Steve Rozenberg is the VP of Investor Education with Mynd Property Management, and he asked Jessy Porter, the Portfolio Manager of Atlanta Operations with Mynd to talk about some of the common issues and challenges that face Atlanta real estate investors and landlords.
If you’re an Atlanta real estate investor, you might want to know why other investors fail. It’s a good way to avoid making the same mistakes.
Atlanta Investment Mistakes: Not Maintaining or Upgrading
Not making the needed upgrades on rental properties is one way that investors fail in Atlanta. This means more than just preventative maintenance. You have to take care of larger items and address repairs as well as upgrades. You don’t necessarily have to do a complete rehab, but maybe a small rehab is necessary. Perhaps replacing appliances is necessary. A new paint color might be required.
You need to bring your product into a competitive market. Many properties in Atlanta are being renovated and getting a lot of upgrades. If you’re not keeping up, you’re going to have a hard time succeeding. When everyone else is putting granite counters in their kitchens and you’re not, there will be a problem achieving good rents and attracting quality residents.
Maintaining your home includes adding value to it. A new mailbox isn’t going to add much value. But, changing your dated appliances to new black appliances might bring you $50 more per month in rent. You can also replace your ceiling fans from 1980 with new fans that have remotes. These are the things that keep residents in place and ensure your home is always leased. Be competitive, or you’ll run into vacancy and turnover. As you know, those are expensive.
Atlanta Investment Mistakes: Incorrect Pricing
A lot of investors make mistakes when they’re attaching a rental value to their property. Each area of Atlanta performs at a different level. Sometimes, investors want to attach a rent that isn’t attainable for their location. You might think that the average rental price in Atlanta is one thing, but that doesn’t mean your specific property can get that much. Pay attention to your location because that’s going to drive your rental value more than the general market rents in Atlanta. This is an excellent reason to work with an Atlanta property management company. If your rental property is vacant for a long time, it’s probably not priced correctly. We’re experts on this market, and we can look at competing properties and tell you what your rent should be.
You may think you need $1,500 in monthly rent because that’s your mortgage payment. But, if the property is only going to bring in $1,300 per month, you want to follow what the market dictates. Otherwise, you make emotional decisions during a long vacancy period. Those are never good. They’re reactionary and can get you in trouble. When your house has been vacant for three or six months, it puts you in a bad position.
Get a professional to tell you what the market dictates. And, remember that the real estate market is cyclical. Rents are higher in the summer. In the winter, not a lot of people are moving. If your property is vacant in the winter, it might stay vacant for longer or you’ll have to lower your rent expectations.
Sometimes, investors get frustrated and want to change management companies. If one property manager doesn’t agree that your house can get $1,500, you might want to keep moving on until you find one who tells you what you want to hear. It’s going to take a lot of time, money, and energy to look for a property management company that agrees you can get a rent that you actually won’t get. They aren’t doing you a service.
Atlanta Investment Mistakes: Placing the Wrong Resident
The third reason investors fail is their screening and resident placement process. Sometimes, investors are on one end, where they don’t want to bother with any kind of background check. They don’t care about credit. If the prospective applicant has a job and the cash to move in, they’ll accept them.
On the other end of the spectrum are the investors who have very high standards. They want a 700 credit score and income that’s at least four times the monthly rent.
Both of these types of investors make selecting a good resident very difficult.
You need to consider the location of your investment property. If you have multiple rental homes throughout the city of Atlanta, your requirements may change from property to property. You need a set of standard criteria, but each market will drive the screening results. Incomes in one part of the city will be much different than incomes in another part of the city.
Criteria that’s too strict leads to vacancy while criteria that’s too loose leads to vacancy.
Avoiding fair housing issues is important. You can have different criteria for properties in different parts of town, but you have to screen every applicant for a particular property in the same way.
Stay away from these common investment mistakes. If you want to succeed as a real estate investor in Atlanta, make sure you’re paying attention to maintenance and upgrades. Price your property correctly with the help of a local Atlanta property management company. And, be reasonable with your resident selection criteria.
If you want some help avoiding these investment mistakes, contact us at Mynd Property Management in Atlanta. We’d love to tell you more about how to succeed in this market.
We also have other opportunities to connect with us and learn more about investing in Atlanta. You can also visit our Facebook group of investors, which is called Master Mynd. It’s a real estate investors’ club, where you can exchange ideas with other owners. Check out our weekly podcast as well, called The Myndful Investor. We invite leaders in real estate and property management to talk about their success and, more importantly, their failures. There’s a lot to learn from this relatable content.