Starting out in the Atlanta area

[Benjamen Propst]

Hello everyone!  I am full time employed in a non real estate industry.  I am looking to start up a buy and hold real estate business in the Atlanta area.  The more I learn about this industry, the more I realize how much I do not know.  For those that know the Atlanta area:

1) What are some of the better areas for buying and holding rental properties?

2) I would like to use a property manager; what are some of the better respected companies?  How much should I expect this to cost me?

3) What are some of the better lenders to deal with for rental property mortgages?

4) Are there any real estate groups worth getting involved with in this area?

None area specific questions:

1) My CPA recommended I put the properties under a LLC and I form a S-corp to control the LLC. Is this a normal set up? Are there better legal set ups? I will be meeting with a lawyer in January about this, but I wondered what others were doing.

2) How much up front capital should I raise for the first house?  I was thinking 30% of the cost of the house: 20% down payment + reserve; thoughts?

[Jeff Dimock]

Welcome Benjamen,

Where to invest depends a lot on your goals, tolerance, and finances. You can buy more properties and generate higher ROI in various lower income areas but you will have to learn them and get comfortable in areas you might not like to frequent now. I have wholesaled a lot of houses in West & SW Atlanta where returns are high. It took a little while before I was comfortable spending time there but once you get to know the areas its no big deal. I know some investors who won't buy in the city of Atlanta because they don't like dealing with judges on properties there, but I know others who only work in the city. It's really a matter of learning over time One great way to learn property specifics is to get on several wholesalers' email lists.

Property management costs more than I first realized.  I only have one rental and it's new, so my experience is limited but I've just gone through the eval process.  For your first property it will be at least 10% of monthly rent, which isn't too bad.  It's the "extras" that get you.  One month rent for securing a new lease, 25-100% of one month rent for a renewal, etc.  I would recommend talking to one company about their details and using what they tell you to develop a list of questions to ask others, adding to your list as you hear new details for subsequent conversations.

I've typically heard CPA recommendations of a multi-member LLC (you and spouse, etc.) for holding property (you could have the multi-member LLC be the single-member of additional LLCs as your portfolio grows) and an S-Corp if you are flipping or doing other "active" income pursuits, not for passive rental holdings.

Good luck getting started!