It seems like investors are coming into the market at full force right now. Mark & I are part of a national education company and we coach people who want to change their lives by investing in real estate. We just got back from a Real Estate Investing Coaching Mastermind session in Las Vegas and we delighted to hear about all the opportunities that are available across the nation. We learned what is working and not working in various markets.
So what is going on in Atlanta you ask?
Investing Market – Status & Forecast
As more and more investors jump into the market, it provides for more competition for the best deals. That means investors wanting to get into the game, need to be able to move fast, execute well, and be willing to do the things other investors either aren’t willing to do or are not able to do.
We have had several hedge fund firms meet with us to tell us that they are going to buy hundreds of homes – short sales, foreclosures, REO’s, and tenant occupied homes. Some real estate closing firms are estimating 10,000 foreclosures coming onto the market each & every month starting in December from the backlog of foreclosures from the “robo-signing” debacle.
Historically, Georgia has been very easy to foreclose and relatively cheap, so banks are quicker to foreclose here versus other more complex states. In addition, there is no “right of redemption” which makes it safer for investors to purchase foreclosures on the courthouse steps.
For those people who want to invest in more rental houses, we encourage you to speak with us about your overall strategy and how we can help.
Rental Market – Update
With so many investors coming into the market, it means that there are lots of rental homes being offered. Because the investors that are purchasing now generally have a much lower cost basis, they are able to provide rental rates that are less than the traditional market rates. So this is yet again affecting our ability to raise rental rates and fill homes as quick as we would like.
For example, one owner of a quad paid $300,000 or $75,000 per unit. They are selling for less than $100,000 on the same street. Making the price per unit $25,000. The new investor is able to put an additional $15,000 into each unit for a total investment of $35,000 per unit. The rent on the street is $750.00 per month, but the new investor has so much less cash outlay, he can rent the unit for $600.00 per month and still have a great return. Now if you were the tenant, wouldn’t you rather pay $600.00 per month for a totally new rehabbed property? So even if the owner matched the price, at $600.00, he still couldn’t rent it as all the tenants would prefer the newer model.
So what does that mean for owners of existing rental properties? The properties have to be in excellent condition in order to rent quickly. Newer homes with four bedrooms or more in communities that have amenities are renting the fastest. We will expect that trend will continue.
So if your home hasn’t rented and has been lagging on the market for a while, you should consider some strategic upgrades or modify with a move-in special. Unfortunately, the pool of renters this time of year is significantly reduced. 80% of the leases come available between the beginning of April & the end of July. So we only have 20% of the total population looking between August & March. So at SSPM, we do everything we can to maximize every call.
Want more information about investing or property management? Contact us!