Don't know where to invest in Georgia? Help?
Real Estate Agent · Oakland, CA · Member since 2009 · 51 posts · 5 votes
I want to sell my rental in Arizona and do a 1031 exchange to purchase a rental in Georgia to get a positive cash flow. I'm looking at purchasing around $195k in Georgia, but don't know what city in Georgia that I can get $1300+ in rents for a nice home. I don't want a fixer since I'm in California. Also, is there something I need to be aware of in Georgia? I don't know anything about Georgia. Can you help me?
@Audrey James -just be extra careful before you invest for cash flow across the country. It's easy for those living here and knowing their market to suggest areas - but the possibilities of a poor investment remain high for you for the following reasons:
1. You say you don't know much about Georgia and need help.
2. There are too many variables regarding a $200K investment here. Do you want inside the beltway, or outside the beltway? Suburbs or intown? Good school district or average one, but a bigger home for $200K? Only you can make this decision.
3. Are you only investing for cash flow- or do you mean in the short term, you want cash flow? How about long term appreciation? Most areas have already experienced nice appreciation - but there are pockets that are still struggling (yes, inside Atlanta has plenty of areas off people's radar, and suburbs such as Lithonia, Stone Mountain and south Snellville, etc- are not what you would want for long term appreciation, when you can invest in more desirable areas such as Marietta, Sandy Springs, Roswell, Alpharetta, to the north, or even south suburbs are doing well - such as parts of McDonough, & Hampton, etc - where you can get a larger house for the same capital - and will cash flow just as nicely - but not experience as much upside potential. Plenty of opportunity to the west too- Douglasville - is great too for cash flow. Tons of areas - hard to recommend just one area- it depends on what you want and are comfortable with.
4. Don't forget - if you are looking for $1300/month cash flow on a $200K investment - (which is a low ROI in my opinion) - you will need someone to manage the home. Renters everywhere tend to not pay, pay late , disappear, cause damage, etc. Subtract 10% from your monthly cash flow for a good property manager. Repairs? Subtract even more. Need to visit for some reason- subtract the cost of cross country flights, hotel. etc. Perhaps if you had multiple homes here at one time- you can reduce the burden of travel since you can manage multiple projects at the same time. But- one home may prove difficult.
To me it's looks less like a good investment, and more like a way to park cash in a house and see what ROI you can get. Why Georgia? I bet there are great cash flowing houses closer to you- like in Texas (Dallas, Houston ,San Antonio). Tons of investors there- and not as difficult to visit if needed. Georgia is great too- but I live here - it's easy for me to visit my homes and manage them myself.
Are you making your decision to invest in Georgia - due to stories you hear about how great it is to invest here? Or- do you have family or friends here that can help you with managing the home? Yes- our eviction procedure is easy and quick- compared to neighbor states. Is this one component you are considering in your decision?
Not sure why you want to invest cross country for one home - since you do not want to rehab - and need move in ready. Just trying to have you look at both sides of the coin. Plenty of upside, and yes- plenty of downside if things go wrong. I would think it's best to make a visit to Georgia and look around for a few days before parking your capital somewhere.
@Audrey James -just be extra careful before you invest for cash flow across the country. It's easy for those living here and knowing their market to suggest areas - but the possibilities of a poor investment remain high for you for the following reasons:
1. You say you don't know much about Georgia and need help.
2. There are too many variables regarding a $200K investment here. Do you want inside the beltway, or outside the beltway? Suburbs or intown? Good school district or average one, but a bigger home for $200K? Only you can make this decision.
3. Are you only investing for cash flow- or do you mean in the short term, you want cash flow? How about long term appreciation? Most areas have already experienced nice appreciation - but there are pockets that are still struggling (yes, inside Atlanta has plenty of areas off people's radar, and suburbs such as Lithonia, Stone Mountain and south Snellville, etc- are not what you would want for long term appreciation, when you can invest in more desirable areas such as Marietta, Sandy Springs, Roswell, Alpharetta, to the north, or even south suburbs are doing well - such as parts of McDonough, & Hampton, etc - where you can get a larger house for the same capital - and will cash flow just as nicely - but not experience as much upside potential. Plenty of opportunity to the west too- Douglasville - is great too for cash flow. Tons of areas - hard to recommend just one area- it depends on what you want and are comfortable with.
4. Don't forget - if you are looking for $1300/month cash flow on a $200K investment - (which is a low ROI in my opinion) - you will need someone to manage the home. Renters everywhere tend to not pay, pay late , disappear, cause damage, etc. Subtract 10% from your monthly cash flow for a good property manager. Repairs? Subtract even more. Need to visit for some reason- subtract the cost of cross country flights, hotel. etc. Perhaps if you had multiple homes here at one time- you can reduce the burden of travel since you can manage multiple projects at the same time. But- one home may prove difficult.
To me it's looks less like a good investment, and more like a way to park cash in a house and see what ROI you can get. Why Georgia? I bet there are great cash flowing houses closer to you- like in Texas (Dallas, Houston ,San Antonio). Tons of investors there- and not as difficult to visit if needed. Georgia is great too- but I live here - it's easy for me to visit my homes and manage them myself.
Are you making your decision to invest in Georgia - due to stories you hear about how great it is to invest here? Or- do you have family or friends here that can help you with managing the home? Yes- our eviction procedure is easy and quick- compared to neighbor states. Is this one component you are considering in your decision?
Not sure why you want to invest cross country for one home - since you do not want to rehab - and need move in ready. Just trying to have you look at both sides of the coin. Plenty of upside, and yes- plenty of downside if things go wrong. I would think it's best to make a visit to Georgia and look around for a few days before parking your capital somewhere.
Thank you so much for the advice. I really appreciate it Richard.
@Audrey James Hey I'm in Alameda right across the water from you and also looking at Georgia. I'm surprised no one through Augusta out. It was rated #3 on the top rental cities in 2017 so far I believe. I have been looking at the numbers and they seem favorable, even buying off of the MLS. I have a cousin with boots on the ground there and could try to help out if you decide to look at Augusta. What do you think about Augusta @Ethan Atkinson ? Any feedback is much appreciated. Where my cousin "farms" he has done like 200 deals and holds 10 properties. The school districts aren't great so I am concerned but he says he only rents to college and medical students and has had no problems. Being a veteran, I am hoping that if I do go with Augusta I can also tap in to the Fort Gordon tenant market.
I have to jump on board with @Chris Majors and @Derek Okahashi to call out Augusta and the surrounding areas of Columbia and Richmond County, GA (Evans, Martinez). You should have no problem finding a home in either county that will rent for the numbers you're looking for, well within your budget.
@Joel C. I will say, where my cousin farms his properties in Augusta seems to be about a C class neighborhood. I wouldn't want to do that where I live or most places but it seems like maybe there's a niche of military and med students within that C class area..? Do you have thoughts on that? I'm jut afraid of evictions (cousin hasn't had to deal with but a couple), damages, high turnover etc.
@Derek Okahashi, yeah, you can find some nice spots that are primarily medical students if you look hard enough. It can be a challenge finding the right neighborhood for your tastes if you're not here in person, and the neighborhood class does change from street-to-street in certain parts of West and Central Augusta. I'd recommend linking up with a local agent, explaining exactly what your primary needs/wants are (cash flow, tenant base, neighborhood class), and then going from there.
@Joel C. I have a cousin who is a local investor and has a property on Kimberley and one on Minto. I have been looking in that area but it seems I will definitely be reliant on medical students to have the experience I want in that class a neighborhood. Do you own homes in that area of Augusta?
@Derek Okahashi Yessir, I own in that general area! I like the tenant base as a long-term customer segment (medical students & employees, some military, some retirees), the neighborhoods are safe, and the ROI is where I need it to be. Like I said, though, it can be hit-or-miss from street to street. I'd have your cousin or a local agent give you some boots-on-the-ground input on the specific block you're looking at.
I've been following this thread. Within ATL, where are some quality rental regions with decent tenants? Looking to invest soon.
Unless you are door knocking pre foreclosure, rough houses as a tactic to find motivated sellers before theyve called an agent, the Atlanta Metro area is hot and prices are too high for an investor to make a good cap rate. I live here and have moved to buying in better cap rate areas.
Read my talk I give on how to buy high performance and low effort to manage rentals, see the file I uploaded off my profile down on the right, how to buy Bullet Proof rentals.
Anyone with a ton of cash can buy rentals in any market. The differentiator is are those rentals a decent buy and will they appreciate and BTW how much effort will they be to manage??? :)
All the tips here are ok, but no one is giving the cap rate, cash on cash of their tips... Interesting!!! Our business model won't let us buy at 8% cap. LOL
IE I love Gwinnett and its often (but not always) great schools. BUT:
- purchase for $140k, $20k rehab, $160k all in.
$1400/mo rent x 8 (mo accounting for 4 mo for taxes, ins, turnover, expenses) = 11200/yr NOI
Cap rate = 11200/160000 = 7% Sorry, I don't consider this a good deal!!!
We only buy at 12% cap rate AND must be good schools, AND high appreciation AND low management effort. Seems impossible, see my talk I uploaded. Like Tony Robins says, set a goal and work towards it and you will get close. Set low goals and thats what you'll achieve.