Buy, Rent Hold in up-and-coming neighborhood.

[Tommy Browne]

Investment Info:

Townhouse buy & hold investment in Devils Elbow.

Purchase price: $164,000
Cash invested: $10,000
Sale price: $260,000

I purchased a townhome in an up-and-coming neighborhood with a lot of public and private investment in the Atlanta area. I rented the property for 3 years while property value steadily rose. The property cash flowed roughly $250 a month for 3 years and sold for a profit of roughly $80K.

What made you interested in investing in this type of deal?

A planned investment from the city to add a public use pedestrian trail connecting the neighborhood to the near by Beltline trail. My thesis was that this would lead to increased investment in the surrounding neighborhood and home values would increase.

How did you find this deal and how did you negotiate it?

Standard real estate practices. I know was looking in a defined neighborhood and found an agent to aide in the search.

How did you finance this deal?

Mortgage broker.

How did you add value to the deal?

replace fixtures, HVAC, paint, and refinish floors.

What was the outcome?

$89,000 profit realized after 3 years renting.

Lessons learned? Challenges?

Full service property management would have been a great asset to save time and headache. While they do eat into rental margins the larger profit came from the sale and the added rental profit was not worth the hassle of being a landlord. HOA fees and redtape also added to frustration and will be avoided int he future.