Cumming, GA · Member since 2017 · 30 posts · 2 votes
Hello,
I have been lurking and researching BP and many other resources over the past couple of months. I currently live in Cumming, Georgia and am trying to narrow down on a niche. I want to invest into buy and hold properties and cannot determine if I should aim towards college properties or into SFH.
My current issue is analyzing my market. While I am attempting to determine a niche, I am researching many areas north of Atlanta and am in the max budget of $120k. How do I go upon analyzing the market for these types of investments? I have been searching through the MLS on similar houses and looking at sales prices and DOM. I also have been looking at the rent payments on these types of homes as well. Is there any other resources I should be using to look at similar home values?
I am also hoping some of you could answer what to do in reference to my next steps. I've read mixed posts on here about running my credit to see what types of loans I can acquire. Some have said go to Fannie Mae and do it and others have said wait until I'm ready to buy. I currently own a house and will be tapping into that equity and my savings to begin my investing. I'm going to get a HELOC next week so I can have that line of credit prepared. In reference to LLC's and business operations, should I have all of that set before I make a deal on a property or should I hold off.
Sorry for all of the questions, but I want to be very thorough. Thank you guys for all of your help. This website and forum is an incredible resource! I hope that I one day have the knowledge to help out others like myself.
Lender · Alpharetta, GA · Member since 2017 · 6 posts · 1 vote
9y
Great post William. What you should do with regard to the various questions you have posed here depends on your long term investment goals and your situation (generally your life, work, the time you expect to devote to this etc). What possibilities are you going to create for your life by investing? The possibilities you want to create will lead you backwards to the answers to your questions.
I am a Real Estate Broker and Mortgage Broker. I live in Alpharetta off of Webb Bridge Rd. I helped design the acquisition systems & methods several of the now publicly traded Wall Street firms used to build massive rental portfolio's. I have brokered many hundreds of cash flowing single family home rentals since the money began pouring into the industry in 2011. These were all in metro Atlanta. We even built 47 new homes as rentals.
If you are working with $120K cash I would suggest acquiring several low dollar homes with financing in place. Not having all your eggs in a 1-house basket will help you with cash flow. Financing rentals obviously restricts cash flow on each home, but owning several would help with stability of your finances over the life of your holding of these assets. It helps because you may have a vacancy or other issue at one home at any time that interrupts cash flow on that house. If you only own one you will be in the red until the problem is resolved. If you have multiple properties, a collection issue at one home will be completely or partially offset by the positive cash flow from the others.
I would stay away from college properties. An item that is sometimes overlooked by new rental investors, but that can easily kill your returns for years, is turn cost. You need tenants who will be easy on your asset, and by extension your wallet. Most college students are NOT EASY on a home. College students are also transient tenants. They come and go with the years of schooling or the semesters and this means frequent turns. If you have a home that cash flows $300/month and the tenant ruins just the carpet and paint you could be looking at a $4000 turn in between tenants. If that tenant was only in the property for a year and posted a $1,000 deposit which you keep to cover the damage they will have contributed $3600 net rental income + $1000 deposit = $4600. This means after locating, leasing and managing a property for an entire year you netted just $600.
I would suggest looking in an area that is likely to provide a long-term low-key tenant. If you lease to a single tenant for 5 years and never have to turn the property you will make out MUCH better even if the rent is a little lower. To best avoid the cash-killing "Capital Expenditures" you have to pick the right type of house, find the right tenant, and take other pre-leasing measures that will reduce your long run turn costs. I have proposed, enacted and vetted many ideas to invest in ways that take all of these things into account through my work with the big firms. some of my ideas helped them with their bond ratings and long term performance relative to their competitors.
Write me back! We can meet and get a coffee or lunch to talk this through. I can find you properties, hook up the right financing options (Fannie Mae is the best option until you own more than 4 homes), manage your rehabs (or connect you with experienced rehab folks), and lease your homes.
Now that the "big boys" are not buying anything anymore there is an abundance of talent you as a new investor can benefit from.
Real Estate Investor · atlanta, GA · Member since 2008 · 80 posts · 15 votes
9y
@William McGregor first decide which part of atlanta you want to invest in ITP or OTP, since you are in cumming look at houses near by in dawsonville or gainsville and see if you can purchase anything around 120K (which is tough in the current market) , get pre-approved for a loan once you decide an area you want to start investing in and start looking out for properties in that area.
I would look in gwinette (lawrenceville , snellville)
Cumming, GA · Member since 2017 · 30 posts · 2 votes
9y
@Kiran K Thanks for the info. I would want to concentrate on OTP do to the fact that I am more familiar in those areas and have worked and lived all around north metro Atl.
Investor · Athens, GA · Member since 2011 · 306 posts · 156 votes
9y
I worked in the Gainesville coming Alpharetta and Roz well area for many years before the crash and into the crash of 2008. I still stay up-to-date on those markets. I would contact one of the larger property management companies in that area. Although probably the biggest property manager is likely the owner of thousands of past REOs around Atlanta. You should also check craigslist for the specific areas to see his rental comps as well. If you really want to find a deal go ahead and call those people trying to rent houses because they might want to sell them for a deal. Personally I would go after an off market deal so you could be getting the biggest bang for your buck. There are still sometimes deals on the MLS but there is also so much competition because just like you There has been a huge increase in people searching for and buying rental properties. There are duplexes and quadruplexes in all the areas you are already searching. That will help you mitigate the risk in case you have a bad tenant or vacancies. My advice as an agent and as an investor is to get preapproved completely not just prequalified. That means submitting all documents a loan officer would require to approve. Once you go to make an offer it is like do you have cash and there will be no worry on the sellers and you are a qualified buyer. Maybe you can get a better deal that way also. Look up at @CJ Geiger here on BP for a good 30 year loan to get the best rates and lowest payment. Just make sure you can can rent for 1% of the purchase price.
Wholesaler · Los Angeles, CA · Member since 2016 · 276 posts · 181 votes
9y
@William McGregor What has prompted you to want to start in buy and holds? Unless you have large capital reserves, you will hit a wall very soon. Also one of the more riskier options for someone starting out, because of all the moving parts: land lording tenants, maintenance, rehab, and all the other complexities.
While the idea of positive, passive cashflow does make ever investor's mouth salivate, it might not be the best strategy to start off. Then again, I know nothing about your market and it could be perfect. They say a journey of a thousand miles starts with the first step, so I applaud you for jumping in.
As a side note, if you don't follow the BP blog yet, it is a great source of information on varied topics.
Here is a recent one arguing against the "build massive cashflow wealth in no time with rentals" gurus preach. Happy reading!
Lender · Alpharetta, GA · Member since 2017 · 6 posts · 1 vote
9y
Great post William. What you should do with regard to the various questions you have posed here depends on your long term investment goals and your situation (generally your life, work, the time you expect to devote to this etc). What possibilities are you going to create for your life by investing? The possibilities you want to create will lead you backwards to the answers to your questions.
I am a Real Estate Broker and Mortgage Broker. I live in Alpharetta off of Webb Bridge Rd. I helped design the acquisition systems & methods several of the now publicly traded Wall Street firms used to build massive rental portfolio's. I have brokered many hundreds of cash flowing single family home rentals since the money began pouring into the industry in 2011. These were all in metro Atlanta. We even built 47 new homes as rentals.
If you are working with $120K cash I would suggest acquiring several low dollar homes with financing in place. Not having all your eggs in a 1-house basket will help you with cash flow. Financing rentals obviously restricts cash flow on each home, but owning several would help with stability of your finances over the life of your holding of these assets. It helps because you may have a vacancy or other issue at one home at any time that interrupts cash flow on that house. If you only own one you will be in the red until the problem is resolved. If you have multiple properties, a collection issue at one home will be completely or partially offset by the positive cash flow from the others.
I would stay away from college properties. An item that is sometimes overlooked by new rental investors, but that can easily kill your returns for years, is turn cost. You need tenants who will be easy on your asset, and by extension your wallet. Most college students are NOT EASY on a home. College students are also transient tenants. They come and go with the years of schooling or the semesters and this means frequent turns. If you have a home that cash flows $300/month and the tenant ruins just the carpet and paint you could be looking at a $4000 turn in between tenants. If that tenant was only in the property for a year and posted a $1,000 deposit which you keep to cover the damage they will have contributed $3600 net rental income + $1000 deposit = $4600. This means after locating, leasing and managing a property for an entire year you netted just $600.
I would suggest looking in an area that is likely to provide a long-term low-key tenant. If you lease to a single tenant for 5 years and never have to turn the property you will make out MUCH better even if the rent is a little lower. To best avoid the cash-killing "Capital Expenditures" you have to pick the right type of house, find the right tenant, and take other pre-leasing measures that will reduce your long run turn costs. I have proposed, enacted and vetted many ideas to invest in ways that take all of these things into account through my work with the big firms. some of my ideas helped them with their bond ratings and long term performance relative to their competitors.
Write me back! We can meet and get a coffee or lunch to talk this through. I can find you properties, hook up the right financing options (Fannie Mae is the best option until you own more than 4 homes), manage your rehabs (or connect you with experienced rehab folks), and lease your homes.
Now that the "big boys" are not buying anything anymore there is an abundance of talent you as a new investor can benefit from.
Cumming, GA · Member since 2017 · 30 posts · 2 votes
9y
@Ethan Atkinson Thanks for the info! I'll definitely start contacting property management companies in the area to make some connections. I will make the connection with CJ Geiger for those rates. I appreciate it!
Cumming, GA · Member since 2017 · 30 posts · 2 votes
9y
@William Brown Great resource you posted. I don't plan on stopping after my first buy and hold. I do plan on building a portfolio and continuing to build a business. But as of right now, I plan on focusing on my first investment before I get ahead of myself. I always try and be very thorough with everything I do and take things one step at a time. I do know there is risk involved, but hopefully I can mitigate as much as possible.
Cumming, GA · Member since 2017 · 30 posts · 2 votes
9y
@Leland Nicholson You are definitely right on now college kids don't take care of their house (I definitely didnt). I'm looking at SFH and multi families, but noticed that the more north you go, the lack of multi families.
I may have added confusion, but I don't have 120k in cash, I have around 30k. I was hoping to find a home under 120k to start with.
You provided a ton of information and I greatly appreciate it! I would love to connect in the future and discuss REI.
Investor · Alpharetta, GA · Member since 2015 · 242 posts · 185 votes
9y
@Leland Nicholson - great advise! You sure have a lot of experience that most others on BP don't have! I see you're off of Webb Bridge. I'm off of Kimball Bridge. My experience has been mostly lease option and owner finance - for the cash flow. You're correct in renters in general- do not take care of properties -if at all. I got good at their "game" years ago and that's why I only do lease options- with non-refundable deposits, and long leases. Every time I experience a problem, something else gets added to the lease to prevent it- or gain some teeth if we have to appear in court. Lately, my lease option tenants have been doing fine- but the turnover has been costly. I mostly have the repair costs equal to or less than the new option deposit from the next tenant. This helps with the turnover cost.
Lender · Alpharetta, GA · Member since 2017 · 6 posts · 1 vote
9y
All good strategies Richard! One thing we have had success with is using durable materials with extended warranties for rehabs. We changed the trim, paint, flooring type and other features at a slightly higher up front cost in exchange for durability and extended warranty. The floors we use have 10-year full replacement guarantees, so whenever carpet gets work out we replace with this stuff instead. If done right you can almost pressure wash the inside of the house when the tenant leaves to clean it up! :) (ok, don't really pressure wash inside, but you get the idea). Home warranties on every house cost $450 up front but save your cap-ex long term by getting replacement of broken appliances & systems for the price of a basic service call.
Cumming, GA · Member since 2017 · 30 posts · 2 votes
9y
@Leland Nicholson From what I have been reading on BP, it seems that tile flooring is frequently preferred for rental properties. Has that been your experience? It seems that by going with quality materials, it will save you in the long run.
Lender · Alpharetta, GA · Member since 2017 · 6 posts · 1 vote
9y
Tile need grout repair and breaks when people drop anything heavy on it. Also here in the south it is "weird" in most cases to have tile in living areas. I had to explain this to all my clients from out west...we don't tile everything in GA. People want a "warmer" feel. Shaw Luxury Vinyl Tile has a 10 year warranty and looks like wood. It is glue down thick vinly/rubberized plank flooring that is very easy to install and almost indestructible.
Cumming, GA · Member since 2017 · 30 posts · 2 votes
9y
To update my progress, I have been Driving for Dollars and have sent out a decent amount of hand written letters. I'm also looking through the MLS and searching for a deal.
I've decided to stick to my home county of Forsyth County because I know every little detail of the county from crime rates, school growth and ratings, and have access to information of areas that few others have. Trying to utilize my "unfair advantage."
I'm trying to teach myself how to find out the ARV of properties and analyze deals. I've listened to dozens and dozens of podcasts, read a few books about investing, etc. Anyone have any advice on how they learned and what mistakes they made about analyzing? Thank you!
Investor · Leander, TX · Member since 2016 · 299 posts · 402 votes
9y
Douglasville, Fairburn, Grayson, Dallas, Fayetteville, Powder Springs, and McDonough are some good areas near Atlanta.
I have a house myself in the Sudie area near Dallas that I got for $107,000. Over 1,400 sq ft. 4 bed 3 bath, garage built 1986. worth $125,000 today. Rent at $995.