Getting started with LTRs in Atlanta

[Michael Verges]

Hey! I'm interested buying long-term-rental property in Atlanta within the next year, currently spending some time to do some research and math. I'm having trouble finding math that makes sense for profitability. I want to share some of my logic and get some advice!

1: My first question(s) is about the target audience: Who is renting? Where are they living? What type of property are they interested in? And how much do they spend? I ask this because I want to make sure there is a market for the type of property I buy, and there are already a lot of nice high-rise and townhome-style complexes to choose near me. From my brief research: 1) younger individuals/couples in townhomes/condos in the city 2) families needing 3 bedrooms in SFHs further out of the city. Next, I should find the median rents for this target audience (~$2,200/mo)... I may be way off-base, or maybe I need a more nuanced approach to this and go deeper into specific neighborhoods.

2: Second question: what properties are profitable? If I'm basing the home value on the 1% rule for renters spending $2,200/mo, I would need to look at listings that are $220,000 ARV, with little-to-no HOAs. Preferably built after 2000 because of reduced maintenance (am I being too picky?). Preferably doing cosmetic-only rehab (replace carpet with LVP, upgrade appliances, new paint) because I am not skilled with DIY and I don't have any good relationships with contractors to get great rates and costs seem hard to estimate on my own (maybe I don't know where to look). Okay... now find in-demand zip codes with lower property costs: south of the airport? college park? maybe further? Is there even demand further out? Okay, filter Zillow and other MLS sites... verrrry sparse.... expectedly, right? because that would be a great deal, and someone probably already bought it!

*Looking for advice on this: what property types / zip codes around Atlanta are <$300k and getting '1% rule' rents? also how accurate is the BiggerPockets estimate?

3: How do I reduce costs? Finding trusted property management that doesn't eat up more than 10% of rent would be great, but I don't know if that's feasible. I live in midtown, should I self manage? I guess probably not.

4: I should pay minimum downpayment, right? Another calculation: leverage (debt) seems to maximize cash-on-cash return assuming I can use the 1% rule and minimize costs for a 9% cap rate (which seems like a unicorn?). On paper, it looks like holding onto as much of my own cash will free me up for unexpected costs or future investments, while a mortgage enables me to profit more than the bank's interest. So, maybe I'm looking at a $40-50k down payment plus closing & light cosmetic renovation costs.

Overall, it's really difficult to squeeze the math and find the right deals on MLS. My conclusion is that I will need an agent to help identify deals, run comps to find an in-demand property that can pass the 1% rule, and hopefully connect me with trusted property managers. I'm also open to doing more rehab work if I had low-cost contractors, but I'm not sure what risks I'm willing to take there.