, Edgewood, Ormewood, Grant Park, etc. These are NOT war zones and houses can be had cheaply if you keep your wits about you. (Okay, not in Grant Park or Inman Park.)

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Anyway, to directly address the question...

Many parts of intown Atlanta cater to the bread and butter price range... the 150-down range. During the tax credit, that range was going like gangbusters. I flipped houses under 14 days on market, made stupid profit margins, etc.

The tax credit cannibalized YEARS of demand into a very short period of time. Speculative renovation got way outta control with small houses getting travertine, granite, the whole nine yards. Everyone was desperate to set their product out from the crowd.

Then the tax credit ended. God, talk about the dark night of the soul. I no longer fear Hell because I lived through the tax credit ending. Etc. Etc... Basically, prices dropped about $50-70k in the neighborhoods that used to be very much in favor (Shamrock, Toney Valley, East Lake Terrace, White Oak, to name a few Decatur neighborhoods that got rocked)... that collapse pretty much turned endemic through most of Atlanta.

Demand dried up overnight. Investors who were leveraged into their flip properties started to foreclose, lenders got back houses they didn't know what to do with, and nobody could buy or even get qualified for a loan. Absolute, total bloodbath. I don't actually know any investors in Atlanta who didn't feel the heat of the aftermath of the Tax Credit detonation.

After the tax credit, the entry-level home for your average blue collar worker just stopped being a viable option as a flip resale candidate. The heavy hitters (Graystone, Thrive, Game Ents, Epic Precision, etc.) all basically picked up shop and moved to higher income brackets where the demand hadn't been so cannibalized... or they simply dropped their low-price product entirely and focused on the upper end market.

Intown, neighborhoods like Kirkwood became target-rich environments as all the money moved towards Second and Moreland away from Candler and Glenwood. Kirkwood especially saw a bubble in 2009 and 2010 that kinda burst through 2011. For awhile, though, the money was kinda like mopping water off a floor.

Then the scandal with the city of Atlanta schools hit, and those Atlanta neighborhoods became not so desirable for people with kids. Again, demand dried up and a few folks got left holding the bag.

Right now, like I said... it's all about Decatur school district. Oakhurst, Decatur, and north until you get to maybe Briarcliff are just going like gangbusters. If you have the cash to play, that is...

So Joel mentioned war zones and then you list these cities...what a wonderful coincidence!

Hopefully Aaron doesn't get mad at me that I am including Decatur in this list...:-)

I'll be honest, I got no idea what the rental demand is in these areas but I don't care because I would not deal with those areas. No, they are not all war zones but there are war zones in these cities.

Just because you can buy a cheap house does not mean you are getting a good investment. If the recommendation you are getting for houses in those areas is from the same guy that is selling them to you then I would be careful.

Then again you being in London I assume someone will be managing this for you so you will not have to fear for your life but will have to pay the bills to replace the stolen AC/copper lines/appliances etc. Or the trashed house...

Joel is right in that there is an abundance of cheap houses in Atlanta and that is because many of them are crap...crap houses or crap areas.

The only area I can recommend is north of I-20 just because it is what I know. Furthermore I would recommend north of I-285 also known as the "Perimeter". And I say this because this is where I own property and know what I am dealing with.

Like Joel said you have to know your market and I don't see how you can do that without driving the streets, talking to the tenants and the neighbors day in day out.

Rental demand is strong especially in suburbia. If I can find the link to the article I read I will post it. This is supply and demand where the families have to rent now after foreclosure.

As far as the bad areas in Atlanta are concerned, I have buyers that want to buy fix up and hold. Some of the "war zones" are not that and just a myth. There is an empowerment zone in the city and many investors are unaware of it which is 30318. There was mortgage fraud recently and there are many more houses boarded up due to that fraud. It does look bad but I have buyers
who want to invest and rent and "bring up" the neighborhood. I am referring to 30314 & 30318.

Downtown Atlanta remains "dangerous" because no one wants to go and start turning it around. When you have POVERTY - you have unstable environment which leads to depression and crime. It does not have to be that way and the mayor is ignoring it too. I intend to meet with him soon :)

I am just one investor that is going to do what I can house by house to make it different. Watch me...you are welcome to join me.