Atlanta Duplex in D Area - My First Deal

8 Replies

Hello BP,

I am a first-time investor looking for some brutally honest feedback on an MLS duplex in the West Atlanta area. It is turnkey for the first year and attached is the BP calculator numbers. The numbers I put in were very conservative, including the 20 year financing (which I'm not married to) and the low insurance quote. Tenants are currently in place and paying $1445 altogether so there is cash flow and since it's a first deal, I may drop the property management company.

It is being inspected this Saturday and basically, I am looking for a reason not to buy it... 

So tell me... Why should I not invest in this property?

I own two houses in 30318, on the other side of Hollowell Pkwy, in Collier Heights which is a nice neighborhood and is a Historic District.  That being said I'm going to be selling both because I can't seem to get good tenants over there; have had one eviction and one abandonment that trashed the house.  I screen the hell out of people but maybe I'm just jinxed in that part of town.  I've owned both since 2013, I self manage and these two properties take up 90% of my time compared to the other two that I own farther out.

Appreciation has been much slower than I had anticipated; there are still a lot of distressed sales in 30318.  I am already seeing with the first house I am going to list that I'm going to have trouble with it appraising for what my broker says we can sell for.

Personally I would't buy a duplex off of Hollywood.  Granted I haven't driven that area in a few years but I didn't like what I saw back then....too many people/adult males "hanging out" during the middle of the day when most people are working.  That was enough for me to not even do a night time drive through like I always do with any house I'm thinking of buying.

That is my humble 2 cents.

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Thanks for the input, @Mark Graffagnino , super helpful. Since the tenants are currently in place I never even considered if they were Sec8 or not... Looking at the leases, it doesn't seem that they are but I'm not sure if I'd be able to tell either way. I did briefly meet with them and they both seemed great. It is definitely in a rough neighborhood with a LOT of empty/abandoned homes so it's probably still just as you remember.  

How much further out are your other two properties, if you don't mind me asking?

The lease would not state if the tenants are Section 8; there would be a separate agreement between the landlord and the AHA.  You may want to ask the Seller about that.

One of my properties is off Camp Creek Parkway, outside 285 in a very nice area and the other is in Kennesaw.  I get a much higher class of tenant in both of those locations, although the rents are not really much higher than the houses in 30318.

Another old rule of don't want the nicest house in a sh*tty neighborhood.

@Mark Graffagnino , don't know if you've experienced this or not, but we have a friend with a couple of properties in crappy neighborhoods in city of ATL (don't know zip code) that have great returns on paper (he was all-in on one for around $25K and rented for $950), but with one of them, he's paid the city of ATL about $4K in fines in the last 3 years (broken fence, trash in yard, etc.).  

Like you, he's looking to unload them and I think currently has both of them under contract.  He says they're not worth the hassle.  Have no idea what his screening process was like and other factors that may have affected his experience though.

This is secondhand - not my personal experience - so the facts may not be 100% accurate, but something I would have never considered up here in the 'burbs :)

So basically what y'all are saying is that this isn't a great deal? That is pretty much what my gut has been telling me... The cash flow is okay but I'm worried that I'm spending too much for the area. Still going to see what the inspection comes back as but will probably continue looking in other areas (maybe a tad bit closer to the belt line developments). Thanks for all the input!

@Julie Kern fortunately I've never had to pay any fines to the City.  Although with the amount of crap I had to go through with the historic district department it felt like I was being fined.  We're going to list the first one and see how it goes.  The broker feels like we should be OK.  We'll see

@Robbie A. it comes down to whether you are comfortable with the area or not. If you are unfamiliar with it (or don't know quite enough) I would steer clear until you do know more. Better to be cautious when you're first starting out.