What is Historic West Ends Cap?

Question

Does anybody think Historic West End will cap at soon PPSF or do you think the prices will keep rising? If you think they will keep rising what do you think the cap will be PPSF? I am looking at a house that would work right away as a rental. I may let the area appreciate for another year or two.

Rick Baggenstoss · Answer

@Chance Bridges  It will definitely top out.  Rents can't grow disconnected with incomes.  Hopefully, home values don't get too decoupled from rents.

I think a good way to track it is, compare the West End ppf to Grant Park, Peoplestown, Westview, and Edgewood.  West End and Adair Park are the best in the SW, but the West End is going to continue to trade at a level below Grant Park or Edgewood.

Personally, I think the West End becomes unaffordable, even undesirable, for a lot of first time home buyers and trade-uppers at ~$300k or $200/sf fully rehabbed.  The commercial amenities including great restaurants, good jobs, etc. aren't there yet.

If it works now, that's a pretty good deal over there.  If you don't want it, please pass it on to me. :-)

Jesse LeBlanc · Answer

No doubt!  I've been watching many of your post for some time now.  You're rockin it and kickin butt.

Nick Fitzpatrick · Answer

@Chance Bridges Everything I am seeing shows that West End will continue to appreciate at a level that is equal to or greater than the rest of Atlanta. There are a lot of factors positively affecting the West End, just one of which is the Beltline. A lot of the residents I've spoken with like the diversity and neighborhood feel as well as the building restrictions which provide a continuity in the style of housing. If you are purchasing this property as a rental, you are better off buying before any further appreciation makes it a bad investment.

@Pavel Redko I get a lot of wholesaler e-mails about property in "West End" with West End comps when the property is really in Oakland City or Westview. Two different beasts.

Marc Yu · Answer

Historic West End may or may not appreciate at the rates it has been for the last couple of years.  I would look at the street in particular - look at the other houses on the block, along with how close it is to the actual Beltline.

You see, this is why I like buying with all cash.  Then you don't have to worry about the CoC to figure out if the estimated rents meets cash flow projections.

Michaela G. · Answer

I agree, not to buy just for appreciation, which would be speculation. But if there's potential appreciation in addition to present nice cash flow, then that's icing on the cake.

I've been buying in Pittsburgh the past years and this past year the prices have gone crazy. I love it!

Jesse LeBlanc · Answer

I agree, and now that everyone has seen what the Beltline has done, i'm sure it will only get better from here.  However, I don't feel that its EVER a wise idea to only buy based on the assumption of appreciating values.  BTW, "won't be as desirable" simply meant as desirable as other areas with those amenities, but I agree @Michaela G. now doubt we see growing demand there now.

Michaela G. · Answer

Just keep in mind that Grant Park didn't used to have restaurants and only got a grocery store a few months ago. I moved to GP in '91 and the lack of did not really stop the rise.

Jesse LeBlanc · Answer

FYI, @Chance Bridges (I didn't text you, you might already know this) but for others guess what... Monday Night Brewery just broke ground on their HUGE 2nd brewery.  And guess where it's at.  On the Beltline in West End.

As Rick stated, it's nice to see so many investors in the area rehabbing, but until we get some better restaurants and businesses, it won't be as desirable.  So many people are riding "The train is coming the train is coming!!" assuming it will just continue to grow and grow and never stop.  Well, it will cap out.  I'm sure with better businesses and restaurants we'll have another EAV, kindof area.  If we're luckly similar to Highlands down the road with the beltline, the Quarry (park) etc.

One can only assume, so it's best to buy for today, make the numbers work today!  If they get better (and I too feel it's still growing, no doubt) then that's gravy on the top baby.

Kristen Jackson · Answer

Hi  @Chance Bridges

I am currently a wholesaler and my direct areas are east and west of the belt line. There are areas that will appreciate for example Westview historic area, Audubon street really the entire area of Cascade Rd but there are also some areas in the West end part that will not appreciate. The best thing to do is to really search the neighbor hood because one street is full of working residents while one block over it's not instead its abandon homes. Overall I think the west end is a great area to invest in many investors I work with are investing in the area.

Pavel Redko · Answer

I agree with @Marc Yu - it will be taken on a case-by-case basis. I've seen an increasing amount of wholesaler activity in the surrounding area which might indicate an increase of rehabilitation. Have you considered reaching out to the WEND society/association to see if there are any big changes/development coming in the next year or so? Might be a good indicator of continued growth.

What is Historic West Ends Cap?

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