Cash flow Positive - Single Family Residence - Atlanta US

Numbers:

$105000 (inc closing cost)

$1400 per month rent

Yeild: $1400 x 6 months = $8400

8% net yeild


Stretagy:

Plan is to Buy n Hold.

Yeild is great and property is in prime location for growth.

Right across the beltline and walking distance to new train station!


8% yeild + 5% organic annual growth + beltline premium. Beltline properties are in demand. Entry levels are circa $100k(original condition) and $200k-$400k(renovated/new build)

Client:

This asset is for a client - won't be under Be Developer Portfolio!

We own two more properties around this location.

Property:

 

This is one of the reasons why we have so much competition in Atlanta (link attached), which is also driving prices north.

http://beltlineorg.wpengine.netdna-...01/Atlanta-BeltLine_Subarea-4_Master-Plan.pdf

 

Are these figures in USD?

 

Yes, US$, including rent

Here is a little snippet on the beltline and one of the factors driving this market north, but the only one.

However, I must admit there are many property markets at the moment in USA going nuts which we will be pursuing. Looks like 3 trillion $ will be pumped into USA infrastructure, just another driver for growth.

We are comfortable with Atlanta as @MTR my business partner has been playing in the market since 2011.

http://beltlineorg.wpengine.netdna-...01/Atlanta-BeltLine_Subarea-4_Master-Plan.pdf

 

@Be Developer

Looks fantastic, you make me wish I could liquidate everything and move to the US to start from scratch. It might be a little late now to experience the kinds of massive growth that happened in last few years.

 

yip, well done again, another great find Chirag.

 

I will be moving over possibly by the end of the year, planning to build my office/primary residence, purchased my block for $22,000 in a nice pocket of Atlanta beltline.

There are plenty of opportunities and markets to play in today. What we are seeing in US is an economy on the rise and then we have volume 52 States, take your pick, of course the lower entry levels can provide the best opportunities.

The growth achieved by those who purchased in 2011 was nothing short of spectacular today. In 2011 every second house had a "For Sale Foreclosure" sign on the front verge, today the signage is long gone and there is very little stock for sale in our playing ground.

We have doubled our money on 2 blocks we purchased in August 2016, its absolutely not too late but a different strategy is required in 2016/17.

We are buying some properties prior to hitting the market as we are dealing with a couple of wholesalers, there are also other avenues to beat the competition we are working on, cash helps and making a decision within a 4 hour timeframe gives us an edge. Properties in this market in the right location go under offer immediately. There are many buyers/investors from out of State, California etc. playing in these markets.

The Atlanta market has not stalled it continues to grow. Recently 10 companies moved their headquarters to Atlanta, labour is cheaper and it makes sense. We are not talking about a small country town here. I am always amazed when I arrive at Atlanta airport, busiest airport in the world.

Happy investing everyone

 

any other states/towns besides atlanta you see as decent growth areas (with similar price entry point as atlanta)?

 

Most markets in USA are moving key is to look at markets that provide lower entry level and provide cash flow and opportunities to flip. San Francisco is going nuts but who has $800K to spare it wont work for us. Keep researching plenty of info on various markets we are continually researching for opportunities

 

I can tell you Brooklyn heights, NY in the $1-$3m have stopped on a dime since Trump got voted in.

I think lots of people having a hard time swallowing the new 30 year rate.......

I'm sure with all of the froth in the equities market it will pick up again (the property market here is ridiculously intertwined with wall street ....eg. Bonus time on wall street sells cars and apartments in this city), that said.....sales time for properties in this space have blown out and i'p probably say most are selling for 5-10% less psqft that they were last spring/summer season last year.

 

Atlanta is much lower entry level and it is booming, there are other markets such as Texas, Florida, Portland also going nuts.

Properties that tick the boxes in Atlanta sell within 4 hours, and in most cases real estate agents will ask for BEST AND HIGHEST due to multiple offers. We are competing with many interstate investors loading up.

 

@Be Developer, what assumptions you used to have this property as cash flow positive? If your clients get loans for non-residents (they are ~8%, right? 80% LVR?), what would the monthly net cashflow (after all expenses and vacancy rates) be?

A quick search for Atlanta gives vacancy rate in December 2016 of 19.87%, of which vacant for rent (true vacancy rate I guess) is 5.65%.

Atlanta, Georgia Housing

 

As a foreign investor you wont get loans in USA as you need a credit score. There are hard money lenders and a bank which will provide loans to foreigners but your LLC can not be owned by an Australian Trust, once again higher interest rate, they are also higher risk IMO, I would not recommend these loans.

We are going in with cash, I guess you could always access equity.

We are currently looking at other markets in USA where entry level is lower and cash flow is higher. Still in the research stage, when we have something solid will post.

Vacancy rates in Atlanta in 2011 were around 9% but now its around 5.65%.
I know @MTR purchased in Atlanta in 2011 and never had an issue renting, however it has only been the last 2 years where rents have started to rise and multiple applications when re leasing.

We have a development site in trendy Memorial Drive (Beltline)
Here is what they say about rents

Old Atlanta rentals in hot areas being reborn as (more) affordable options

 

That's good, I was pretty sure that you pay cash for Atlanta houses, just the 'cash flow positive' in thread title confused me (but then, going in with cash would make everything cash flow positive )

 

Yes, but in Australia to buy in a hot market you could be looking at minimum of $400K+, yields currently in Melb or Sydney around 3%, may as well stick it in the bank.

 

I think what is meant, is that one purchases the US property in cash, but that cash maybe from one's equity redraw or line of credit from an Australian based property (i.e. borrowed funds out of Australia), hence it is possible that with the net yield generated from the US property it would be more than the interest payment in Australia, and hence "cash flow property".

I have a question about property management and rent collection, I lived in the USA in the mid 90s, and it was often typical for landlords to collect rent directly from tenants in cash. In Australia, with a third party property manager / agent being the norm using standardised rental agreements, and all funds transfer being performed electronically / funds held in trust account etc - how is the rent collection and property management performed in the USA these days?

 

@meme plecko

Current Approx. numbers are:

A.Total Income:

$1400 x 12 = $16800

Expenses:

Property Management (5%) : $840
Insurance: $1000
Tax: $800
Repairs: $1000
Cost of funding(@4% x $105,000) =$4200

B. Total Expenses: $7840

$16800 - $7840


$8960 Net Income

All amounts are in USD

PM - 5% to 8%

We have two properties in area and tenets are depositing funds in to our account on time. saving us a cost of PM Fee.

We may/may not hire PM for this one!

 

Thanks @Be Developer, nice numbers

 

What would be the typical practice in the USA?, Do investors typically engage full service property managers / property management agents to manage their properties and collect the rents?, Are the rents collected and transferred electronically?, Do the property managers have the powers to terminate tenants like in Australia?, Wouldn't having the rent go directly into your account from the tenant be a risk factor?

In fact, for somebody living in Australia, I would say that one of the biggest risks would be the effective property management and rent collection services that would be provided in the USA. A landlord in Oz, would truly want somebody to sort out the issues. This is true of remote ownership of property anywhere, but more so in the USA when one considers the population size, diversity, and local laws. It would be good to understand the differences and risks for property management / rent collection in the USA compared to Australia.

 

A 1 : mixed bag - I believe

A 2 : mixed bag - I believe

A 3: cash, chaque,ACH

A 4: Yes - within state laws

A 5: not sure - what that would be a risk factor?

Second paragraph : I agree!

Do your own due diligence!

Our main business is property development - really don't get in to PM side of things!