Looking at first rental property in ATL

[Steven Chang]

Hello!  

New member here and I've been working through the forum posts and as many of the BP podcasts as I can.  I find them very informative and inspirational at the same time!  I'd appreciate some comments on a potential deal I'm looking at. 

I currently live in San Jose, CA and I've been thinking of stepping into real estate investing for myself. Was thinking of looking out of state because CA prices are very high right now and currently have the opportunity to purchase a SFH in Atlanta from a friend who has 10+ properties there. I mentioned I was interested in investing so she's offered to sell me one of her properties. It would be good for both of us since she's looking for more cash flow to renovate some of her other properties there. She gave me three options:

1) a 1300 sqft SFH in 30032 for 150k. However, Zillow prices the home at ~115k. Good/bad news is that there is a steady tenant there on a 5 yr lease for 1360/month so the house seems like it would cash flow well and I wouldn't have to hire a property manager. It's pretty much a turnkey property

2) a 1300 sqft SFH in 30034 for 95k but needs ~28k of exterior work. Zillow prices the home at 90k. I think I would need to find a tenant for this one.

3) a 1100 sqft SFH in 30316 for 92k but needs ~50k of rehab work (plumbing, adding in another bathroom, and electrical). Zillow prices the home at 144k. It sounds like it may be a good house to flip since there is a huge basement that can be converted into another room. I would also need to find a tenant for this one

First thing I noticed is that the Atlanta market appears to be hot since the prices seem to be over what zillow suggests. I'm leaning towards option 1 or 3, with option 3 being the one that requires more work but would be a great opportunity to learn more about rehab. Option 1 sounds like it would cash flow well. I contacted my mortgage guy and he said i'm qualified for 5% down at 4.5% and a 4.625% APR, which roughly comes out to $597 plus tax and insurance on the high side. I was hoping to seek the advice of those more experienced than I before I jump right in. Thanks in advance!