Long time listener of BiggerPockets, first-time forum poster, and first-time real estate investor (outside of REIT's.)
I just got back from a visit to the Atlanta, GA market where my real estate agent mentioned to me that a lot of Duplex properties are being sold in all-cash deals. As someone who wishes to house-hack as I start out this venture, this was disappointing to hear.
Can anyone else verify this? Is it worth still sending in offers even though I am getting a loan from my credit union? Do I even have a chance?
Real Estate Agent · Woodstock, GA · Member since 2018 · 253 posts · 255 votes
6y
Hey Daniel, welcome to the Atlanta market! I would say it really depends. We are seeing a lot of cash offers on properties in the Atlanta market(Hedge Funds and investors are very active here).
That doesn't mean they are all going to cash buyers though. I am currently working with a client who has a duplex in Marietta under contract and they are using conventional financing. So it just depends on the property and the price point.
I think it is still worth sending in the offer just make sure it is a competitive offer. If a property was just listed for a reasonable asking price and you are submitting offers at 80% of asking price you are probably not going to get it. I always tell buyer clients to think about things from the sellers prospectives. Sellers care about the net to them and the timeless of the closing. So if there are 2 offers in, one at $100k with no seller paid closing and another offer at $101k with the seller contributing $1,000 to closing costs, then these offers are the same net to the seller. So you have to make a competitive offer if you are competing against cash buyers. If the property has been on the market for a while then your competition maybe less.
Atlanta, GA · Member since 2020 · 5 posts · 2 votes
6y
Hey Daniel,
I'm indeed seeing duplex sales tending on the all-cash side; however, since you are looking to house-hack, you can pull a profit from a purchase price that is higher than those making cash offers. Every seller has their own time-vs-money tendency, so in this situation, I would offer slightly more than my cash offer would be. You'll get a property as long as there is a duplex seller that cares more about price than a fast close.
Real Estate Agent · Woodstock, GA · Member since 2018 · 253 posts · 255 votes
6y
Hey Daniel, welcome to the Atlanta market! I would say it really depends. We are seeing a lot of cash offers on properties in the Atlanta market(Hedge Funds and investors are very active here).
That doesn't mean they are all going to cash buyers though. I am currently working with a client who has a duplex in Marietta under contract and they are using conventional financing. So it just depends on the property and the price point.
I think it is still worth sending in the offer just make sure it is a competitive offer. If a property was just listed for a reasonable asking price and you are submitting offers at 80% of asking price you are probably not going to get it. I always tell buyer clients to think about things from the sellers prospectives. Sellers care about the net to them and the timeless of the closing. So if there are 2 offers in, one at $100k with no seller paid closing and another offer at $101k with the seller contributing $1,000 to closing costs, then these offers are the same net to the seller. So you have to make a competitive offer if you are competing against cash buyers. If the property has been on the market for a while then your competition maybe less.
Yes, there are a lot of cash buyers in the Atlanta market. I ran into the same issue when I was searching for a duplex here. A few tips that I was given and used are:
Offer the Asking Price - You don't want to give the seller any reason to immediately throw out your offer, especially when you know cash buyers are right there with you. If the asking price works within your goals, then make that your offer and be done with it.
Offer to Cover All Closing Costs - As @Matthew Nicklin mentioned, sellers are likely to choose the offer that nets them the most money even if it'll take them a couple weeks longer to receive it.
Send a Pre-Approval Letter With Your Offer - This shows the seller that you are prepared and that the closing won't be held up because something got messed up with your financing.
Send a Short Letter With Your Offer - This helps your offer stand out and makes it more personal. Explain who you are, what you do, and why you're interested in the house. Some sellers will be more inclined to sell to someone looking for a place to live as opposed to an investor.
It's still worth putting in offers. You will face competition and you will lose out on some properties you may really want. But don't give up, you will eventually get an offer accepted.
Thanks for the insight guys! I'll keep at it, and I hope I can get a great deal in the area here over the next few months. Are there certain markets I should be looking at in particular in the Atlanta area? Where are most people flocking to?
Thanks for the insight guys! I'll keep at it, and I hope I can get a great deal in the area here over the next few months. Are there certain markets I should be looking at in particular in the Atlanta area? Where are most people flocking to?
Your original question has already been thoroughly answered, but to sum up: You can definitely scoop up a house hack duplex with traditional financing in the Greater ATL metro. You do not need to give an all cash offer but, as others have suggested, you will have to be competitive with other terms.
To answer your second question; for a house hack, I would recommend looking in Cobb and Gwinnett County. I frequently see duplexes here that would make for good house hacks. Keep in mind, with the market price where it is and market rent where it is, cash flow will be tight. You may have to get in on something that needs some work to properly cash flow. But if your goal is to just cut down on living expenses, this is totally attainable. So start analyzing some deals and sending in some offers, man. Worse thing they can do is say no.
If you have any other questions or just want to chat, please feel free to message me anytime!
Real Estate Agent · Atlanta, GA · Member since 2014 · 683 posts · 317 votes
6y
Not only duplex. Lot of SFH are sold all cash especially under 200K. don't get discouraged tho. There're new deals everyday. Besides offer a little higher than cash offer you can also look into properties that has separate basement entry etc to make extra $$.
Investor · Brookhaven, GA · Member since 2015 · 2 posts · 0 votes
6y
@Daniel Snyder since you're working with a realtor already, do you have a part of town in which you're looking? Target size / price? How much renovation are you looking to do? As a multi-family investor in Atlanta, don't be fooled by the lack of traffic right now. Atlanta traffic can be worse than you think - if you have some other obligation to a part of town (job) I would recommend starting there and working out.
@Ryan Esparza I've been looking all over. We recently checked out the Pittsburgh area (due to expansion of beltline, over to the east till Decatur, and all the way north as John's Creek. Looking ideally for a duplex under $500k that needs some work done to it to make it cash-flow positive. I've crunched so many numbers with where the current market rent is that most of these properties don't make sense unless I put some work into them (which I'm totally okay with!) And I totally understand the traffic. I've been living in LA for the last four years - so no problem there!
@Jingru Sui I've been exploring the basement route as well. The properties I've seen so far haven't been doable though due to all sorts of factors (pipes, air condition unit in the middle of a room, need a window, etc.) I've been trying to minimize the level of work needed to be done as I'd like to mainly focus on aesthetic repairs. I'm not giving up though!
Rental Property Investor · Athens, GA · Member since 2016 · 47 posts · 13 votes
6y
Ive definitely seen most of Ga small MF market leaning to all cash., we've been rejected by several sellers even with full price offers due to all cash offers...in North Ga. areas for over a full year now. We are looking into atlanta area, up towards Chattanooga (more rural than metro) and are looking to JV with an Investor and dive into larger MF (but less than 20-30) and Mobile home parks. However, id add to keep making offers...we were chosen once over others (we offered 5k above asking) because the sellers had worked with our lender of choice previously and liked their behavior. another tactic ive used successfully was offer more earnest money, 2k for example.
good luck. and work with more than 1 realtor and get into a zoom REI meetup