Atlanta, GA or Sugar Land, TX?

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Atlanta, GA or Sugar Land, TX?

Vicky Liu
Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes

Hi guys!

I’m getting ready to purchase my first rental. Looking for a buy and hold property but hopefully it cash flows a bit. I’m debating between Atlanta, GA and Sugar Land, TX. Here are my thoughts:

Atlanta

Pros - potential for growth. Younger crowd. Lots of job opportunities. Prices are a bit cheaper. Lower property tax.

Cons - neighborhoods are not as safe as Sugar Land. Weather might be more unpredictable.

Sugar Land

Pros - very residential. Very nice neighborhood in the Houston area. Also got potential for growth.

Cons- Property tax rate is lower than general TX rate but still around 2.5% so that might eat into the cash flow if there’s any.

It will be a long distance investment for me as I reside in CA. I have connected with agents in both areas.

Anybody familiar with these markets can you please help and provide some insights? Much appreciated!

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Dwayne McNabPro Member
Rental Property Investor · Atlanta, GA · Member since 2018 · 13 posts · 5 votes
5y

@Vicky Liu Atlanta is great. You have both good and bad neighborhoods. If you are looking for cash flow in the metro area, it’s best to buy a fixer upper in a up and coming neighborhood and hold for a while. Places like Decatur is not a bad idea and depending on the size of your investment old fourth ward.

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  • Dwayne McNabPro Member
    Rental Property Investor · Atlanta, GA · Member since 2018 · 13 posts · 5 votes
    5y

    @Vicky Liu Atlanta is great. You have both good and bad neighborhoods. If you are looking for cash flow in the metro area, it’s best to buy a fixer upper in a up and coming neighborhood and hold for a while. Places like Decatur is not a bad idea and depending on the size of your investment old fourth ward.

    1Reply
  • John Ford
    Rental Property Investor · Atlanta, GA · Member since 2016 · 85 posts · 49 votes
    5y

    Isn't Sugar Land just a suburb of Houston? Rather than comparing it to "Atlanta", why not compare it to a comparable Atlanta suburb? I think something like Cumming or Duluth might be comparable. For me, it's no question, go with Georgia. I'm putting my money where my mouth is and moving back to the Atlanta area from Texas later this month. Even before deciding to move back, I was looking for my next rental...in GA.

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  • Patrick C. Bellamy
    Investor · Atlanta, GA · Member since 2021 · 29 posts · 11 votes
    5y

    @Vicky Liu, 
      I live in Atlanta and in the same boat regarding looking to purchase my first rental.  Let's connect.  There are definitely neighborhoods to look into and others to stay out of.   

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  • Reid Chauvin
    Lender · Nashville TN - Licensed in AL AR DC FL GA LA MD TN, TX and VA · Member since 2021 · 583 posts · 338 votes
    5y

    I imagine ATL has a considerably large pool of renters and just general growth potential. I would look for the most affordable area with the best schools. 

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  • Jenning Y.
    Investor · USA · Member since 2015 · 168 posts · 243 votes
    5y

    @Vicky Liu  I am a long time OOS investor from Houston Metro. 

    If I were you, I will do this: wait until the bidding wars ebb, then start looking at Inland Empire or Sacramento. If SFR does not work, try 2~4 Unit. California is still one of the best state for real estate investing, if not the best. If coastal areas are too expensive, that's understandable, then try inland, which will be far better than invest in out of state.

    About  Atlanta vs Sugar Land, though I do not know much about Atlanta, I prefer Atlanta.  Please do not get me wrong,  Sugar Land is one of the best place to LIVE, but I am not sure whether make sense to invest there, price is high, property tax is high, Houston Metro always has high vacancy rate in normal time (I know right now is not normal time).

    Just my $0.02 . 


     

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  • Robert Haney
    Investor · Sugar Land, TX · Member since 2016 · 62 posts · 48 votes
    5y

    I would be surprised if 1 out of 20 new investors living in one state and investing in another state are glad they did it.  

    If you can pay cash and are happy with a 5-6% return on cash, then go for it like the foreign investors do from outside the US.

    If you think any RE Agent is going to bring you great deals, good luck with that. There is less than 1% chance of that. If paying retail MLS price is your goal then almost any RE Agent will do fine with that. PLENTY of landlords seem happy to pay top dollar retail like consumers. I owned for 6 months and then sold a remodeled property last year that I had $125k invested that could've rented for $1350/mo. I had multiple offers and an investor bought it for $180k with a RE Agent who thought that was a good perfectly normal investment deal. Go figure. That's crazy in my opinion.

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  • Vicky Liu
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes
    5y

    @John Ford

    Yea Sugar Land is not the metro Houston area. I only consider it because I already have friends who own home there and they can keep an eye out for me IF I do purchase there. I do like the vibe in ATL. Just trying to avoid any bidding war not… Thanks for sharing!!

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  • Vicky Liu
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes
    5y

    @Dwayne McNab

    Ok great! That’s a good start! I’ll keep doing my research. Thank you so much!

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  • Vicky Liu
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes
    5y

    @Patrick C. Bellamy

    Absolutely!

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  • Vicky Liu
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes
    5y

    @Reid Chauvin

    Thank you for sharing!

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  • Vicky Liu
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes
    5y

    @Jenning Y.

    Yea I would invest locally in CA in a heartbeat. However, besides the ridiculously prices, my biggest concern is the tenant rules in CA. So many of my friends have been burned in CA, especially during the pandemic. Crazy.

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  • Michael Lyons
    Investor · Philadelphia, PA · Member since 2021 · 40 posts · 17 votes
    5y

    @Vicky Liu a quick search will show that about 80% of homes in Sugar Land are owner-occupied, so the rental demand doesn’t seem like it’s there.

    i was just in the area this past weekend checking out neighborhoods in Houston and the surrounding areas. it seems like a much better place to live than Houston, but from an investing perspective, not so much

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  • Pete Harper
    Rental Property Investor · Streetman, TX · Member since 2018 · 528 posts · 495 votes
    5y

    @Vicky Liu

    One more thing to consider in Houston/Sugar Land is flooding. Being close to the gulf you are exposed to the threat of Hurricanes. Because of this Houston frequently has flooding in unpredictable patterns. A neighborhood that has never experienced flooding can get buried in the next storm. Many rental homes may have a history of flooding with undisclosed flood damage. Post hurricane Houston is a flippers paradise. Some just slap lipstick on a pig. FEMA flood insurance is expensive, often more than your normal homeowners policy that you still need to have.

    With first had experience with tropical storm and hurricane flooding on rental property this is not something you want to have to deal with remotely. All the good contractors get snapped up quickly leaving you with the less desired crews. I ended up with a guy with a drinking problem. He frequently slept on the job site because he was too drunk to drive home. Good times!

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  • Alvaro Rodriguez
    Specialist · Houston, TX · Member since 2019 · 151 posts · 17 votes
    5y

    @Vicky Liu

    I went through the same debate last year when I bought my first rental. The rental market is Texas is really good. I live in Sugarland and houses here get rented really quick. Ideally you want to get a two year contract.

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  • John Ford
    Rental Property Investor · Atlanta, GA · Member since 2016 · 85 posts · 49 votes
    5y

    Yeah, I don't think anyone will have much trouble finding prospective tenants for decent quality houses close to good schools and strong job centers. The trick is being able to charge high enough rents to make the numbers work. With the high property taxes in Texas and high housing prices everywhere, I don't see how people are making buy and hold deals work here right now. I know a lot of "investors" are taking it on the chin with negative cashflow deals on the hopes they'll be able hold for a few years and capture massive equity gains when they sell in a few years. I wish them luck but it reminds me of 2006, to be honest.

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  • Ian Fortney
    Rental Property Investor · Houston, TX · Member since 2021 · 11 posts · 10 votes
    5y

    @Pete Harper I agree with a lot of Pete says. While I don’t have an investment property, I do have a house in the heights and have lived all over houston my whole life. I don’t know of a lot of renters in sugar land. It has a lot of track home neighborhoods that popped up in the last couple of years, hence a lot of owner owned. Also flooding is an issue. Don’t make the assumption that the neighborhood is safe because it’s not close to the coast. The issue with sugar land is that it’s by a huge retention pond. For example, the Greatwood neighborhood (one of the nicest in sugar land) was close to getting destroyed due to the water going over the retention pond (water was already in the yards).

    Personally I know of a lot of friends who have had success in 3rd ward (up and coming area) and Pearland. Pearland is great due to its proximity to the med center. Any house right off of 288 is highly desirable for nurses in the med center who can’t afford the extremely high prices (comparatively) around the med center. Most renters will be in Montrose / Midtown / Washington Heights / Heights (essentially 77007 and 77008).

    Regardless always check the flood plain map. Most of them have been updated since Harvey thus expanding

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  • Jay Ragland
    Contractor · Atlanta, GA · Member since 2016 · 183 posts · 28 votes
    5y

    @Vicky Liu here in atlanta the demand for rentals is insane ... demand is x1000 times higher then supply

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  • Kenji Otokawa
    Investor · Atlanta, GA · Member since 2018 · 19 posts · 26 votes
    5y

    @Vicky Liu

    I invest in Atlanta. It’s good you have connected with a agent here. I’ve often invested in up and coming neighborhoods the last 10 years. The neighborhoods to vary drastically. While many consider them unsafe, I’ll say we have had few incidents in these neighborhoods. Our strategy with these homes has largely been targeting appreciation. As more and more people buy in town, Atlanta is running out of places for people trying to buy in the $250-$400k range.

    Sugar Land sounds great as well. Perhaps less risk and more cash flow but less appreciation there?

    Whatever the case may be, I think it comes down to your goals and also what deals you find. If you find a great deal in either city, go for it. Just ensure the agents or experts you are working with can confirm it is indeed a deal.

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  • Sarita ScherpereelBusiness Member
    Real Estate Agent · Chicago, IL · Member since 2018 · 659 posts · 376 votes
    5y

    @Vicky Liu I’m from Sugar Land and still have a lot of family there. For me, it’s really hard to compare this suburb that’s outside of Houston to Atlanta. Some of the boundaries of Sugar Land might be connected to the Houston Suburbs but it’s still very far from the city. As several people of already commented, these two inventory types don’t really correlate with the inventory that they offer. While growing up in Sugar Land was great, I don’t see it as a potential investing opportunity because I don’t see that there is going to be long term appreciation. One of the best things that happened to Sugar Land was when it was listed on one of the best places to live lists on Money/CNN. There was a bit of a housing boom at the time the it fizzed out. Long term growth is important to me. It really depends on your other investment goals 

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  • Leslie George
    Member since 2020 · 3 posts · 0 votes
    5y

    @Vicky liu

    Hi Vicky,

    I’m from sugar land as well and still live/work/invest nearby here. Agree with the statements above, great place to live..not so great place to invest.

    This is not a city you would invest in for cash flow. You will get modest appreciation and most rents cover PITI only in the area at mls list price.

    If you do want to go foreword however, I just did a zip code analysis of rents and sales through 2020 for the Houston metro. Happy to share if you pm me.

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  • Amit Dhawan
    Investor · Sugar Land, TX · Member since 2016 · 28 posts · 18 votes
    5y

    Hi @Vicky Liu, I live and work in Sugar Land. Great place to live and raise a famaily, not the best place to invest though, atleast not right now. BTW, I'm an agent as well beside my other day job as an engineer so I can tell you there's been a crazy bidding war here on investable homes say under $300K. I myself would like to wait. Maybe wait a bit for the market to atleast stabalize a bit. Just a side note, I generally like to visit the place or have someone visit for you before and get the general picture of the place before you invest.

    Thanks

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  • Jeffrey Donis
    Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
    5y

    @Vicky Liu I agree with @Dwayne McNab. Atlanta is hot! I think, if you can get a property there, you will be making a great investment. 

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  • Ann Watkins
    Real Estate Broker · Houston, TX · Member since 2013 · 187 posts · 111 votes
    5y

    Sugar Land has a ton of rentals I had to cut this list down from over 192 listings and used $2500+. Getting to be the successful bidder is another thing. I have investors from California but they primarily buy condos to rent in areas near the medical center where a lot of workers who rent want to be.

    0Reply
  • Vicky Liu
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes
    5y

    @Michael Lyons

    Yeah you are correct. That is actually one of my concerns as well. In the mist of making decisions I have somehow put that aside. Thank you for pointing that out for me. 

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  • Vicky Liu
    OP
    Rental Property Investor · Los Angeles, CA · Member since 2021 · 25 posts · 16 votes
    5y

    @Pete Harper

    That is true about the hurricanes. ATL also gets tornados and storms. I will look into insurance rates for both cities more carefully. Thank you!


    @Alvaro Rodriguez

    Correct. At least the agent that I connected with said the homes rent out quickly in Sugar Land. However, I haven't been able to find one that makes numerical sense whenever I do the analysis. The high property tax rate really does consume a big chunk of cashflow. 

    @John Ford

    The agent from ATL says the same thing. People are snatching up properties like crazy. I'm thinking to use a more creative way to myself more competitive. However I'd honestly rather wait than engage in a bidding war. 

    @Ian Fortney

    The potential of flooding is a major concern to me. Especially I'm not there. Thank you for emphasizing that. I will also study Pearland. Thanks again!

    @Jay Ragland

    Great! That's good to know. Thank you!

    @Kenji Otokawa

    At least from my analysis, I would get more cashflow than Sugar Land. My goal is long term growth overtime, but I don't want to be cashflow negative. 

    @Sarita Scherpereel

    I see... That actually clears a lot of my confusion. Thank you so much for sharing. It definitely helps a lot. 

    @Leslie George

    Thank you Leslie! I'll PM you.

    @Amit Dhawan

    The agent actually says the same thing. And the only way to get your offer accepted is to bing all cash and above asking. What a crazy market.

    @Jeffrey Donis

    Great thanks for the input! I guess the trick is to actually get one without engaging in a bidding war. ugh 

    @Ann Watkins

    That is actually a great advice. Do you know if  hospital workers usually rent long term? 1 year or 2 year contracts? Thank you!

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