Atlanta Investment Property – Rex Rd

Today I’m analyzing a 3 bedroom Atlanta investment property located in Ellenwood, GA.  Ellenwood is a suburb of 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

  • atlanta investment propertyMarket: Metro Atlanta Area
  • Listing Price: $79,000                               
  • Rehab Estimate: $5,000 (optional)
  • Address: Rex Rd, Ellenwood, GA
  • Beds / Baths / Sq Ft: 3 beds / 2 bath / 1,851 sq ft
  • Property Description: This home is tenant occupied and primed for immediate investor returns.  It has been professionally managed and maintained.  I have budgeted for minor updates whenever the current tenant moves out.

NEIGHBORHOOD GRADE: C

  • Median Income: $56,577
  • Poverty Rate: 12%
  • Unemployment Rate: 14%
  • % with Bachelor’s Degree: 28%
  • % of Renters: 18%

The zip code 30294 is average for the Atlanta metro area based on key economic factors including median annual income and the poverty rate.

RENTAL PRICE EXPECTATIONS: $840/MO

The vast majority of rental properties in this area are 3 bedrooms. These homes generally rent for $975 – $1,250 per month with a median of $1,150.  This investment property is larger than average and should ultimately be able to rent for at least $1,000 per month.

The current $850/mo is very affordable when compared to the area’s median income which is over 67x the monthly rent.  There should be a large group of area residents who can comfortably afford both the current rent and higher.  

ANNUAL EXPENSE EXPECTATIONS: $4,879 (48% OF GROSS RENT)

  • Property Taxes: $749
  • Insurance: $840
  • Property Management: $1,470 (assumes 1.75x monthly rent)
  • Vacancy: $560
  • Maintenance: $840
  • Other: $420

The expenses for this property are generally in-line with industry standards with the exception of property taxes, which are well below the typical 2x rent.  Since this is a C-level neighborhood I have assumed 1 month of vacancy every 18 months and ~.5 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: $79,000
  • Rehab: $5,000
  • Closing Costs: $2,370
  • Total Investment: $86,370
  • Financed Amount: $63,200
  • Cash Investment: $23,170
  • Annual Revenue: $10,080
  • Annual Expenses: $4,879
  • Interest: $3,160
  • Net Income: $2,041
  • Annual Return: 9%
  • Annual Appreciation: $1,580
  • Total Return Potential: 16%
At Recommended Price

  • Purchase Price: $75,000
  • Rehab: $5,000
  • Closing Costs: $2,250
  • Total Investment: $82,250
  • Financed Amount: $60,000
  • Cash Investment: $22,250
  • Annual Revenue: $10,080
  • Annual Expenses: $4,879
  • Interest: $3,000
  • Net Income: $2,201
  • Annual Return: 10%
  • Annual Appreciation: $1,580
  • Total Return Potential: 17%

MY RECOMMENDATION

I have analyzed this Atlanta investment property assuming a financed purchase.  With a neighborhood grade of C , I would normally target a minimum annual return of 12% with an additional 3% margin of safety.  I think 2% annual appreciation of ~$1,580 is a reasonable expectation.  Here the listing price of $79,000 would be an attractive price. I would start with an offer of $75k, but this property is no-brainer.  There is room to raise the rent, rehab expenses are optional, and this is a nice, stable neighborhood.

Note that this property will also benefit significantly from deducting annual depreciation of $2,886/yr.  That means your annual rental income could be tax-free.

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

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