All Forum Posts by: John C.

If they are self employed most definitely. And bank statements as well.

If they work for a company then their paystubs plus a verification of employment should do the job there. Someone will need to call and verify a) that they still work there, b) what their salary is, and c)how long they have been with the company. Of course the more info you have the better so as Douglas mentioned above if it is a high demand rental area then why not?

John

Hendrix P.,

Yes always change the locks. CYA. I use the Kwikset system from landlordlocks.com. They take just seconds to change out and you can do it right in front of the tenant. Plus they look good.

Over time I decided it was a good idea to have a few cylinders keyed the same to a "vacant" key. When the tenant moves out a "vacant" cylinder goes on so my people can get in and out to turn over the unit. When a new tenant moves in we swap the cylinder again and the "vacant" cylinder goes to the next vacant unit. And so on...

Just thinking out loud here as I''m no expert. Their cost of money is next to nothing. These guys are going to securitize and package these income streams then sell them off before the music stops. They are locusts operating on the greater fool theory. Considering how well-heeled they are and how much money is at play they'll probably pull it off. One big legal ponzi scheme. IMHO.

Hopefully enough jobs will be created and communities saved in the process to have at least moved the ball forward before they pull out so the end result will be a net positive in some markets.

So how to take advantage of this movement?

Short term?

Medium term?

Long term?

Rob,

I was able to drive by today. Interestingly enough on the way there they mentioned on the radio that Dekalb Public Schools had been put on probation. Looks like they still have a lot of problems. Go figure.

The weather was pretty nasty so not much street activity. I did not go in. I was able to confirm my first impressions. The following are my thoughts:

I just don’t see how this could pencil out as a retail project. It would take a substantial amount of work to make it appeal to your limited target market. It just doesn’t have the “bones” and would require a major facelift. Of course your target market is even more limited because of the car repair shop next door and since the home is on the edge of the community. You can change the house but not the location. Even in 30030. I mean come on! A few blocks over new 2800 sq. ft. Mcmansions are selling for 1/2 million. Welcome to the ATL. It's really whacky here.

I’ve seen people get trapped over and over again where they are working off of rental repair estimates and expecting retail ARVs.

For rental I’m thinking you would be able to get around 900-1,000/month. Everybody has a different tolerance level of value based on rents so that is certainly subjective but 120k for $1000/mo doesn’t appeal to me in today's market. You can do much better in decent rental areas in the Atlanta area right now if you are looking to buy and hold.

I still feel your maximum retail value would be about 170k-180k (maybe even 160k due to the auto garage next door) but that is actually gross not net so you would still need to take out purchase price, renovation, realtor fees, and of course holding costs. I also believe it would take longer to sell than a similar product in the middle of the community so that would increase your costs even more. The only way I would do this deal is if I had some sort of insider information that something big was going to happen that would increase the value substantially no matter what.

Just my .02. Good luck and be safe!

Rob,

Please slow down. You seem like a nice guy and I understand that compared to what you are seeing out in Cali everything here looks like a steal. I've got a couple of meetings downtown today. I'll try to do a drive-by when I break free. Don't get me wrong I've always liked 30030 (back in the old days it was too pricey for me). But I think you are underestimating the importance of schools in Atlanta and more particularly Decatur 30030. Remember it's virtually street by street here until you get North of College/Dekalb Aves. I Just don't want you to make the same mistakes I made when I first got started in this business. How long is your free look?

Quick thoughts:

As far as the rehab goes there is nothing there I see that could not be dealt with.

Under contract right now. Asking price 99k. Lots in 30030 used to sell for more than that. Now they sell for about 50k-60k. Depending on school district. And location.

Looks like it used to be a Duplex. Decision would have to be made. Make a real retail bungalow "front" and go with higher-end retail finishes to try to sell this year for maximum retail or convert to a rooming house for cash flow while waiting. Market rent as SFR not very exciting at that cost basis. What would maximum retail be this summer? This is not in a good school district so families would most likely not be interested. Your "best chance" demographic would be young professional couples or a single professional looking to pick up a couple of roomies to pay their mortgage for them. Oh and it looks like it is next to a car repair facility so that limits appeal even more. Actually the more I think about it the neighbor could be a real problem for a retail buyer.

You have a new construction bungalow that just went on the market for 275k just down the street (more “inside” the neighborhood and not on the fringe). Looks like they bought the lot for about 56k. If everything goes perfect they'll come out net around 250K minus land, construction, and holdings costs. If everything goes perfectly. Take off at least 50k in value for a remodel (of that particular brick ranch) vs. new construction. So I would think your maximum retail net return would be about 200k minus retail conversion (at least 40k-50k) and holding costs. Actually more like 170k-180k tops minus, minus due to the factors previously described.

It is definitely a solid rental market. I believe the retail value suffers from bad schools and being on the "wrong side of the tracks" with no real ability to get to the cool stuff in Decatur without driving. Of course the Marta station is right there so that is a plus. In other words this feels more and more like a working class support community than a college community.

This area is next to several really great areas and 30030 is a hot zipcode so it’s “value” comes from its proximity to better areas. A rising tide raises all ships. The closest college is Agnes Scott. If that is the college you are speaking of it looks like they already have plenty of housing. I’ve remodeled and rented in this area before and out of 1000s of calls over the years I think one or two were from people that worked at Agnes Scott. Not students. Plus this area is not walking distance and would not be considered “cool” anyway. Agnes Scott students seem to stay close. So if I had to do this deal (not saying I would at that price for that location) I would convert to a rooming house with top notch landscaping out front (looks like it’s next to commercial so as long as you weren’t too crazy with it you would be ok) and let it cash flow for a few years hoping that the neighboring areas continue their uptrend. Which I'm pretty sure they will barring any major national/international catastrophes.

Great stuff! It seems to me that a key component to long-term success in real estate investing is to have good intelligence-gathering abilities so you are in the right place at the right time. Having your ear to the ground so you understand what is driving the market as well as what the community "powers that be" want can make all of the difference.

Hi Glenn I must agree with everyone else this doesn't make a lot of sense. What happened?

I see that the OP's account is closed so this is just for general discussion. I noted that the OP did not include other costs like water and trash. In multifamily if the water bills are not separately metered they can really hurt your cash flow and trash may or may not be included in the property taxes. As always do your due diligence. It's that one unknown that can turn a good deal around. That being said in this market 165k for 13k net not including vacancies, repairs, credit loss, etc per year is not a good deal.

This looks like something Ringcentral could probably handle for you.