All Forum Posts by: Dan Mahoney

I went to the Fulton County tax sale yesterday.  I bid aggressively on one house but eventually bowed out and went home empty handed.  Better to walk away than overpay...

@Asim Alam Did you go to Clayton County tax sale yesterday?

@Asim Alam I agree with you on the farm area concept.  I just meant that you can't pick the right farm area unless you know what you're trying to accomplish.

@Robert Gilstrap @Ryan Horne  City vs. Suburb conversations in metro Atlanta are like debating religion.  Nobody ever changes their mind.

I live in the City of Atlanta and find plenty of things to work on intown.

Sounds like y'all prefer the suburbs.  That's cool, too.

Here's something we all have in common:  We face an uncertain future and we're out here making our best guesses.

@Ryan Horne Ok, your situation is different than just being an investor...you also need a home.  Assuming without evidence you are not married...if I were I in your shoes, I would:

1) Figure out where most of your friends are living

2) Find a convenient block or subdivision in that area that is mostly owner-occupied homes

3) Buy a 3-BR house there with an FHA mortgage and move into it

4) Get 2 roommates and collect reasonable rent from them

5) Live there for at least two years

6) Sell when you get married or have another reason to move (take the tax free gain)

@Ryan Horne You have to start with an investment objective and then develop an investment thesis to achieve the objective.  If your objective were to generate steady cash flow for retirement you would look at very different opportunities from someone who wanted to earn 3x their money in a year.  And it's not just a question of how much capital you invest, it's also a question of how much time you invest.

With that caveat...

I think that there are some interesting single family opportunities around the SW Beltline right now.  Of course this is speculative, but it doesn't cost a lot to get in and find out.   

30318 is the perfect example of why you can't draw conclusions by zip code in Atlanta.

So this house is in 30318 and is arguably in the best elementary school district in Atlanta (Morris Brandon).  Listed at $1.2 million:

Beaverbrook

This boarded up house is also in 30318, listed at $26,000:

West Ave

30318 contains the most blighted neighborhood in the city, English Avenue:

Atlanta's War on Blight

30318 also includes most of Georgia Tech.

So, it depends.  Home value was historically linked to which side of the train tracks one was on.  We will see if that changes.

@Pat Mulligan @Anton Watt The Atlanta Housing Authority maximum rent for Section 8 is $4,050 per month.  This is for a 6BR unit and only applies to certain areas of the city.  So you'd have to find a very large low income family to qualify and you would have to own a 6BR unit in a higher-rent area of the city that you were willing to rent Section 8.  AHA policy is to pay market rent, so this is just the theoretical maximum, but I'm pointing out that very high rents are possible in this program.  

The portion of rent paid by the voucher holder is based on their income and family size.  They pay what they can afford based on a formula, it is not based on a fixed percentage of the rent.  To the point of this thread, $1,300 is well within the realm of possibility of what AHA will pay for a nice 3BR unit in an average Atlanta neighborhood.

Source:  https://www.atlantahousing.org/cms/uploads/file/aha-payment-standards-maximum-payments.pdf

Good luck Jarrod.  Net 30 will be helpful if you actually need trade credit for your business (I wouldn't think this is super important for most real estate businesses vs just using credit cards).  The other thing that helps is keeping over $10k balance in your business checking account.  Banks are going to care about debt service coverage, asset coverage, and collateral more than they care about your paydex score, so don't invest too much time manipulating your business credit rating if you could instead be finding great business opportunities.

@Jarrod Roecker

@Jarrod Roecker

It sounds like the original question has been answered but I would like to add two things:

1) Unless you are a very large business that qualifies for commercial credit, you will be applying for a small business credit card which is backed by your personal guarantee.  While it is true that if your business' credit is bad, you may be denied for a small business credit card, you are generally applying based on the strength of your personal credit.  Banks will readily approve small business credit cards for brand new businesses (even if there is no business credit history) provided the credit history of the owner is solid.  Don't worry about getting a DUNS number, this will happen in the ordinary course of your business and will not affect your ability to get a small business credit card.

2) Capital One does offer a decent suite of small business credit cards, but there is one important business practice that makes them different from every other bank I've worked with. When you have a small business card with Capital One, they report the information on your PERSONAL credit report. That's right, even if your LLC is the borrower, Capital One will report the balances and payment history on your personal credit. This has created problems for me in the past when I was applying for personal credit and my business debt showed up on my personal credit. It made it look like I owed a bunch of money in my name when it was really owed by the businesss and paid from the revenue of the business. For this reason alone, I have avoided Capital One small business cards since I paid off my balance with them in 2015. I can tell you from experience that Amex, Chase, BofA and others do NOT report small business credit cards on your personal credit report (though a hard inquiry will show up when you apply).

@Stephen Grass I'd like to challenge your thinking on this. The 1% rule is a rule of thumb that I believe is incredibly misleading and should be retired. As many others have pointed out in these forums, if you buy a single family house for $50k and rent it for $500/month you are going to lose money over the long term unless the area gentrifies. (Capex will eat up all your profit). Similarly, if you buy a house for $300k, you can have positive cash flow well below $3000/month rent (if the house is in good shape).

I'll second @Michaela G. that there is rent-ready single family inventory available in the City of Atlanta for $90-120k that will rent from $900-$1,200/month.  The numbers are better if you buy a fixer-upper and do the rehab but you stated your preference was not to do that.

@Charles Harwell Based on your answers, I'd say keep it, rent it, and do the refi.  Get some tax-efficient cash flow, take some equity off the table and defer the taxes on the gain.  Once you've owned it a year you'll be eligible for long-term capital gains treatment and you can reassess then based on market conditions and your other projects.