All Forum Posts by: Dan Mahoney

@Harry Williams Good luck getting started!  Atlanta is a big, growing, and incredibly varied market.  There is lots of opportunity here, which unfortunately has attracted some dishonest (and/or incompetent) people.  I mention this because when you say you're a "new member with capital," you may hear from some individuals that wish to separate you from said capital.  Just be careful.

@Terrell Dyer sorry my previous post did not tag you correctly.

@Terrell Dyer  I have a couple houses in this neighborhood (Ashview Heights).  The area is improving but there is still some blight.  This duplex could work as a rental, depending on whether your repair estimate is accurate.  I'd guess $30k is low but it depends on the condition.  

Seller's ARV is too high. You can't look at the single family comps because those were retail buyers with mortgages and, probably, down payment assistance. A duplex will sell to an investor, who will price based on market rent.

@Canesha Edwards You are right to think about the deferred maintenance.  Replacing roof, HVAC, water heaters, etc. can certainly change the math quickly on a $100k property.

That said, if its currently rented you can assume the plumbing and electrical systems are at least functional.  With $500/month rentals you can't necessarily assume much more than that.  I'm sure you'll do an inspection before you buy, so you won't be guessing about the condition.

A couple thoughts on your numbers:

1) Can you really get a 4.5% 30-year fixed loan on a non-owner-occupied property at 80% LTV? If so, great! If not, your numbers will be worse.

2) Taxes of $98 per year seem too low.  (Did you mean $98 per month?)

3) Management fees of $104 per year seem too low.  (Did you mean $104 per month?  That would be 8% of gross rent.)  If you are using a property manager, you will also have to pay them a leasing fee every time a tenant turns over.

4) $700 seems low for annual reserves.  You need to be ready to write a $5-10k check at any time to replace a major capital item (e.g., roof).

5) Trash is usually landlord-paid in Atlanta (since it is billed to owners by the tax collector) and is about $500 a year.  I assume it is the same in East Point but I don't have any experience there.

Good luck with the deal!

@Remone R. With the assumptions you laid out, you would get zero cash at closing.

Appraised value $600k x 80% LTV = $480k max loan

$480k max loan - $477k existing loan payoff - at least $3k closing costs = $0 cash available at closing

Now, if you can find someone to go to 90% LTV you could get out $60k minus closing costs. I would try for the HELOC but it is going to be tight.

@Khadijah Hunter why do you need hard money?  Your situation sounds like a good fit for a conventional loan.  If you can't get low-cost long-term financing, you might be better off selling.

@Account Closed You will probably have some challenges raising funds if you have no experience, poor credit, and are putting no money into the deal.  That being said, if you have a good enough deal, you may be able to get past that.  

Are you hoping to invest near Calhoun?  That could be interesting.  What kinds of purchase prices and monthly rents are you seeing?

@Joshua Feit That is odd about the new meters and the huge bills, especially since it's happening at both of your houses.  You need to figure out the cause or it will continue to recur.  If the meters are defective you need to persuade the City to replace them ASAP.  The symptoms you describe (usage spikes whenever the home is occupied) sound like a leak or a running toilet, but I know you said you had everything checked by a plumber and found nothing.  A $100 bill is like 6 CCF of usage, which would be reasonable for a household.  A $1,000 bill is like 45-50 CCF, which is really high if you're not running sprinklers or something.  Is that what is showing on the bills?

Re the liens, assuming the unpaid bills are in tenants' names, you might try sending a certified letter to the Atlanta Watershed's legal department reminding them that Georgia law prohibits them from putting a lien on the property for a bill owed by a tenant.  That might save you the cost of retaining a lawyer.

Since Watershed is a City department, you might also try contacting the member of City Council who covers your neighborhood.

...But I wouldn't try to tackle the bills or liens until I understood the root cause of the problem.

@Joshua Feit 

Ugh, sounds exasperating.  

I'm sorry I don't have a specific contact person at Atlanta Watershed but I will say I've had better luck going to City Hall in person to deal with water issues than I have using 311 or internet.

I would separate out the billing issue from the lien issue and tackle them separately.  The root problem you need to solve is the large monthly bills.  Is water flowing through the meter when everything is turned off?  Sounds like you're pretty sure you don't have leaks.  Do you suspect something is wrong with the meters?  Or that they are being read incorrectly?  Document everything (photos, dates, permits, deeds, etc).  It seems odd to me that you are having this issue at two properties simultaneously.  Are both properties occupied with the water account set up in the tenants' names?  If either or both properties are vacant, the water usage is going to be on you, regardless of whether you have an account.

Once you have the billing situation under control, you can tackle the lien issue.  This is really only going to matter when you want to sell or refinance but your lawyer should be able to get the liens removed if you can prove the liability was incurred by a tenant who had an account in their own name.  You can litigate as a last resort but you probably won't have to.

@Steven Chang  To me, the most important question is:  "How good of a friend is this?"

If your friend is someone you really trust, then you can expect she'll give you a fair deal and truthful historical numbers.  If you were dealing with a stranger or acquaintance, you'd want to be more skeptical.

Unless your friend is also going to let you use her renovation crew, I'd avoid trying to manage major rehab work from 2,500 miles away.

Maybe do deal #1 and see how you like being a remote landlord before you get more aggressive?

By the way, unless you're in a cookie-cutter subdivision, Zillow prices are worthless in Atlanta.  Don't even bother.