Hi All,
Thought I would pose a question to the Atlanta experts…Jay, Emma, Karina, WI etc. What should I be looking out for when investing in Atlanta. I am just sniffing at some deals at present and wanted to know opinions on:
a) What's the suburb Temple like ?
b) Would it be reasonable to be paying around $50 per sq foot for a home around 2570 sq feet built in 2006
c) Is it too late for Atlanta investment. Appreciate WI was paying from $20 sq ft
Speedy,
We havn't done any deals out in Temple so can't give you too much information on that area. $50 sqft seems high to me. I would be aiming for closer to $30 sqft. We did source some properties for WI and other investors at $20 sqft (and under) but most of those deals were in 2011 or early 2012.
In regards to whether its too late it depends on what you base your comparison too. I believe we are past the bottom of the market and trending up in prices but still way below building costs and the peak of the market. Still good value in my opinion if you can secure a good property. That's the challenge right now, just because its listed for sale doesn't mean you can buy it even if you are prepared to pay full price or higher. The competition out there is fierce with multiple bidding. It just means you have to work much harder to get the deals and act quickly when the right opportunity presents itself.
Karina Perez Ronderos
Select American Homes LLC
Phone +61 412 900 111 | http://www.selectamericanhomes.com
Hi Speedy
$50 per sq ft is too high, no more than $30 I would also say.
Don't know Temple.
I think try to buy no older than 10 years and anything over 2000 sq ft would be great, I like my properties to return at least $1000 pm.
I don't know if it is too late, depends on your criteria. For me it is too late as I will only buy properties with 20% gross which is just not realistic at the moment.
Cheers WI
Temple looks to be half way to Alabama so pretty far out of Atlanta per se.
We own Douglasville and I own a few in Carrolton which is just as far.. However they are more modest in size.
From my vantage point the farther out you are the less price per sq ft will matter.. IE its going to be price range for bd and bath.
Although to talk about houses are too expensive above 30 a foot is really amusing.. We sure got spoiled EH ( thats Canadian for ain't that so)
The quality of the homes that we are all buying can and will be replaced at 55 a foot plus the lot.. So don't let anyone tell you its a 100 a foot to replace these homes because thats just not the case.. And lots are dirt cheap Freudian slip. and will continue to be. Resale on these bigger sq ft homes will not go up exponentially with the sq ft size.. some increase yes but not dollar for dollar for a 2400 sq ft home.. Sweet spot is 1200 to 1600 both for rental and resale for these quality of homes, at least in my opinion.. Rehab is much cheaper rents do not go up % wise per sq ft of home..
One thing is certain though there will be less pressure from the institutional buyers the farther out you go.. they concentrate on the 7 close in counties.
Thats my take on it for whatever its worth… Probably not much right:)
Jay,
Can you share the 7 counties the institional buyers are purchasing in?
Gwinnet and Dekalb were named in the Wall Street Journal article you posted. I would be interested to know the others they are targeting.
Karina Perez Ronderos
http://www.selectamericanhomes.com
+ 412 900 111
in no particular order
Fulton
dekalb
cobb
henry
clayton
gwinett
rockdale
then ones that are a little farther out but still considered in the metro area
Douglas
Carroll
Cherokee
Forseth
Cowetta
Takes an army and a very well capitalized team to cover all these counties. Just for informational purposes. the foreclosure sales are only 1 time a month in Georgia ( First Tuesday of the Month) So this month Its Oct. 2nd. There will be 2,000 plus properties on the sale each month in the metro area with about 500 or a little more being sold in that one day.
The trick is that in each county the Law firms that show up to cry these sales ( Auction them) have the right to show up anytime between 10 and 4pm.. Some keep fairly tight schedules others you just have to stand and wait.
So you will have multiple auctions going at the exact same time.. So to cover every property you would want to bid on a company needs 3 to 4 people at each auction..Plus Cashiers checks for each person… The big players will have 5 to 20 million in Cashiers checks ready to go that day.
So its pretty difficult to break into the flow of this, and compete against the regulars that have been doing it for years. ( and thats what I think has been labeled on this site as first generation wholesalers.. they buy at auction then flip to companies like TRR, Karina's company and a host of other turn key marketing companies. One of the reasons that you have delays in closing for instance with TRR is it can take up to 90 days before the Trustee's deed is delivered to the buyer and the process of selling can begin.. The winning bidder has equitable title but not deeded title.
So that all said its a business just like any other.. And the big players have 20 something year olds or house wifes running around with a list of what to bid on and max bid and cashiers checks to pay for them.
At last auction I had a beer at the end of the day with one company that buys 15 to 20 a month.. they had 9 people out.. One of their court house steps bidder's was 8 months pregnant,,, she bought 2 houses for them
We get our handful every month and sometimes we get lucky we got one property that slipped through the crack and while the big boys were all fighting over a couple of other properties that were going the auctioneer was late and no one bid on this one and we picked it up for a dollar over minimum bid… Right at 25k… which is about as good as it gets right now for decent area and 10 years or newer.
JLH
Hi Jay
Your build is always lower than what I have researched, so why $55 per sqm, how did you get this figure??? and how much is the lot, Why is it that I always come up with around $70-90 per sq ft, what about inflation.
WI
Jay,
i think it would be good if you also listed the pitfalls of this type of purchasing
eg: potential liabilities on the title
owners trashing the place when they find out they have to move
existing tenants being unwilling to pay rent etc
thanks
Hi Speedy
I'm just getting into the US market too (like the rest of the world!). As per some of the previous comments, it looks like some of the super exciting single family home deals have already disappeared. A friend of mine has bought a few properties (in Texas and Georgia) through this buyer's agent, and I'm about to make my first purchase in the next few weeks:
http://www.888usaproperty.com.au/547803/
(open to educated opinions). Perhaps you can use it as a comparison?
Having just logged onto loopnet.com for the first time a week ago, it seems the real bargains are in the multifamily deals. Ie finding a block of 20x 2 bed apartments selling for <$100,000 is astonishing! Now I'm left wondering how to pull together then numbers on what I assume is a different type of property deal.
Does anyone have experience running the numbers / due diligence on larger US deals (10-20 unit multifamily)?
Mike.
Jay,
Thanks for listing the county information.
I was a little confused by your comments
"So its pretty difficult to break into the flow of this, and compete against the regulars that have been doing it for years. ( and thats what I think has been labeled on this site as first generation wholesalers.. they buy at auction then flip to companies like TRR, Karina's company and a host of other turn key marketing companies."
Jay the majority of what we buy are bank owned foreclosures (we don't do courthouse steps), we don't have any companies flipping properties to us for us to onsell. We do not mark up the price of the properties. If we negotiate a price of $60k with the seller thats what our client pays $60k + our facilitation fee. The facilitation fee is how we get paid and this is fully disclosed to our clients. Just wanted to clarify as there are many different business models out there. We source our properties direct from the open market and facilitate the renovating and tenanting of the homes for our clients.
http://www.selectamericanhomes.com
"Facilitating the purchasing, renovating and tenanting of homes in the USA for international investors"
Hi mgdavis
I think you should search this buyers agent/company you posted, as you may want to reconsider purchasing from this group. You will find you are paying too much for properties and do not touch their finance.
WI
The multifamily deals you mentioned are cheap for a reason, these types of properties need to be run as a business, also if it is in the inner city areaas then most likely in areas that should be avoided at all costs. The cashflow will be negative and you wont be able to give it away.
WI
Thanks for your feedback & comments Karina, WI & Jay,
I'd be curious…..your suggesting around $30 sq ft would be more on the mark…..lets say a home needed new carpets, paint, HVAC, light fittings….a full makeover. For a home around 2000 sq feet what would you expect to pay in Atlanta ? Appreciate many if's & but's involved but just an idea of the amount would be great for me to refer to.
WI,
Thanks for your comments. I'll have a search for 888 threads now.
Have you (or anyone you know) done any of the larger multifamily deals?
Hi Everyone,
I am a property investor that lives in Atlanta and buys to hold as well as sells to investors. Until now i have focused mainly on US Buyers but due to overseas and especially Australian demand i have changed course a little.
As far as your question in regards to Rehab costs this can vary greatly depending on who you get to do the job. A good example of this would be a project that i recently finished. When and if you use a licensed and insured contractor prices (and usually quality of work) are both a lot higher. I hot a quote for $14500 labor only on a job with similar specs to your above request. You need to add in about $6000 for materials and you are just about right. The other quote i got was from un unlicensed immigrant workers and it was $8000. The risk you take with this is that standards of workmanship vary greatly and its a bit of a luck of the draw until you can build up a team you know does the right job. It is then a matter of constantly checking up on them to make sure they are keeping the standards up.
The other issue you run into whit unlicensed contractors is Liability. As they usually (always) don't have genuine insurance if the worst does happen you are proverbially screwed. Also if you need to pull permits then you need to have a license so that i another thing to consider when looking at the job you are undertaking.
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Hi SG
My properties averaged around $12-15K this would include painting, HVAC units and carpets (all the itmns you mentioned).
Cheers WI
Speedy, I know in Australia, I would be taking a lot more into account than the cost per sq. ft. What about its location? proximity to schools,? Street Frontage? I'm just a window shopper at this stage but I would suggest doing your own research and finding a few key 'wow' factors about the property. Its worked for me in all my Queensland properties to date.
Best of luck,
Gazz
gazmatazz,
That goes without even saying but at the end of the day not much point concentrating solely on location etc if you end up paying $30,000 more then what similar properties are worth surrounding it. Funny you mention Queensland….the home of two tiered marketeers. Most of them now sell US property !!
So I hear Speedy. My two properties are both in Mackay. Too far north for the two-tiered marketers I hope!
Both mine have done me well but I'm just not so sure about putting my money on foreign soil. The problem is, most of what you see on the internet doesn't make sense so I might just have to buy myself a ticket to the America and visit Disneyland on the way…
jayhinrichs wrote:We sure got spoiled EH ( thats Canadian for ain't that so)in Australia too lol…or maybe just Queensland, not sure…
Ziv Nakajima-Magen | Nippon Tradings International (NTI)
http://www.nippontradings.com
Email Me | Phone MeZiv Nakajima-Magen - Partner & Executive Manager, Asia-Pacific @ NTI - Japan Real-Estate Investment Property
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