Atlanta and Georgia here we come!

[David T.]

We're moving some of our operations to Atlanta/Georgia first week of September and will be starting flips immediately, so we need to put together a team of people to work with. Having been there two weeks ago for a few days, we already have a few deals lined up!

We thought we'd start building our team out of the BP network, so here's what we need to get ourselves rolling;

A (Really Good) Title Company Contact.

CPA

Wholesalers (for Flips)

Experienced Flip Contractor.

Property Inspector.

Landscaper.

Any competent Rehab Services Providers.

.... and all the other business services that go with a start up. We're really looking forward to this move (just can't beat that southern hospitality - and charm!) and would welcome all the support we can get.

BTW, we'll blog our Atlanta experiences as we go, gonna be fun!

Thanks in advance and may all your deals be home runs!

[Curt Smith]

Hi David. First let me wish you welcome to Atlanta and good luck. Atlanta is not nearly as hot as where you are leaving at the least. :) But let me share my views on the Atlanta market so you know what you're in for (in my view working here).

Atlanta is a VERY crowded market with investors from all over the country and world thinking they can make a living working Atlanta real estate. The locals have moved out to more profitable areas leaving Atlanta counties to the new folks to struggle and of course the over paying foreigners.

There are much more profitable areas in my view: emerging markets where a new auto plant or some jobs reasons why their will be positive emigration to the area:

- Eastern coast board port cities that will get shipping increases from the panama canal widening and increased shipping traffic. I think a dark horse in this angle is Appalachacola FL. No one is touting this location yet. Port St Joe is along shot. Everyone is talking about Charleston SC (so already too hot).

- Google new auto plant openings.

- Tap into growth state chamber of commerce news for new jobs. Usually they will be in Southern smaller cities, not places like Atlanta.

- Columbus and Warner Robins GA, has a combo of cheap houses, a military base, a river. Smaller cities often haven't had the investor swarming where there are still sub $30k houses that rent for $750 and up. I wouldn't touch the areas in Atlanta where you can still buy sub $50k houses. You'll not get 9 months out of 12 rent collected in my view.

- Birmingham AL, has a new auto plant coming.

- A bit of our secret sauce is: smaller cities have alot of folks who WANT to live there and are long term renters. We've found they will only move within a 1/2 mile of where they want to live. So if you put up a house for rent, keep it nice, they tend to not leave. The poorer areas of bigger cities are the opposite, folks chase the cheapest rent and have no affinity to any 6 block area so it's hard to control turn over.

- In bigger cities (like Atlanta) our secret sauce is to buy ONLY in great schools high school districts 5 or better. Preferably 7 or better. Then you select tenants with middle school kids who want to stay in that high school. Now you have a tenant for at least 4 years. In Atlanta now you're paying more than $70k + rehab at the low end. In my view, the cap rate is not high enough to interest me in investing in Atlanta good school districts any more. We've left for emerging markets and smaller cities! Plus Atlanta is down to 2 months inventory, as crazy as this sounds. All investor type properties have 20+ bids. I've heard of crazy percent over ask winning bids. You honestly can't guess what to bid anymore if you want the property. It used to be 60% of ARV - repairs. I hear it's now between 80% - 90% of ARV minus repairs, and the V in ARV is jumping so you might have to bid over the value. Which means you can be left holding the bag. Remember 2008? There's no profit and too much risk in that model for me. So we left and just closed on a $26k 3/1.5 that rent and will return cash on cash around 25%. You'll never do that in the hot markets! We've moved to working the unknown smaller cities.

curt