Buy Rental Property in Atlanta
Forbes had an interesting concept that has been lost in today’s zero interest rate environment: When you buy rental property in Atlanta, you are taking money out of your liquid financial assets – stocks, bonds, CDs – and investing it into a very illiquid asset – real estate. You were earning a rate of return on your financial assets, such as 4 percent or 6 percent, (remember this was in 2013) and you should strive to earn a fair cash-on-cash rate of return on your real estate. To do this, you need to pro forma your deals and buy cash flow-positive properties that earn you decent returns.
“Decent returns” is a subjective term. It should be a positive return after taxes and inflation and most important, it should compensate you for the risk you take. Since real estate is illiquid, your return on investment (ROI) should be higher than stocks, bonds, CDs. ROI for some includes appreciation. For a good rental property in Atlanta, we prefer cash-on-cash return as the most important calculation for real estate investors. This approach looks at every dollar invested and determines the percentage yield return on an equity cash investment. This leads us to “cash flow” where the cash inflows during a period are higher than the cash outflows during the same period.
Positive cash flow is a return on your equity investment, call it yield if you want, and that cash flow can be used for living expenses, more investments, or paying down debt. That’s how some get rich in real estate. They reinvest the cash flow into more real estate and it has the effect of compounding. Imagine if you could compound at 12% a year. In six years you would have doubled your investment.
In today’s interest environment the connection between risk and return has been severed. By that I mean there is not much difference in Interest rates on your investment if you loan money for one year, ten years or 30 years. Once you subtract inflation from your yield and pay taxes on the interest, you are left with a negative return. Investors are forced to take on higher and higher risk for a positive return. Not so in real estate. You can still be compensated, as you should be, for being illiquid when you buy rental property in Atlanta.
Val Buys Houses LLC is here to help homeowners out of any kind of distressed situation and we can help potential homebuyers find their dream home. In addition, we will help you find that perfect passive cash-flow property if you’re an investor. As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.
Give us a call today at 404-844-8845 to let us know what YOU need help with!