What does Low-end rental numbers looklike?

3 Replies

Hello! Does anyone rent in lower income area in Atlanta? Given the low inventory +high property price, I am exploring new areas to find multi-family rentals. One of the areas I am looking at rent for $500 per door. I just wonder, if I find an older property (meaning higher maintenance cost), and with tenants paying $500 for 2 bedrooms, is it possible to make cash flow? Can anyone share experiences on low-end rentals?

Thanks!

I wouldn't recommend that. The areas of Atlanta with rent that cheap, $500 for a two bedroom, aren't going to appreciate and the costs from tenants including evictions is going to skyrocket. You're better off saving up and getting a small multi family or SFR in a better area. A decent example might be... Maybe in Lilburn or Mableton where you buy a 3/2 house for $70k, rent it out for $1,000 a month, making $250 a month in cashflow.

Hi Emily,

I think the real question is... do you want to be a slumlord?  Profitable... it can be.  Difficult to do... yes it is.  Hope you're stern, carry a firearm, not afraid of walking into "the hood" alone, and have the cash to clean house.  IMHO, these types of properties are best left to experienced investors who look to redevelop a neighborhood.  They have the knowledge, team, cash, and expertise to clean house,  make repairs, attract higher quality tenants, and raise rents.  This appreciates the property value and also the neighborhood. 

The property "as is" may seem like a profitable deal because of the low upfront price.  The hidden costs are in the turnover, eviction, non-payment of rent, damage, numerous trips to the property, etc...   That's going to eat into your gross income that you had originally calculated.  It will leave you with a net you didn't calculate.  What's that saying about real estate...  location, location, location!!!

My advice... save your money, find a better location, buy where it's safe for you and for your tenants.  Personally, I only buy in areas where I would personally live.

@Emily Allen  My rentals range from $20k to $400k.  Each segment comes with benefits and drawbacks.  $500/mo rent is a very low rate.  If you don't have land lording experience or a great connection to someone who does, it's a bad idea to take on the low-end type of tenant on as your first.

Unlike the previous posts, I think it's a good idea to mix up the property types and locations.  Some cheaper, high cash flowing properties are a great complement to more expensive low cash flowing properties.  Both should be in the path of progress so you have a shot at appreciation -- a serious wealth generator for Atlanta investors.

For example, I'd buy a low cash flowing, $500/mo/unit, multifamily in Reynoldstown/Edgewood, Ormewood Park, all day long.  However, I would not do the same if it were Stone Mountain or Clayton County.  

If you have a W2, then you definitely should be looking for something more expensive.

Hope that helps.

Rick