August 1, 2023
August 2023 Report on the Real Estate Market
From Your Friends at Northwest Atlanta Properties
Is Calhoun the Next Great Georgia Investment?
Since 2015 we have focused on finding great investments for our Investor Clients.
The Investor Owners who used us to represent them have purchased 34 properties in Alpharetta, Canton, Dallas, and Cartersville, based on our recommendations (many of whom never saw the properties in person.) These Owners have seen equity growth of 44% overall and have increased their wealth by over $4.6 million.
Since Cartersville is currently sold out to investors at this time (except for a few townhomes), we’ve been advising our clients to look for newer resales in established areas and have been scouting for the “next best place.” We recently investigated properties in Calhoun Georgia and are blown away at what we discovered.
Calhoun is a growing city of about 18,000 people and 4,500 homes. Located about 10 minutes north of Cartersville and 49 miles south of Chattanooga on I75, most of the employment in the area is in the flooring industry. Schools are a bit above average. And one of our newer Buc-ee’s is here.
We like a developer who is now open to investors for what may be a limited time and has two lots and three new houses that are move-in ready. They are 4 bedrooms, 3 full baths, and a half bath. $275,900 to $280,000 and they should rent for $1900 to $2100. Our first investment purchaser there got 4 applications in 2 days on their rental asking $1995/month. Call Mike Stott today if you’re interested. 678-232-0927. There are just the 3 ready now and 2 coming up so act quickly.
Things that make us go “huh?”
After 40 years in the business, we know there are 2 critical statistics to understand in any real estate market. The affordability of homes – largely due to interest rates – but also price, on the Buyer (demand) side. And on the Seller or supply side, the competition – months of homes available for sale – or standing inventory.
Mortgage rates remained slightly above 7% to close the week at 7.03%. While the fear of increasing rates has slowed down buyer interest at times, these rates are certainly in the range that has caused high buyer interest historically. Our numbers below back this up. Mortgage professionals think the rates will remain in the high 5% to medium 6% range for the foreseeable future and as they drop, as predicted below, demand will rise in a low inventory market. Low Inventory and High Demand = Prices Rise.
The fact is, as long as inventory is as low as it is, prices cannot go down much; and in our market, they should continue to increase.
But that doesn’t make headlines and sell advertisers.
In a move designed to increase viewership, we’ve seen a rash of nonsense reported in the news.
Homeowners with interest rates in the 2% to 3% range almost universally feel lucky, not trapped.
The real opportunity CNBC and others have missed is sharing the ways those owners can monetize their low-interest rate by renting the property out and enjoying the great cash flow (we’d be happy to manage it!) or selling the property for top dollar by wrapping their low rate current mortgage with a new mortgage for the balance.
This lowers the payment for the buyers and thus makes the home more attractive. If you have a home with a low-rate mortgage and are thinking of selling, please reach out and we will walk you through the process.
A second entry in the nonsense headlines is “U.S. housing market avoids crash, but challenges remain for Buyers and Sellers.”
First, OK… the “market avoided a crash?” When was it crashing? We somehow missed that.
Data never supported it, and we have said that consistently over the past 5 years.
But really… “challenges remain for Buyers and Sellers? Really? When do challenges NOT exist for Buyers and Sellers? If they didn’t, we’d be out of a job.
That’s where an exceptional Agent and Property Manager can help. In and around Atlanta we saw great appreciation over the past three years. See the top city below:
And while we saw a slight dip in prices (from the peak of June in 2022) for 4 to 5 months starting at the end of 2022 prices have come back strong. One analyst called it a “head fake.”
In fact, virtually every forecast as to where prices would end up in 2023 nationwide has been adjusted dramatically upwards:
Our Local Market Report – because it’s all Local
The snapshot of “Year over Year Price” below shows that our areas of business actually remained steady – with a slight increase in median price appreciation.
Realize that this is a snapshot, and a few high-priced or low-priced sales can affect the median price dramatically. Use these charts and look at trends. For best information let us prepare a professional pricing analysis for your property to know for sure – let us know if you want one. We are happy to spend a few hours putting one together for you and your unique property.
The number of sales dropped from 955 to 826 (13% fewer closings) simply due to fewer homes for sale.
Our local market is strong for well-priced homes.
We recently listed two properties that had multiple offers over the asking price within 10 days of marketing them. Housing is especially tight in Cherokee County which has about 102,000 homes total with just 650 homes for sale at all, and only 2 “move-in ready” homes under $300,000.
If you would like to sell an older rental and replace it with a newer one avoiding upcoming maintenance like new appliances or roofs, now is an IDEAL time to do a 1031 Exchange and make that adjustment tax-deferred pushing off that maintenance for another 7-15 years.
Property Management Question we are often asked:
What do I need to do if I manage my own rental?
Here are 6 things many owners do not do a great job at when they try to manage their own rental:
- They don’t do adequate background checks. Don’t base your decision on whether or not to rent an apartment to someone because they seem nice when you’re showing the apartment, or whether the person can come up with the initial funds for the rental. Take the time to call at least two prior landlords and pay for a credit and background check. In an hour or less, you’ll be removing a lot of potential risk.
- Not automating the rent collection. If you want consistent cash flow from your rental properties, the best thing you can do is automate your tenants’ rent payments. The days of one-off payments are numbered. Think about it: Do you still pay your cell phone bill or car loan with a check?
- Security deposit mismanagement. The compliance laws connected to security deposits are built to protect tenants, not property owners. This will save you a lot of headaches in paying interest (in some states but not in Georgia) on tenants’ deposits every year, bookkeeping, and returning deposits to tenants when they move out. It’ll also make claims against the deposits easier to make and defend.
- Going month-to-month. As a landlord, stable tenants are your greatest asset. That said, just because you have a tenant who pays the rent on time, gets along well with neighbors, and even does some maintenance themselves doesn’t mean you should be lax when it comes to renewing their lease.
Some landlords fear that making a tenant sign a new lease every year and even issuing a rent increase, could make them rethink whether they want to stay in the property. While this might be true to some degree, the alternative is far less favorable for you as a landlord. While tenant law differs by state, generally, when a tenant goes month-to-month they only have to give you 30 days’ notice before they leave. This could mean longer vacancies for you, especially if a tenant leaves during a time of year when people in your area don’t move as much. Also, you’re likely missing out on an opportunity to increase rent, which means your investment is underperforming.
- Not doing preventative maintenance. Waiting to repaint, re-carpet, replace appliances, etc. can prove to be more costly in the long run. Run-down properties attract less than stellar tenants which causes your property to run down faster further. Nice-looking properties attract tenants who take better care of your property.
- Not hiring an accountant for the business. Don’t take on the financial management of your rental property yourself. Accountants who know real estate go a long way toward making sure you’re complying with city, state, and federal real estate tax laws and making sure you deduct every penny you can. The time and money you’ll save by hiring an accountant will be more than worth the amount of money you pay them.
Local and Fun Stuff – Just click on the Links!
Bartow County reducing Millage Rates – Cartersville is in Bartow
We continue to appreciate your business and referrals to us, thank you.
You might notice from our signature below that our son Matthew Stott has joined us in the business having graduated from UGA (Go Dogs!) with a business degree from Terry College of Business. We are thrilled to have him and grateful to continue another generation of Stott’s serving Sellers, Buyers, and Investors for many years to come.
We are grateful for your support of our family business.
Mike and Donna Stott, Jon Burke, and Matthew Stott
Northwest Atlanta Properties