8 Biggest Atlanta Real Estate Investing Mistakes To Avoid

When it comes to investing in Atlanta real estate, here are seven major mistakes that you want to avoid. One of the biggest mistakes is assuming that you're going to net positive in the first few years of a real estate property. And so if you are doing the buy and hold method and you're trying to get a good deal on a home and you're going to be renting it out, and so you've taken out a mortgage on this home, it is possible that you may not net positive for a first few years as you're waiting for rental values to increase. Or it could be that you're waiting for PMI to drop off of your mortgage. There are all kinds of different factors that affect that net difference in what you are paying for your mortgage and how much you're collecting for rent. So let's talk about how to net positive when you are using this strategy. The next major mistake that I often see people making is waiting too long to list a rental property. Let's say you have already closed on that home or you are about to list that home for rent and you're maybe waiting for someone to move out or whatever it may be. You don't really need to wait for that. You actually should be listing that far before the home is actually ready for renting. You can see very often people will list their rental properties a month or two in advance before it's ready. And then in the listing, you can say, hey, this will be ready in a month or two. That way you are getting applicants. You are checking credit. You're checking all kinds of different things with people who are applying for the rental before the listing is actually ready to be moved into. What's up, y'all? My name is Victor with Atlanta Suburban Living. We put out videos every week about what it's like to live in Atlanta and the suburbs of Atlanta every once in a while. We also talk about investing in Atlanta. And number six mistake that you want to make sure you avoid has to do with making sure that you net a positive cash flow on that real estate investment. One of the best ways to do that is to put a big enough down payment. And so the mistake here that you want to avoid that I see many people trying to do is to put a very small down payment on a real estate investment. Very often people find a home that they think will do good with rental values and they want to purchase that home. But then they put something like a 3% down payment on that home. And so they have a loan of 97% of the value of the home, which gives them a big mortgage, which is difficult to cover with the rent. And so you want to make sure that you are netting a positive cash flow by putting a big enough down payment. Even better than putting a big down payment would be buying the property with cash. This would obviously mean that you don't have a mortgage. And so you would obviously be netting positive. But if you are going to be buying an investment property with a mortgage, which is totally doable here in the metro Atlanta area, you really want to be aiming for at minimum 10% down payment. Even better would be like a 20% down payment. And so you want to make sure that you are keeping that mortgage payment low enough so that the rents cover that mortgage payment. Now, it's very common. What I'm seeing with many investors is they kind of do the mortgage route and then they have a mortgage payment and the rent just barely covers that mortgage payment, especially if you're doing less than a 10% down payment. You're going to have PMI from your loan. PMI is private mortgage insurance. And so this is an extra hundred dollars or so on your mortgage payment that will drop off when you get to a 80% loan to value on the property. So let's break that down a little bit. So if you're putting 10% down payment on a home, you have a 90% loan to value of the home. And as long as you have more than 80% of the loan for the purchase of the home, the bank is going to put PMI on your mortgage payment. But when you get to like, you know, you've paid off your monthly payments, so you're slowly paying off that mortgage when you get to 80%. They take that PMI off. And so this helps out with covering your mortgage payment with your rent. Another big one is obviously going to be that rental values are going to increase every year, just like home prices increase every year. Rent payments, rent prices also increase every year. And so while your mortgage payment is going to be fixed, that rent will increase every year. And so while you might not be cash flowing positive at first, eventually you will cash flow positive. And so it really all has to do with how you make that purchase, what the down payment percentage is, obviously what the interest rate is. Lots of factors we're going to talk about in this video. And so the next major mistake that I often see people making is not understanding how much the rents are for the homes in that area. If you're planning on buying a real estate investment property here in Metro Atlanta, or you just have any questions about what it's like to make that purchase, feel free to call, text or email me any time. Thank you so much to everybody who has reached out. I'm always happy to help. And so the best way to figure out what the rent values are in an area is to look on Zillow. You can also call a realtor. I'm also happy to look that up for you. And so we see how much these homes are getting in rent to help figure out if it's going to cover the mortgage payment. If you're looking at a home in a certain part of Metro Atlanta and you're seeing that with your down payment and interest rate, you're seeing that the mortgage payment may come out to like twenty five hundred or two thousand dollars per month. But you're also seeing that the rents in that area are fifteen hundred dollars per month. Then obviously that's not a good move. You really want to be aiming for an area where the rent values are high enough and the mortgage payment is going to be low enough. And so it's super important to understand what those rental values are going to be in that area. The next mistake that I often see people making is not taking into account things like property taxes or homeowners insurance or even maintenance for the home. When you are trying to figure out if you're going to be cash flowing positive on that real estate investment. So we can certainly calculate like how much your principal and interest is going to be on that mortgage payment. But you're also going to need to pay for property taxes and for insurance. And so for property taxes here in the Metro Atlanta area, I like to say that it's going to be typically about one point two percent of the value of the home for the property taxes per year. So for a three hundred thousand dollar home, it come out to somewhere around thirty three, thirty four hundred dollars per year for property taxes. If we break that down by month, let's say thirty four hundred. To be conservative, we break that down by 12 months and you're looking at two hundred and eighty four dollars per month for the property taxes. And then for homeowners insurance, that's certainly going to range a lot. If you are looking at a high deductible, you may be able to get away with about a thousand dollars per year. And then if you have a low deductible on that home, which may be worth it if you're using that home as an investment, then your insurance is going to come out to maybe closer to fifteen hundred per year. So let's take the average of twelve fifty divide that by twelve. And you're looking at one hundred and four dollars per month for insurance. And then for maintenance, I typically like to say about one hundred to two hundred dollars per month for maintenance, for things like electrical problems or plumbing problems or whatever. You know, ideally, all of those things don't happen at the same time. And so you have a few months of building up, if anything comes up for the home. But that maintenance cost is also certainly something that's very important. So if we take all of those numbers, one hundred and fifty four maintenance, one hundred dollars for insurance and two hundred and eighty three dollars for property taxes, that's going to come out to two fifty plus two. Eighty is five hundred and thirty dollars per month added on to the principal and interest payment. And then number two on the major mistakes is underestimating repair costs. You definitely don't want to make this mistake. The best way to avoid making that mistake is to hire a contractor to do an inspection on a home before you buy the home. You may want to do a home inspection as well with a regular home inspector. But having a contractor go out to the home to give you an itemized list of all the things that need to be repaired if you're going to be buying and flipping would certainly be a very important part of that, because you have to remember that the home inspector does not typically come up with the prices for repairing homes. They're only saying, hey, look, these are the issues with the homes, but they don't do the repair costs. So you need a contractor to be looking at the home while you are also considering buying. And then the biggest mistake by far that I see people making when they are investing in real estate here in Atlanta is investing in the wrong area. Again, you don't want to be in an area where the rent values are too low and the mortgage payments are too high. You want to make sure that you're in an area which we're going to talk about in just a second. You want to make sure you're in an area where the rental values are high enough and the mortgage payment is low enough so that you are netting positive. Making sure you're in the right part of Metro Atlanta can make or break whether or not your real estate investment succeeds. So I've made an entire video outlining the top five suburbs of Atlanta for real estate investing. You can check it out right here. I'll see you in the next one.