Invest in Atlanta with high prices, or invest long distance?

Question

As I start my journey in real estate investing, my first order of business is to narrow down what market to invest in.

Investment Strategy:   Buy and hold for cash flow - SFH or MFCurrently I live in Atlanta.  My initial thought is to set the first property price budget to $100,000 or lower in B or higher neighborhoods.  While Atlanta market is a good investment market, property prices from what I can tell by looking at Zillow are a lot higher.  (mid 200s or higher).  Given this, I was considering perhaps investing in other markets outside of Atlanta.  Mainly, I was thinking of cities that are close to Atlanta that I can drive to in case I need to go to the property such as Birmingham, AL, Montgomery, AL, Macon, GA (smaller town south of GA).

1.  What do you think is better strategy: invest in a market with lower price points so that I can purchase more properties given the same investment amount, or stick with market I live in at a higher price point since I am more familiar?

2.  What resources /articles/books would you recommend specifically on how to assess and evaluate different markets/cities?

3.  It is quite possible my quick search on Atlanta market pricing is off... if so, what areas in Atlanta would you recommend that I look at that would meet my criteria above?

Thank you so much!

Kelly Rambo · Answer

Congratulations Haley!  Remember to enjoy the journey.  You will learn a ton of stuff as you travel this one.

As for your questions...

1.  What do you think is better strategy: invest in a market with lower price points so that I can purchase more properties given the same investment amount, or stick with market I live in at a higher price point since I am more familiar?

Like many others have said, stick to markets for which you are familiar.  Yes, you could go to areas with lower acquisition costs, but will it be worth it in the end?  It's a toss-up, but I'd guess no, at least not initially.  Until you have a strong PM team and experience with a variety of rental situations.

2.  What resources /articles/books would you recommend specifically on how to assess and evaluate different markets/cities?

Some resources that may be valuable to you are an app that helps you quickly evaluate properties that you are considering.  I use Property Flip or Hold which is only available for Mac (no mobile).  I've had it for years and I think it cost me $20 about 4 years ago.  Admittedly, my most used tools are Realtor-only tools, but I'm sure there are tools available to the public - just don't pay thousands of dollars for some "proprietary" tool.  Remember, we all have either time or money, but not usually equal amounts of both.  Pay for what you don't have time to do or research what you don't have money to pay for.

You should also make sure you have an investor-friendly closing attorney that will handle your title work and closings.

Since the market can change in a heartbeat (and sometimes less than that), I'd recommend current articles over books.  With the market pace in Atlanta right now, anything published in December is outdated and may not be relevant.  Check out the Atlanta Business Chronicle for market info, trends, and upcoming developments.

3.  It is quite possible my quick search on Atlanta market pricing is off... if so, what areas in Atlanta would you recommend that I look at that would meet my criteria above?

No, your pricing is not off, IMO.  I, like most investor/agents I presume, are on wholesalers mailing lists.  I've seen aggressive pricing on wholesale deals as well as on-market deals.  If you have cash available, you may try the county foreclosure auctions.  There are a considerably low number of properties offered right now, but all you need is one to get started.  To answer part two of your question, there are no areas ITP that are consistently below 100k. Even teardowns can be above 100k.

Best of luck to you, Haley!

Zach Westerfield · Answer

@Haley Thornton start with areas you know. If you know areas very well, you can find properties that other out of town investors miss. It is also a key to owning long term rentals to choose good areas

Quentin Davie · Answer

@Haley Thornton Great job starting and having a investing criteria. Pertaining to question #1 , I don’t think you should qualify properties as cheap and or expensive, but look at deals that fit your lenders DSCR requirements and your personal  ROI/Cash on Cash return criteria . As you begin to create deal flow (wholesalers, Realtors, off market direct to seller) you can get creative (partner , wholesale, seller finance) if the deal makes since. The target for suburbs will likely yield you more inventory and higher returns due to less competition in the areas rather than the normal hot spots in the city.

Duane Alexander · Answer

You're not seeing properties within your criteria here in Atlanta because you are looking on market. You want to look off market. You will have the same problem in most other markets if you are trying to invest by scoring properties off of zillow or the mls. If you invest long distance it will be even harder because you won't know the area as well and managing rehabs from long distance is not easy whatsoever. However if you're interested, there's a biggerpockets book on long distance investing that you may want to check out. IMO it paints an extra rosey and unrealistic picture around how easy it is to invest long distance but you may feel differently.

Austin Kay · Answer

Following this discussion. I'm a relative newbie (2 SFHs in Atlanta) but looking to expand in Atlanta. I prefer buy and hold rentals in decent to good school districts. Nothing seems to cash flow on FMLS. Thanks!

Invest in Atlanta with high prices, or invest long distance?

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