Do you want to invest in real estate? Maybe you already own a rental property, but you want to expand your portfolio. As one of the most experienced Atlanta property management companies we have seen how much smart investors can make in the rental property market. Now is the perfect time to invest in an Atlanta rental property. If you aren’t sure how to get started in real estate investing the first step is to research your options. Below you can read about a few of the different methods for investing in Atlanta real estate.
Should I Flip or Buy and Hold?
Flip or Flop, Flipping Out, Zombie House Flipping, Masters of Flip, there are countless TV shows about flipping houses. Investors buy a home, fix it up, and sell it for an enormous profit. Once you sell your first flipped home you can roll some of the profits into the next purchase and keep moving up from there. There are many investors who find success in flipping houses, but just as many who barely break even. If you choose to invest in real estate by flipping houses there are some things you should know. Top Atlanta property management companies recommend taking these steps:
- Be Patient: Don’t purchase a house if it is a good deal, wait around for a house that is a great deal. Savvy house flippers patiently wait for the perfect home at the perfect price. If you aren’t patient you may end up in the hole.
- Brush Up on Your Handyman Skills: “Sweat Equity” goes a long way when flipping houses. If you can wield a hammer you can save some serious money. But be careful not to take on any job that requires a licensed professional.
- Stick to a Budget: One reason many house flippers lose money is that they go over budget. In order to stick to a budget you need to know which repairs offer the best return on investment.
- Manage Your Time Wisely: House flipping is all about time management. Unless you paid cash for the home you will be paying down a mortgage every month, including interest. Every month the home is under construction you lose money. Factor in the time your home will be under construction and on the market when you create your initial budget.
Buying and holding is the alternative to flipping homes. Our Atlanta property management company has seen real estate trends come and go, but the buy and hold method remains one of the best ways to make a profit in real estate. While this method does not bring the same kind of instant gratification as flipping does, it can make you more in the long run. Smart real estate investors find a home that appeals to renters, in a good neighborhood, at a good price. In many real estate markets property owners are able to charge enough in rent to cover their mortgage principal and interest, real estate taxes, insurance, and maintenance costs. Even property owners who just break even after their costs will make money in the long run because of the equity they build.
There is not one “right way” to invest in real estate. Some handy investors love the rush that comes with flipping homes. Others enjoy the stability and guarantee that comes with buying and holding rental property. One point remains true for every investor; real estate is one of the best investments you can make. Before you decide to purchase real estate have a plan in place for flipping or holding.
Why Atlanta Property Management Companies Recommend Single Family Home Investing
NPR recently reported on a new trend in real estate. A large number of people are choosing to rent single family homes, even when they can afford to buy. In fact, home builders are jumping on the bandwagon, building communities of single family rental homes. Why are so many people choosing to rent instead of buy? Most renters enjoy the freedom that comes with renting. Buying a home means choosing to stay put for the foreseeable future, or losing money if you decide to move. Some younger renters saw their friends and relatives lose houses during the housing crash and are afraid of losing their home if another recession hits.
Beyond the current trends there are other reasons to invest in single family rental homes.
- Appreciation: Single family rental homes tend to appreciate more over time than multi-family rental properties. If you plan to sell at some point in the future you will likely get more from your single family rental home.
- Outside Maintenance: According to most Atlanta property management companies, tenants of single family rental homes are responsible for landscaping and other outdoor maintenance. Property owners are responsible for this aspect of multi-family rental units.
- Location: Single family rental homes tend to be in nice, quiet neighborhoods, close to good schools.
- Less Turnover: Tenants who rent single-family homes typically sign longer leases than tenants of apartments or other multi-family rental units.
While there are many factors that go into making your rental property a success, single-family rentals tend to be a stable and predictable investment. In addition, when you work with experienced, professional property managers you can avoid expensive mistakes that may put your investment at risk. To learn more about our full range of services for single-family rental homes visit this page.
Investing in Multi-Family Rental Units
Duplexes, quadruplexes, or smaller apartment buildings can also be a good investment for individuals who want to make a start in real estate investing. But there are big differences between single-family rental properties and multi-family rental units. Before you dive in and purchase a multi-family rental unit consider these pros and cons from Atlanta property management companies.
- One Mortgage, Multiple Units: A multi-family unit can be bought with one mortgage, which can be a benefit if you plan to purchase other properties. Most banks put a cap on the number of mortgages you can hold. With a multi-family unit you can use have one mortgage bringing in several income streams.
- Overall Costs: While the cost to purchase a multi-family rental unit is almost always more than purchasing a single-family rental home, some maintenance costs are lower. For example, owning one quadruplex versus four rental homes means only one roof to fix.
- Vacancy Days: Vacancy days are expensive, no matter what type of property you own. However, with a multi-family unit vacancy costs are offset by the income you generate with your other units.
- Appreciation: As we stated above, single-family rental homes tend to appreciate better than multi-family rental units. If your plan is to sell sometime in the near future, a multi-family rental unit is probably not the best investment for you.
Of course, it is worth noting that with more units you are likely to have more problems. The day-to-day aspects of property management are multiplied with each new tenant. Most Atlanta property management companies will tell you there is no “right” investment for everyone. If you are considering investing in real estate, think about how much time, money, and effort you want to put into it so you can decide if single family rentals or multi-family rentals are right for you.
Guidelines for Buying Rental Property
When you decide what type of rental property you want to purchase, how do you find the right one? As experienced property managers we know a thing or two about what makes a rental property a good investment. Oftentimes the property owners we work with are simply turning their former family home into their first investment property. This can be a great way to get started in real estate investing, but it is not right for everyone. If you are considering this route talk to our experienced property managers to help you decide if it is right for you.
Picking a single-family rental home to purchase is different than picking a home for your personal residence. You need to think like a renter in order to get the best return on investment. Atlanta property management companies can help you narrow your search for the perfect rental based on their local expertise. In general, your rental home should include these things:
- A location close to good schools, restaurants, and public transportation.
- A fenced-in yard.
- Laundry hook-ups.
- Three or more bedrooms.
- Built in the last 20 years.
- Good curb appeal.
Look for a home that supports a family lifestyle. Homes that have unusual layouts, small backyards, or are located on busy streets are more difficult to rent out. When you think you have found the perfect investment property make sure you check local regulations and HOA bylaws before you purchase it. Unfortunately, we have seen over-eager investors purchase a property only to discover they cannot use it as a rental.
Get Started With Specialized Property Management Atlanta
Ready to start investing? Don’t lose money on your investment by making common, avoidable mistakes. Specialized Property Management Atlanta helps first time and veteran investors make more money on their rental property. Unlike other Atlanta property management companies we are offer full-service property management. That means we take care of everything during the rental cycle. To learn more about investing in Atlanta real estate call us today at (404) 596-8454.