Help me evaluate this Lindbergh Atlanta deal

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Help me evaluate this Lindbergh Atlanta deal

Jermaine Grant
Atlanta, GA · Member since 2015 · 4 posts · 2 votes

Hey guys, 

I'm under contract for on a Condo in the Lindbergh/Buckhead area of Atlanta for $205k. Its a 2 bedroom, 2 full bath, with a den that can be easily converted to a 3rd bedroom (just needs a closet) - so it is basically a 3/2. The HOA fee is $346. The community is walking distance from the Lindbergh MARTA station, gated, and has a pool, gym, clubhouse, and tennis court. It is also right next to the Beltway/Path 400. It has a wood burning fireplace, built in bookshelves, and outdoor space. It's in move-in ready condition but I'd prob replace the carpet in the bedrooms and do some upgrades in the kitchen at some point.

I plan to live there for a year to take advantage of my VA loan (no money down, 4.4%) and then rent it out. For the area, it seems like a slam dunk deal since everything else comparable in Buckhead is $250k and above. However, when I put out test market ads on FB marketplace, zillow, and hotpads to see what rent I could get, NO ONE is responding. I'd ideally want it to pass the 1% rule and get $2,000/mos at least, but I'm not getting any hits even at $1800/mos. Current owner is renting the unit out way below market at $1,200. I'm renting a one bedroom across the street for $1,350/mos.

What do you think? Is this still a good buy even though I'm not getting responses to my dummy ad for the rent price I would want to get?

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Ericka G.
Investor · Atlanta, GA · Member since 2015 · 366 posts · 283 votes
7y

We’ve talked about this deal offline but i’ll chime in on here too...it seems like a great deal for a move in ready 3/2 in Buckhead, walking distance to MARTA.  That said, I never buy anything that I can’t rent out from day 1 for a profit...so if the market test isn’t giving you the rent you need to make money, this probably isn’t a good investment.  As a place to live tho, that seems like a great price in a great area.  Not sure why you aren’t getting interest from renters.  I paid $1550 for a 2/2 in that area 5 years ago and loved living over there.

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  • Ericka G.
    Investor · Atlanta, GA · Member since 2015 · 366 posts · 283 votes
    7y

    We’ve talked about this deal offline but i’ll chime in on here too...it seems like a great deal for a move in ready 3/2 in Buckhead, walking distance to MARTA.  That said, I never buy anything that I can’t rent out from day 1 for a profit...so if the market test isn’t giving you the rent you need to make money, this probably isn’t a good investment.  As a place to live tho, that seems like a great price in a great area.  Not sure why you aren’t getting interest from renters.  I paid $1550 for a 2/2 in that area 5 years ago and loved living over there.

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  • Eamonn McElroy
    Accountant · Atlanta, GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    @Jermaine Grant

    Sounds like you're pretty close to me.

    I'd ask:

    • Is there a rental cap on units in this association?  If yes, what is the max?  Is it current maxed out?  If yes, how many additional units are currently in the queue waiting for a rental permit?
    • Ask if there are any special assessments in addition to the monthly fee, whether they be annual, quarterly, or monthly.
    • Ask to see how financials (balance sheet and income/expense statement). The income/expense should have an "actual" column and a "budget" column. I would at least want to see two sets of financials. One for the year ended 12/31/18 and one for the year to date activity as of 2/28/19. Make sure the HOA is adequately capitalized and setting aside proper reserves for maintenance and capex. You don't want to buy into an HOA that has money problems...
    • Introduce yourself to residents you see on the property while doing your due diligence. Ask them what they think of the property and the HOA. Ask them how long they've lived there. People are usually pretty transparent here if something is bothering them.

    Make sure you're accounting for all expenses if you intend to turn it into a rental, including higher property taxes without the homestead exemption and reserve accounts for vacancy, turnover, maintenance, and capex.

    I own a condo in a nearby area and have found that I could probably only get $1,500-1,600 a month for it currently.  I would need $2,000 a month for it to make sense as a rental.  We'll see where it's at in 2-3 years...

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  • Jermaine Grant
    OP
    Atlanta, GA · Member since 2015 · 4 posts · 2 votes
    7y

    @Eamonn McElroy Thanks for the input, I will add those questions to the list I have for the property manager.  I do know that they are already maxed out for the rental cap but am waiting to hear back on how many others are on the waiting list, etc.  

    I'm still in due diligence so hopefully I'll have the answers needed in the next couple of days.  The rental prices are surprising since the big complexes over here all charge $1900+ for 2-3 bedrooms, it's odd that the privately owned units are going for so much less.

    1Reply
  • Eamonn McElroy
    Accountant · Atlanta, GA · Member since 2015 · 1k+ posts · 1k+ votes
    7y

    There's always a reason, whether it be less amenities, older units in need of an update, crime, etc.

    APD publishes crime reports by neighborhood every month.  Check the last twelve months for Lindbergh and look for the condo's address.

    2Reply
  • Jermaine Grant
    OP
    Atlanta, GA · Member since 2015 · 4 posts · 2 votes
    7y

    @Eamonn McElroy very good point. It seems like a safe area but I’ll check the facts. That area also has apartments and condos overload with all the new builds. Competition could be fierce in that area as well. 

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