Atlanta Investment Property Analysis – Dalhouise Ln

Today I’m analyzing a 3 bedroom Atlanta investment property located in Decatur, GA.  Decatur is a suburb in the Atlanta metro area.  Take a look at my analysis of this property and let me know if you agree.  You can also send me an email with additional questions or to learn more about this property.

Atlanta Investment Property Overview

  • Market: Metro Atlanta Area
    atlanta investment property
  • Listing Price: $75,000
  • Rehab Estimate: $3,000
  • Address: Dalhouise Ln, Decatur
  • Beds / Baths / Sq Ft: 3 beds / 2 bath / 1,236 sq ft
  • Property Description: Charming home perfect for families. Kitchen with lots of storage, breakfast bar, and all appliances included. This home offers a great traditional floor plan and is located on a nice lot. The private backyard with wood deck is perfect for kids and pets. This property has been professionally managed and maintained.

Neighborhood Grade: D

  • Median Income: $48,210
  • Poverty Rate: 19.2%
  • Unemployment Rate: 19.3%
  • % with Bachelor’s Degree: 23.4%
  • % of Renters: 34%

The zip code 30034 is below the average for the Atlanta metro area on key economic factors including median annual income and the poverty rate.

Rental Price Expectations: $995/mo

The vast majority of rental properties in this area are 3 bedrooms. These homes generally rent for $950-1,200 per month with a median of $1,050.  This investment property is around the average size so we have assumed rent of $995 per month. 

$995/mo is very affordable when compared to the area’s median income which is over 48x the monthly rent.  There should be a large group of area residents who can comfortably afford the proposed price.  

Annual Expense Expectations: $6,882 (58% of gross rent)

  • Property Taxes: $1,161
  • Insurance: $995
  • Property Management: $1,741 (assumes 1.75x monthly rent)
  • Vacancy: $995
  • Maintenance: $995
  • Other: $995

The expenses for this property are generally in-line with industry standards with the exception of property taxes, which are below the typical 2x rent.  Since this is a D-level neighborhood I have a assumed one month of vacancy every 12 months and one month of cushion for unexpected expenses.

Property management is set at ~1.75 months rent.  This factors in regular monthly management fees along with various other new tenant and lease renewal fees that companies may charge.

Financial Summary

At Listing Price

  • Purchase Price: $75,000
  • Rehab: $3,000
  • Closing Costs: $2,250
  • Total Investment: $80,250
  • Financed Amount: $60,000
  • Cash Investment: $20,250
  • Annual Revenue: $11,940
  • Annual Expenses: $6,882
  • Interest: $3,000
  • Net Income: $2,058
  • Annual Return: 10%
  • Annual Appreciation: $750
  • Total Return Potential: 14%
At Recommended Price

  • Purchase Price: $70,000
  • Rehab: $3,000
  • Closing Costs: $2,100
  • Total Investment: $75,100
  • Financed Amount: $56,000
  • Cash Investment: $19,100
  • Annual Revenue: $11,940
  • Annual Expenses: $6,882
  • Interest: $2,800
  • Net Income: $2,258
  • Annual Return: 12%
  • Annual Appreciation: $750
  • Total Return Potential: 16%

My Recommendation

I have analyzed this Atlanta investment property assuming a financed purchase.  With a neighborhood grade of D, I would normally target a minimum annual return of 15% with an additional 3% margin of safety.  I think 1% annual appreciation of ~$750 is a reasonable expectation.  Here the listing price of $75,000 is fairly attractive although I would prefer a $70,000 purchase price to boost the annual return to 12% before adding appreciation.

Note that this property will also benefit significantly from deducting annual depreciation of $2,635/yr.  As a result, your annual net income will be effectively tax-free.  This offsets the fact that the before-tax return is 2% less than my normal 18% target.

Want to place an offer or learn more about this property?

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