All Forum Posts by: Andy Luick

No matter how good a deal looks, I typically won't purchase a property that has been stripped....if it happened once, it will happen again. I base my offers on projected net incomes from rents with a 10% cap. Since this is a 3/1, I wouldn't even be interested. I'd rather pay more for a 3/2 or bigger and get better rents. You can find some pretty decent off-market deals in the 30s if you hunt for them. It sounds like your rehab budget would be low as all of the $12k would likely go for full electrical rewire, plumbing and new hvac.

I too like the westend and spent many years in that area....and still hold some properties over there. I actually lived in the area for 5 years. If and when Ft. mac hit, it will transform the entire area....much more so than any impact the beltline could have....but there could be many years between now and when Ft. Mac comes along. I don't count on any appreciation...it's just a bonus if it comes at all. Happy Investing!

I would look to some diversification. I probably wouldn't attempt a fix and flip unless you just wanted yet another job or had someone very solid in your market that you could network with. Front end investor partners in our program earn 10% and a 50% split on the profits when the property is sold. These investors are usually seeing 20% to 30% on their funds in 6 to 12 months. We use the funds to purchase & repair distressed properties, turn them into shared housing and sell them off to passive investors who earn the tax write-offs and 10% to 14% returns. Happy Investing!

Are you an all cash investor or financed? There are a variety of models out here. Be cautious of the pro-forma returns that marketers & sellers are estimating as they very seldom hit those returns. Shared housing yields higher than normal returns while minimizing vacancy and repair/fix-up costs. It's feel good investing, allowing you to create affordable housing for other while earning good by doing good!

There are so many angles and perspectives to real estate investing. Leverage can create some amazing returns...especially on paper. I saw a KC property advertised recently that also produced 120% cash on cash. It looks great until a tenant doesn't pay. I don't know David's market and I do hear good things about texas but what I do know applies nationally - good credit people aren't tenant....they are owners and buying with rates this low. Now, skipping the financing for a minute, and making sure there are no restrictive covenants preventing it.....I would turn it into shared housing which boosts the returns, keeps the property rented maximizing income and minimizing risk. It's a different niche but it works and it works very well.

I have a 3bedroom/2bath in metro atlanta that was investor owned for 4 years...it barely produced a 2% return over that time and was purchased for cash. It brought in a net $500 a month rent...when it was rented and the owner has not accounted for the 3 evictions and all of the ensuing repairs in his 2% number...nor vacancy costs. We took it over, made it a 4 bedroom by finishing space in the terrace level and it now nets $1500 a month after all expenses. More importantly, even if someone leaves, we still have income on the property.

We are not creating rooming houses - we attract professional class tenants - many who may have had past job issues and credit issues....or got divorced and down-sized. Shared housing produces huge returns...at least for us it does. You may want to consider it for this property.

Beyond that, call some local rental agents in David's market and see what kind of rents and times on market they quote you. Get a feel for the local market before you sign into anything. I appreciate David's response....I just don't like that much debt on a property. Our backend buyers are either all cash or go with 50% down and are guaranteed a 10% net return (ignoring financing which boosts the return). If the property doesn't hit the mark, we reach back in our pockets for the first 18 months. We haven't had to hand over any money so far and most properties are producing 10% to 14% returns. Happy Investing!

Looks like you have a lot of it covered. As the others have said, at this price point, if it's fully rented and hasn't gone under contract with those numbers, you are likely missing something. If it's a converted house, check with your local zoning folks and make sure that the property is up to code and that the conversion to a duplex was legal. Otherwise, you could be inheriting some legal problems.

Always be cautious with pre-existing renters. I've seen units where the tenants were there for years and always paid the rent...which is wonderful....but when they left, there was nothing left to the unit. Check the kitchens and baths of both units very carefully. It's a good idea to to stand strandling the toilets and feel if the floors have any give. If you can get into the crawlspace or basement area with a flashlight, look for rotted framing members or water leaks. Also check for insulation in the attic and crawlspaces. Lot's of things to look for really but most rentals at that kind of price point will have a ton of deferred maintenance so just be cautious.

Landlord rental policies can be hard to get in a lot of markets these days. I like Grange & Farmers Insurance for my landlord policies and they typically run $50 to $100 a month depending on where the property is located. Joining the local REIA is a good idea but try to network with the wholesalers there for vendor contacts and potential property deals. A good home inspector is essential....try not to use the one recommended by your realtor unless you can confirm how useful they are by other references. Realtors like to recommend inspectors who go light on a property so they can make the deal. Again, just be cautious & good luck!!

Like all markets, to be successful now you can't have a follow the herd approach. Atlanta is a very tough rental market and as JScott noted vacancy is huge in certain rental markets and many of the renters are marginal at best. A lot of investors are faced with renters who end up trashing the place and it takes months to get them out. We created a shared housing model that works in Atlanta and we've turned around a number of orphaned investor homes that were purchased "turn-key" and never rented...or rented marginally. We are still actively acquiring properties in the $40k to $65k range. If you are not making cash offers...you can just about forget it as an investor OR deal only with wholesalers. We do now have the ability to offer back-end buyers 50% financing on rented properties.

Sure you can own real estate though a SDIRA but you can often achieve a much higher return as a lienholder or lender. Owning real estate isn't always the way to go, especially in markets that aren't appreciating. Real estate investors prefer to use private funds and avoid the fees associated with hardmoney. We joint venture with investors and many of them are using their SDIRA to become front end partners with us. We use the funds to purchase, repair, rent/manage and sell off rented investment properties. Our model is unusual in that we create shared housing for higher returns. The front end partner gets 10% on funds per deal, not annum, and 1/2 of the profits on the back-end sale. Once the property is stable & fully rented, we sell it off to other passive investors seeking renovated, rented & managed property. We're in GA and have created a secured process. We've created a model that minimizes risk and maximizes return. A recent deal returned $14k on a $30k investment inside of 6 months. We can't create these kinds of returns any other way and if we don't perform, the front-end investor takes over a nicely renovated property!

Nice buy! The key is getting it rented quickly and keeping it rented. There are still some cheap deals in the metro Atlanta market but renting here can be a nightmare. I created a shared housing model that is producing very well. We end up taking over quite a few investor props in our market and then renting as shared housing for better returns and lower repair/vacancy. We just took over a 3/2 in tucker that had barely been returning $500/mo on a $140k investment. We finished off a basement bedroom and it's netting $1550/mo with shared housing. Huge difference. Happy investing!