Real estate offers unique investment opportunities for private investors. Unlike other markets, buying real state allows investors to profit from a steady cash flow while also creating equity in your property.
However, just like in any other investment, you need to do your homework first before you jump to buy a property in Atlanta. Here are some tips to get you started:
STUDY THE NUMBERS
When considering which property to buy, carefully studying the metrics can tell you a lot more about a place than the number of rooms it has or how good it looks. Find out about the vacancy rate, local employment opportunities, historical trends such as population growth, and the demographics of the area. You should also know who your target demographic is; whether it’s renters or buyers, young people or old people, professionals or unskilled workers, etc. All of these factors will determine the property’s potential to generate wealth and whether you should invest in it or not.
CARRY OUT A RENT SURVEY
Knowing how much rent a property can yield is crucial. Conducting a careful rent survey of the area will tell you how much money you can expect to get out of a property and whether or not you should buy it. The first thing you need to determine is how much owners charge for rent on comparable properties. Then you need to find out the occupancy rate to see if there is enough demand for rentals in the area.
INSPECT THE PROPERTY
Inspecting the property is the best way to spot any problems it may have. Does the roof need to be repaired? Are the appliances in good working order? Does it need a new coat of pain? Inspecting a property will reveal how much you will have to invest on repairs and renovations before you can start making money. Hiring a professional home inspector is the best way to spot structural problems, which will be cheaper in the long run and help you avoid many headaches, like fines or repeat repairs, in the future.
GATHER A TEAM OF PROFESSIONALS
Successful investors rely on professionals to cover their weak spots. Hire a local real estate agent who knows the market, an appraiser that can value the properties you’re interested in, an attorney that focuses on real estate, and a lender that can finance your purchase. Adding good technicians, like plumbers and electricians, to your team is also a must. However, depending on your budget, you can also hire a property management firm that will do all of this for you.
ESTIMATE YOUR CASH FLOW
When buying a property, it is critical that you take all the necessary repair and renovation costs into consideration. Moreover, it’s also a good idea to give yourself a cushion in case costs are higher than expected. If you hire a property management company to handle your rental, you need to include their fees into your cash flow calculations so you can cover the expenses.
HAVE A PLAN B READY JUST IN CASE
Successful real estate investing is more than just buying cheap and selling high. It’s also about knowing when to get out. Experienced investors know when to cut their losses short and plan an exit strategy accordingly. You should take your financing situation into consideration when planning the timing of your exit strategy. If a variable-rate mortgage is about to go up, it’s probably a good idea to sell before the date arrives.
CONSIDER YOUR OPTIONS
Imagine that you’ve invested in a property just when the market turns. Maybe a pricing bubble bursts just when you were planning to sell or maybe the local rental market is flooded and you can’t find tenants. If your exit strategy doesn’t work out but you considered your options before buying, you could get out of this one by offering a lease-purchase deal to potential buyers.
If this doesn’t work out, you can sell your property for a price below the market value. It may only yield a small profit, but it’s better to cut your losses short than to keep throwing money on a losing horse.
Keep these tips in mind when investing in Atlanta’s real estate market, and make sure to contact us today if you’d like professional advice on purchasing investment property.