Out-of-State Rental in Atlanta???

Question

I've been thinking a lot about investing out of state, and after doing some research, I'm leaning towards Atlanta. However, there is no better source of information online than the BP forums, so I wanted to ask: What do you think about Atlanta for a long-term, out-of-state, SFR rental investment(s)?

Because every investment's value is unique to the investor - here's what I'm looking for.

The house we're looking for:
1. Ready to be rented/Turnkey. Finishes don't have to be strong, but the place needs to be rentable from day 1.
2. 3 bed, 2+ bath SFR. Slightly larger also works.
3. Newer homes. Probably newer than 1990, but the newer the better.
4. Decent lot size (>.10 acre; preferably .15 to .25)/basic landscaping.
5. Suburban feel. Sidewalks, and tree lines streets are big deals for us.
6. We target higher-than-average rental units (60th percentile?), and are willing to pay a little more upfront and sacrifice some cash flow to do so.
7. Lots of house for the money. Certainty <$100/sqr foot. This rules out most of the US...

The city that we're looking for:
8. In a city/metro area that is larger than Portland. I think this rules out Austin.
9. A good cash flow on the type of SFR described above. Though this is a long-term investment, so cash flow is not the sole-priority.
10. A decent long-term outlook for their economy. This rules out Detroit and Vegas.
11. A non-extreme climate. This rules out Phoenix.
12. A rental market that isn't saturated.
13. Taxes and Rental/Tenant laws that are not prohibitive.

My research is suggesting that Atlanta is the best place for us to be looking. Am I missing something about the Atlanta market? Or - are there other obvious locations that I should also be considering?

Thanks for any advice, guidance, or thoughts that you might have.

J Scott · Answer

While I can't compare it to the rest of the country, I've found that many of the suburbs of Atlanta have excellent rental real estate opportunities. Personally, I focus on the west side of the city (Cobb County), and it isn't too difficult to find properties in the $60-80K range that are renting for $900-1200/month. If you know the area well and are diligent, you can even find much better deals. I just picked up a 14 year old house for $36K, put in $4K in basic repairs and expect to rent it for aboout $900/month. Those deals aren't common around here, but I've picked up a few over the years. If you want nicer school districts, you can generally find properties that you can purchase for $90-120K that will rent for $1200-1500/month. And if you want high-end in nice neighborhoods, it's not too hard to find stuff that meets the 1% rule (though there aren't a lot of higher-income renters in my area). Those numbers are just my area. On the north side suburbs of the city, there are better school districts and higher-end housing. On the east side of the city, there are lower priced houses that rent for good amounts but it's really tough to sell in those areas (too much distressed inventory), etc. There is a lot of opportunity in Atlanta. I'm happy to answer any more questions you might have about the areas I know...

Joel Owens · Answer

Hi Jeremiah, I mainly do commercial and multifamily only. I have lived in Georgia all my life. In Atlanta we have the actual city and then we have the (MSA) Metropolitan Statistical Area which encompasses over 20 counties. The city part of Atlanta has some nice areas but also some very depressed areas. The city has high water and sewer rates and an aging water and sewer system that in some place is 100 years old at the streets. The taxes inside of Atlanta are extremely high for the rental rate you can get and investor and owner occupants have appeals going on for years now that have not been resolved and are still pending. Many local investors here like to invest outside the city limits and in surrounding counties where taxes are much less but you get the same or more rent for purchase price. If you are looking at little houses J Scott a moderator on here knows those well as he does rehab and flips with some holds.

Jeremiah B. · Answer

@Joel Owens That's a great point about taxes - my home market is very similar due to both city and county taxes. And that's crazy about the infrastructure! @ Rob K - I didn't know that about Detroit, but that's great to hear. My reference to the economy of the city is really two fold: First - I will need to be able to convince my wife that the city is not going the wrong direction. And second, as this is a long-term thing for me, I'm hoping to avoid markets driven largely by one industry or employer. This is a big concern about my home market which relies heavily on Intel. Detroit and Vegas both look like great investments, but are slightly higher risk-reward than I'm looking for. @J Scott - you win the gold star. Your website is great and you do simply amazing work!!! And frankly, the level of upgrades is right about what we will be looking for. In a few months when we are closer to purchasing, I'll reach out to you and see if you have any anything in the pipe. (in the future) That 90K-120K would really be our sweet spot for a first investment. If we could find a 100K house in a good area that rents for $1300 - we would be a very happy family! Thanks to all. We now know that this is the market that we will watch and really study. We are still months away from a purchase, but we want to be well educated prior to being ready to buy. BP freaking rocks!!!!

Rob K. · Answer

While the city of Detroit is a mess, the suburbs are booming. The auto industry is back and prices are climbing nicely. I think Las Vegas will do well long term. They crashed harder than most, but prices there are so low that I would think it could be a good investment. I'm not knocking Atlanta. It's a great area. I just wouldn't rule out some of the other areas.