Dallas/Ft vs. Atlanta, which one do you prefer?

Question

Hey everyone,
	
	I'm planning on purchasing two single family homes to rent this winter but am unsure of where to buy. I plan to visit both areas in December/January but it would be ideal if I could narrow my search down to one city before then. My plan is to purchase a total of 5 properties within the next 3-5 years, all in the same area. I'm looking to spend between 150-160k total for the first two properties, including 70k in cash.

I'm leaning towards Dallas because of the high percentage of renters, its higher population, and because it has lower unemployment/vacancy rates. Atlanta is closer to me though and seems has more properties in my price range. I'm kind of torn because I'll likely purchase more properties in the area and want to start out on the right foot.
	
	I'm also looking for a mentor in the area I choose who'll can help me through the whole process. I'd be happy to compensate you for your time. 
	
	ty!

Darrell Shepherd · Answer

I dont know Dallas, but Atlanta can vary a great deal on where you buy.  The Athens idea is actually a good one.  I need to look at that.  Be a good excuse to get over there more...

I dont do any rentals anymore, but when I did we did really well in St. Louis, then tried to replicate that success in the ATL.  The difference in tenants was incredible.  TOTALLY different culture here than there.  I also had trouble finding a decent management company.  Went through 8 or so before I started doing it myself, which was a nightmare.  This is in the lower end stuff, btw, I never had any trouble at all from anything that cost over $200k.

Also, there has been an obscene amount of Wall St. money buying rentals around here lately and most of them are poorly managed from what I can see.  I anticipate a glut of rentals in certain areas just because of the sheer volume they are converting to rental.  I have no stats to back that up, though, just thinking out loud.  Its also going to get ugly if all those guys decide to get out of the rental game, and I have very little doubt that their real returns are going to be a fraction of their projections.

The numbers work well here, though, which is why the hedge funds came into town in the first place, and there are plenty of people doing well.  Just sharing my experience and thoughts.

If you make it into town, I'd be glad to put you in touch with some wholesalers, plenty of people peddling turnkey property around here.

If it were me going out of state, I'd suggest looking at more blue collar working class areas in the mid west where the culture is to pay your bills or you're a loser.  The big driver in value is job growth, so do your due diligence on the city...in the end it all boils down to supply and demand on both appreciation and rents.

Maybe some of the active landlords around here can tell you better than I can, though.

Thomas Williamson · Answer

Noah congrats on taking action especially investing at a distance, that can be challenging even for seasoned investors.  I can give you my experience with Atlanta and Texas.  I live in and invest in Atlanta, but I'm from Texas.  I've traveled to Texas quite a bit the last few years looking at real estate in all the major markets.  My goal is to obtain a multi-family property in Texas.  If I were you, I would invest in Texas over Georgia.  Atlanta is great, but the tenant market here is very challenging (of course like anywhere that depends on what part of Atlanta you invest in).  If you look at the Atlanta market, a good rule of thumb is stay north of I-20.  Anything south of that line through Atlanta is sketchy at best in my opinion.  The perimeter, or inside (ITP) 285 is different.  There are great areas (higher end) within the perimeter, and there are war zones as well.  Again, do your research, visit the area before committing.  Housing prices are much better here than Texas, but again it goes back to jobs and quality of the tenant, and how quickly you can rent a property out in Atlanta versus Texas.

I like Texas because the economy is very strong there, the job growth is great, like Georgia its a landlord friendly state, tourism is much stronger in Texas, there are no state income taxes in Texas, large military presence all over Texas, and of course the oil and gas industry.  I was in Uvalde Texas this past summer (in the middle of no where) and ended up staying the night there.  There were a ton of new very nice hotels, shopping centers etc.  I couldn't figure out why all of that was there, so I asked the clerk at the hotel why all the growth there and what was supporting it.  The answer was oil and gas, which according to the clerk meant a lot of jobs for the area.  Atlanta is a great city to invest in, but if I had to make a choice between the two, I would go Texas all the way.  Just my thoughts.  Good luck either way.

Penny Brown · Answer

Atlanta...hands down. All of the Fortune 500 companies have it right...Atlanta is the place to be.  Be wise, run your numbers, find great locations, and a good team (core4) and you too will win, my friend.  If I can answer any questions, I have boots on the ground  and happy to send real data to support what I'm saying.  Best of luck house hunting!

Vong Srey · Answer

I came across this question, because I'm currently doing the same decision as Noah, but I'm living in WA. At current market (2022), should I buy in Atlanta or Dallas.

Ali Boone · Answer

Hey Noah!

I work with properties in both Atlanta and Dallas. My personal properties are in Atlanta. I bought them a couple years ago though and if I were to buy today, I would shoot for Dallas over Atlanta. Either market is good, but Atlanta has been such a hot spot for a couple years now that inventory is really picked over, returns are back to normal levels, and just in my experience it is just more chaotic to buy in Atlanta. Also, if you are financing, appraisals in Atlanta are notoriously very low so that will impact the cash required to buy. I've seen appraisals up to 40% low, meaning a heck of a lot of cash required to buy them. Dallas on the other hand is a lot less into their expansion cycle and there is a lot of room for growth there. The returns may be slightly lower but you are also getting, in my opinion, higher quality. Appraisals tend to be fine there too.

Either market is good, but in my experience you'll have a lot less headaches in Dallas.

Noah Zielinski · Answer

Thanks for the great advise everyone! I'll have to look into everything more this weekend but it's starting to look more and more like Dallas. 
	
	-really appreshiate your help

Jeremiah B. · Answer

I've looked a bit at both, and both are great markets.

I did a detailed review of Atlanta(http://www.biggerpockets.com/blogs/4117/blog_posts/30696-my-out-of-state-search-step-5a-due-diligence-on-atlanta).  In short, Atlanta is a volatile, and somewhat dangerous market.  It has gone through some huge hits the last few years, and was decimated in the housing crash... and is still recovering.  The returns are good, but it has been a hot-bed for investors for the last few years, and I'm a little worried about what this will do to new investors long-term.  Atlanta's current economy doesn't look as strong as Dallas, but they have a great source of Fortune 500 companies.  And I think the actual houses in Atlanta are some of the prettiest around. So, while it has some downside, it looks like a great market.

Dallas is a safer market, probably with lower returns today - largely due to high property taxes.  The economy is, and has been booming, though housing prices are still affordable.  A much more healthy market, with a more healthy outlook.

Either is a good market to invest in, and I think the key question is what are you looking for.  If you are up for the risk, I would lean towards Atlanta.  If you want nice, consistent, safe returns - Dallas looks like a rockstar.

ps - I opted not to go with Atlanta today as I wanted something more stable.  So, I will buy 4-7 houses in another market (Charlotte) over the next few years, and follow Atlanta until then.  It's very possible that I will be a buyer in Atlanta in a few hours.

Adam Roberts · Answer

@Noah Zielinski  I don't think you can go wrong either place, although I'm not extremely verse in Atlanta real estate, just from what I've absorbed here at BP.    I agree with @Thomas Williamson  about the growth factor in DFW and Texas in general.  Every time I open the newspaper I'm reading about a new company moving significant operations into the metroplex area...  You can feel the growth energy for sure.

Don't hesitate to reach out if you need help before or when you visit the area.  There are a bunch of us from DFW here on BP that would love to assist in any way we can.

Adam R

Jack Tucker · Answer

Noah,

Not too sure about Atlanta, but you may want to take a look at Athens, GA, only 1.5 hours away.

Athens has the lowest unemployment in the state of GA, opening brand new major manufacturing plants in the area (Caterpillar and Baxter nearby).  Most importantly as a new investor, your risk is always lowest when you stay local. There's a learning curve and you want to be careful so this "cost of eduction" isn't as painful by adding the complexity of distance.

I have another recent forum that discusses pricing of my rental properties in my local Athens market. Here's another investor's take on the quality of tenants (a major factor of rental return success) in Athens:

Dallas/Ft vs. Atlanta, which one do you prefer?

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