Beware of the SW Atlanta Beltline hype.

Beware of the SW Atlanta Beltline hype.

Real Estate Agent · Atlanta, GA · Member since 2016 · 61 posts · 99 votes

I have read a lot of hype about the Atlanta Beltline over the past few years here in Metro Atlanta. Usually a strong market buzz precipitates it's realization as people jump on the bandwagon and fuel the market dynamic. Unfortunately not the case with the beltline homes. Small levels of appreciation have been seen in areas where the beltline has been completed, but these are the areas that carried strength in values before the beltline was developed. Most of the distressed areas where the beltline is projected to be built still show no signs of appreciation, even in the midst of investor activity in the area. I'm not saying that all the good stuff we're hearing about in some of these areas will never happen, but there are currently no viable trends in most of these areas that would substantiate all the hype. The city still faces big funding and planning obstacles that could prolong the remaining development for many years to come. Many local investors that I have talked with, whom have purchased next to the beltline in SW Atlanta still have the same problems and issues with crime, vacancy rates, and stagnant values, and many of those investors are regretting their purchases. If investing along the beltline is your gig, beware of the hype and do as much research as you can. Investigate the future development of these areas, area crime rates, and value changes. Many agents and bird dogs will show you 1 or 2 strong comps in a particular area, but hardly a trend when there's a sea of low sales prices in the area to which you may or may not be seeing. Make sure that trends around the beltline are viable ones backed by strong facts and numbers before considering a purchase.   

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Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
10y

@Gordon VaughnSorry Gordon, but I'm going to say that your posts are pretty ignorant.  I've not made a comment like that about any post out of a thousand so I hope readers of this post don't interpret me as an abusive poster. 

The Beltine has driven tremendous appreciation and will continue to do so.  Have you been to any meetings?  Have you tracked the impact on 'dangerous areas' like Reynoldstown and Old Fourth Ward?   On the Westside, the Beltline isn't complete.  If you tracked Reynoldstown, then you'd understand how much appreciation might be left vs. Reynoldstown/O4W experience.    

"East Lake is dangerous!!!" What a joke this comment is.  You missed the boat on this neighborhood too.  East Lake has had a tremendous amount of appreciation.  You could have bought cash flowing rentals in this area and doubled or tripled you money over 10 years.   Your tenants would be going to one of the highest rated schools in GA -- Drew Charter School. 

Now, I'll forecast.  The Beltine is reshaping the City of Atlanta.  I would not underestimate the longterm shift of jobs and living centers around the Beltline.  Already jobs are concentrated intown but along Peachtree and 400. We're also seeing the Beltine be a draw with Ponce City Market and new business locating along Memorial.   

West End, Adair Park are the anchors for SW Atlanta doing well.  This area is seeing significant appreciation.  It's coming off an irrational low that savvy investors like @Michaela G recognized.   I've flipped several houses in the West End.  The demand for a well done house in the West End is greater than any part of Greater Atlanta (except for City of Decatur).  

As for crime, there are apps for that.  You can see that crime occurs more frequently around the high traffic areas -- more people more crime.  I've not had any issues there, but I have suffered from theft in just about every other part of town including the 'burbs.  

SW Atlanta does require you be a more experienced investor.  There are more low income tenants and with that comes more issues, education, appropriate flexibility, and discipline.  Sounds like your clients were ill prepared to be landlords and picked a more complex market.

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  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    yes. Absolutely stay away from the beltline neighborhoods in sw Atlanta. Run, don't walk.  More for me that way. Mine have only quadrupled in the past few years. So not worth it.

  • Real Estate Agent · Atlanta, GA · Member since 2016 · 61 posts · 99 votes
    10y

    Show me Michaela, and I'll take it all back.

  • Real Estate Investor · Atlanta, GA · Member since 2013 · 122 posts · 36 votes
    10y

    If your buying in or around the Atlanta Belt line it shouldn't be in hopes of appreciation. If that's your mindset your already off on the wrong foot. The investors I work with buy based on rental income and cash flow. Not appreciation. I've heard @Brandon Turnermention in one of the BP Podcast that buying a rental should be based on cash flow and the appreciation, if any, is a bonus but shouldn't be counted on. 

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    Check out values in the pittsburgh neighborhood. Started buying there in 09 for around 10lk. For example 855 coleman. Bought for 7500 . now worth 40.

  • Residential Real Estate Broker · Atlanta, GA · Member since 2012 · 34 posts · 9 votes
    10y

    Michaela is correct. The belt line has appreciated very well in the past few years. But she bought at th right time. How much more will it go up? Thats the big question . Pittsburgh is scary. Vine City , English Avenue...you have to have a strong stomach and carry your gun or take your pit bull getting out of your car there. But..Adair Park, West End...these areas are getting better. But are 2/3 times the price of Pittsburgh.  But even in those areas, there is a lot of clean up needed.

    These rough areas will go one of two ways - And this depends on whether you can get the people out that currently live/doss around thereout .  Im not sure they will leave anytime soon. So if you don't see them taking their profit and moving out, then there is limited potential and we could even see a market slide...

    If they do leave or are placed somewhere , these areas could quadruple again in 5 years. 

  • Clairton, PA · Member since 2016 · 20 posts · 7 votes
    10y

    I'm born and raised in Pittsburgh. I wouldn't call it scary in the least. There are areas of great opportunity right now if you know the area well as they are giving the surrounding urban communities complete makeovers

  • Contractor · Pittsburgh, PA · Member since 2014 · 885 posts · 359 votes
    10y

    @Kevin MikluskoI've made this mistake too, this is Pittsburgh GA -.- trying to steal our thunder down there

  • Clairton, PA · Member since 2016 · 20 posts · 7 votes
    10y

    Wow! Lol I had no idea there even was a Pittsburgh Georgia! My mistake everyone! And Thanks for keeping me honest Jeremy! There is only ONE Pittsburgh ;)

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y
    Originally posted by @Annette Coker:

     . Pittsburgh is scary. Vine City , English Avenue...you have to have a strong stomach and carry your gun or take your pit bull getting out of your car there. 

    I don't carry a gun, nor do I own a pitbull - have survived Pittsburgh anyway ;-). Actually, I lived in one of my houses for 1.5 years and would walk to all of my properties from there. Yes, I had a dog with me, but I don't think she would have been a major threat, if anyone had wanted to do me harm. And I'm about to drive cross country to live in that house again, while I'm working on a project there.

    I think the neighborhood looks worse than it is, which is fine, because it's kept many other investors out and allowed me to get great deals. Yes, there are some gangs and drug deals and prostitutes, but I've never had anything happen to me. ANd I'm white, blonde, with a red convertible and stick out like a sore thumb in that area. Everybody knew who I was.

    These rough areas will go one of two ways - And this depends on whether you can get the people out that currently live/doss around thereout .  Im not sure they will leave anytime soon. So if you don't see them taking their profit and moving out, then there is limited potential and we could even see a market slide...

          I really think the rough areas will only go up and not further down. The values have been going up again and owner-occupants are buying at pretty high prices. Not too high, but 100K is high for Pittsburgh. But that's only for properties developed by the Annie E. Casey foundation. They have some kind of lending deal. But, it'll bring the overall values up. RIght now it's not a 'flipping neighborhood', but just cash buy and hold. 

    The police is actually going to do more foot patrols with the crop of new rookies, that are coming out end of February, so that the really bad spots become very uncomfortable for the drug dealers, because there'll be much more police presence. 

    I have had problems in front of one of my locations and spoke to the major, who got me in touch with his LT, who started parking a squad car in my drive way, confiscated the pitbull, that they had tied to my fence, confiscated some marijuana, that was hidden in my trashcan, put out 'no trespassing' signs on my property, which allows them to arrest anyone that they see. 

    So, from what I've been told, my zone will actively target present problem areas/streets with the new crop of cops.

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y
    Originally posted by @Kevin Miklusko:

    Wow! Lol I had no idea there even was a Pittsburgh Georgia! My mistake everyone! And Thanks for keeping me honest Jeremy! There is only ONE Pittsburgh ;)

     It's a neighborhood in Downtown Atlanta. It was named after your Pittsburgh, because it had a lot of train tracks and the steel workers were living there. It was the first neighborhood in the Atlanta area, where African Americans were allowed to own property, so it has history.

  • Clairton, PA · Member since 2016 · 20 posts · 7 votes
    10y

    Thanks for the insight Michaela! :)

  • Atlanta, GA · Member since 2015 · 9 posts · 1 vote
    10y

    Hi Micheala; Should I buy in Pittsburgh like you for rentals, buy and hold or should I focus on East Lake...considering I get similar offers..or the number make sense? What do you think?

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y
    Originally posted by @Sergio Veskovic:

    Hi Micheala; Should I buy in Pittsburgh like you for rentals, buy and hold or should I focus on East Lake...considering I get similar offers..or the number make sense? What do you think?

     No, I would not, unless you know the area and feel comfortable. It's a very management intensive area and not one of those where you just get the check every month and don't have to do anything. Things get stolen between tenants etc. 

  • Real Estate Agent · Atlanta, GA · Member since 2016 · 61 posts · 99 votes
    10y

    All great points and I agree with Michaela on this last post. East Lake is still too dangerous and values are inflated. But because you purchased your home for $10K and it has a market value of $40K today doesn't mean that your home quadrupled in value. These areas carried full market value of $40K back in 2009-2010 which is why you could find distressed deals for $10K-$15K. Put $10K on a rental rehab and $20K on a retail rehab & you're into the deal $20K-$30K, so one would expect to see at least a little equitable margin for your investment. There's been a few current sales prices in the $50's but you still don't see any market indicators, just a few retail sales sliding into the value mix. These markets are still dominated by depression. And as the ladies said, tenant problems, owners not selling, crime, bring your pit & pistol, these are the things you have to contend with as well as the external factors holding values down. Even if you could make the argument that the market went from $40K to $50K that's not an impressive 6-year appreciation rate. It will take strong movements and a lot of "what if's" for the stars to align in these areas, which make them high risk low results areas to invest and the reason why I wrote this post. There are too many better areas to invest that are not as risky. 

  • New to Real Estate · Newport News, VA · Member since 2015 · 3 posts · 0 votes
    10y

    The new Falcon's stadium is bringing improvements including the addition of surveillance cameras in and around Vine city, English avenue etc...  Basically there will be a perimeter from I-20 to Donald Hollowell, Lowery and Northside drive.  

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    @Gordon Vaughn , actually, the market was not 40K in 09/10. Almost all asking prices hovered around 10-20K and were sold for around 10K. Only investors bought, with cash. I had a list of about 200 properties, that could have all been bought for around 10K in the Pittsburgh area. 

    And what you're not considering about the Beltline - everywhere in Atlanta, that there have been parks built all around the Beltline, which in itself is a huge draw and helps increase prices.

    But I'm perfectly happy with your advice to tell everyone else to stay away from the Beltline. More for me. I already have all of my cash out with rents the past few years.

  • Real Estate Agent · Atlanta, GA · Member since 2016 · 61 posts · 99 votes
    10y

    I actually agree with everything you said and I think I understand how you're gauging market values. Average market values 09/10 were not $40K because the market was dominated by distressed sales btw $10K-$20K, while I'm looking at total cost to top market value. 

    $40K was the full market value assessment back in 09/10 based on sparse area retail activity which helped determine ARV's in neighboring areas that were seeing no retail activity. I completed over 3,000 BPO's from 2009-2011 for many national banks, lenders, and hedge funders, and most of them used $40K as their standard full-retail assessment in order to determine distressed list prices. Not an exact science but a "best guess" as all value assessments are.

    You seem to have found a way to make it work, so ride it until you find better! 

  • Developer · Decatur, GA · Member since 2011 · 1k+ posts · 1k+ votes
    10y

    @Gordon VaughnSorry Gordon, but I'm going to say that your posts are pretty ignorant.  I've not made a comment like that about any post out of a thousand so I hope readers of this post don't interpret me as an abusive poster. 

    The Beltine has driven tremendous appreciation and will continue to do so.  Have you been to any meetings?  Have you tracked the impact on 'dangerous areas' like Reynoldstown and Old Fourth Ward?   On the Westside, the Beltline isn't complete.  If you tracked Reynoldstown, then you'd understand how much appreciation might be left vs. Reynoldstown/O4W experience.    

    "East Lake is dangerous!!!" What a joke this comment is.  You missed the boat on this neighborhood too.  East Lake has had a tremendous amount of appreciation.  You could have bought cash flowing rentals in this area and doubled or tripled you money over 10 years.   Your tenants would be going to one of the highest rated schools in GA -- Drew Charter School. 

    Now, I'll forecast.  The Beltine is reshaping the City of Atlanta.  I would not underestimate the longterm shift of jobs and living centers around the Beltline.  Already jobs are concentrated intown but along Peachtree and 400. We're also seeing the Beltine be a draw with Ponce City Market and new business locating along Memorial.   

    West End, Adair Park are the anchors for SW Atlanta doing well.  This area is seeing significant appreciation.  It's coming off an irrational low that savvy investors like @Michaela G recognized.   I've flipped several houses in the West End.  The demand for a well done house in the West End is greater than any part of Greater Atlanta (except for City of Decatur).  

    As for crime, there are apps for that.  You can see that crime occurs more frequently around the high traffic areas -- more people more crime.  I've not had any issues there, but I have suffered from theft in just about every other part of town including the 'burbs.  

    SW Atlanta does require you be a more experienced investor.  There are more low income tenants and with that comes more issues, education, appropriate flexibility, and discipline.  Sounds like your clients were ill prepared to be landlords and picked a more complex market.

  • Real Estate Agent · Atlanta, GA · Member since 2016 · 61 posts · 99 votes
    10y

    I appreciate your comments Rick, I really do. These clients are not my personal clients, but investors that I know and have met throughout the course of my career. If you like to gamble you can go down into these SW areas and sit at the big tables, but I don't bring my investors down there because it's too high risk. I haven't missed the boat on anything, but I have seen a lot of boats sink in these areas and I have seen just how they have sunk. As an investor agent I've sold over 50 Decatur homes in 2003-2004 to buy & hold investors, and sold almost as many in SW and West End Atlanta from 2003-2005. And we all know what happened in these areas from 2008-2102. 50%-70% avg depreciation by 2012. There have been some good areas of Decatur to invest over the past 15 years and there still is, but I wasn't talking about Decatur nor was I referring to East Atlanta, Kirkwood, Reynoldstown, or these other areas that were already popular developments before the beltline was even a conversation. 

    The only one in this conversation who is refuting the dangers of crime in East Lake is you. Anyone who currently lives in these areas knows this to be common knowledge. I can throw a rock from anywhere in East Lake and hit a home owner who has been burglarized, had their car broken into, or has heard gun shots from their bedroom window. The areas of East Lake closest to East Atlanta show appreciation that is real. For the rest, a good hard wind of economic stress can easily blow the progress back to 2010. 

    Smyrna on the other hand, for example, saw a total of just 10%-15% depreciation by the time the market bottomed. So which of these areas would you consider to be a more solid area to invest? I just wholesaled a home that I secured through direct marketing in Marietta 30067, Wheeler HS district, just a couple of miles from where the new Braves stadium is being constructed, to one of my investors for a $15K commission. My investor immediately relisted and the home is now under contract for $25K over what he purchased it from me. All without putting a dime into rehab, skimming equity, or batting an eye. I can do this 4 times a year in this area, in any transaction combination, with little time and effort, and make more money in one year than any single investment home on the SW beltline will yield in 5 years. The numbers don't lie, and SW Atlanta beltline area will continue to be volatile until something major happens. And it will take a lot more than just a couple of new businesses and a beltline to do it. I believe my risk assessment of the SW Beltline areas was a fair assessment. And for those investors out there that don't have the kind of money to throw around on high risk investments should really think twice about trying to build their wealth in these areas. 

  • Real Estate Agent · Atlanta, GA · Member since 2016 · 61 posts · 99 votes
    10y

    And to Rick Baggenstoss:: I'm sure you're a really cool dude and everyone has different opinions of the market. But I think you misunderstood exactly what and why I was warning investors of this area. For every success story you can tell in this area I can tell 20 nightmares.  If you're going to challenge my opinion as ignorant and a joke using speculations, forecasts and predictions, you should be better prepared next time. You're not talking to a speculator or a sophomore, and I would be happy to challenge you in any discussion, on any local real estate market topic, in any forum, anytime. 

  • Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    @Gordon Vaughn the fact that you're talking about average depreciation in regards to SW Atlanta shows that you really aren't very familiar with the area. 

    30310 was number 1 for mortgage fraud in the whole U.S. in the 2000's. That's why the FBI set up a special financial fraud division in Atlanta, in addition to their normal operations. It started in West End, with several real restorations of Victorians having sold to proper buyers for 300K. The scammers used those as comps for basic rehabs with the same sqf and BR/Ba numbers. And it went out from there. In fact I went to court for the Secret service to put one of those scammers behind bars.

    When the market crashed 80% or so of all properties in the area turned out to be mortgage frauds and the banks just wanted to wash their hands off them and threw them on the market for ridiculous numbers. 

    That was not normal depreciation or loss of values. 

    As to crime - guess what? You can probably ask every owner in Grant Park and Inman Park and Candler Park and other A neighborhoods and they've all been burglarized at some point or have heard gun shots. 

    For a completely a completely sanitized, cookie cutter life, stay in the suburbs.

  • Investor · Atlanta, GA · Member since 2016 · 1 post · 3 votes
    10y

    I work for the City of Atlanta, and see the plans for the Beltline, and their impact on Atlanta at least from a tax roll, and the increases are looking more and more realistic although yet to be realized.  For example the old braves stadium is being sold to GA State, and the deal includes community development, some of which will spill over into Pittsburgh.  At the very least from improved police presence and addition of services.  I am very bullish on this area going forward as I am the beltline construction.  All I have to go on is tax rolls, and construction permits and the volume is picking up.

  • Investor · Atlanta, GA · Member since 2014 · 389 posts · 250 votes
    10y

    I think part of what's at play in this conversation is the very big difference between ITP (inside the Perimeter) and OTP (outside the Perimeter) investing.  In Australia they have a term for neighborhoods like Candler Park, East Lake, Kirkwood --  they're "city suburbs,"  as opposed to the Western suburbs, and have urban city issues as well as suburban issues.  Here we call it Intown.   Rick & Michaela represent investors who are well-versed in Intown, having lived and worked in these neighborhoods for years.  Gordon represents the OTP investors and what works best for them.   I'd buy in the West End in a heartbeat, but then again I bought my primary residence in Decatur City, from a flipper, 20 years ago, next to a woman who parked her big rig in the back yard, a crack house two doors down and gunshots were regular.  House has tripled in value, and I haven't done a thing to it but live here!  If I ever sell, it'll be scraped for a new build in the same heartbeat.

    Point being, some kinds of investment need more hands on attention, and nobody should invest anywhere based on "hype," or "speculation" or "what everybody else is doing", especially if you are out of town (or from the other side of the Perimeter) or looking for turn-key cash flow.  In order to make fast money in SW, you really need to know the area, street by street, and know what you're doing.  Slow money leaves a lot more room for error.

  • Financial Advisor · Glendora, CA · Member since 2015 · 209 posts · 94 votes
    10y

    I'm new to Atlanta,  i'm assuming the "perimeter" is the 285 freeway.  What is the beltline?

    Thanks
    Yooch

  • Real Estate Agent · Atlanta, GA · Member since 2016 · 61 posts · 99 votes
    10y

    Very well put Anna. I used to do a lot of business in these buzz areas like West End, but I got tired of all the external issues, equity skimming, scam artists, false inflation, and false prophets talking about how rich they will become by investing in these areas. I've seen too many investors get sucked into these places that take incredible savvy to navigate, & their investment career is over. With reference to the SW Beltine, I agree with both you and with John when it comes to speculations, but i'm still seeing no value movement throughout the SW side of the belt. I have also heard what was going on in the Pittsburg area stemming from the stadium plans and developments, which seems to be one of the more viable high risk areas to take advantage of as students look for more affordable housing. But even then these markets are very volatile to small shifts and are usually the first to suffer in major shifts, so there's still a high risk even for those homes. I hear a lot of talk about how wonderful and how easy the SW belt is at making big fortunes with huge cash flows and multiplying profits, but never hear about the realities of investing here and what the market is actually doing "today", which is a far cry from what I'm reading about. I thought it fair to let people know to beware of this area, know the areas that aren't moving, do as much research as you can, and to make sure beltline trends are viable & backed by strong facts and numbers before considering the purchase. That's it. I'm not a disbeliever of the beltline which has done a lot of wonderful things for nearby communities. But not all beltline neighborhoods are good buys just because the beltline has or will be coming through.  

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