Here is our August 13th, 2021 Email Update about Real Estate in Northwest Atlanta
It may not be likely but there has been a lot of talk recently about Congress modifying or eliminating tax-deferred 1031 Exchanges. Currently, a 1031 exchange allows investor owners to defer paying taxes with they purchase a new investment. For our layman’s version of how a 1031 Exchange works click here.
If 1031 Exchanges are eliminated there is another option called a Delaware Statutory Trust (DST.) DST’s have been available since 2004 and are similar to a Real Estate Investment Trust (REIT) but has the added benefit of being 1031 friendly. A DST is a legal entity created as a trust under Delaware law. Investors in a DST own a pro-rata interest in the trust and generally receive distributions from the operations of the trust. Usually, this is from rental income or the sale of the property.
Why a DST? Because it offers the potential returns on real estate holdings without many of the complications of property management. In addition – there is no need for unanimous owners’ approval in that an appointed trustee is empowered to take action to reduce loss. There is a low entry point ($25,000 to $50,000), bankruptcy protection, reduced closing costs, no need for an LLC, and virtually no day-to-day management. There are risks as with any real estate investment.
One safety net for the potential loss of 1031 Exchange capability is called a 721 Exchange. As always before doing any exchange consult your tax expert. I will be educating myself more so I can assist those of you interested.
If you read one article This is one of the most comprehensive articles I’ve read regarding Atlanta’s real estate market. It has got some fluff in it but the take-aways are 1) We’ve appreciated tremendously over the past 15 years. (If you’d like to know the value of your investment just let us know – no obligation! It’s a service we provide.). Midtown Atlanta is hoping with new large commitments from Microsoft, AirBNB, and Google providing 21,000 new jobs since 2015. In general people don’t want commute more than 40 minutes, so our inside-the-perimeter properties and those within an hours of Midtown are skyrocketing. Our population is predicted to grow by 43% in the next 29 years and development is sprawling out further and further. Either expect long commutes or a growing lack of affordable housing. One mitigating factor is that Covid may have changed our workplaces forever with zoom and tele commuting and reduced need to be in the office 5 days a week. Whatever your take it’s easy to continue to be excited by the real estate market in Atlanta for the next 30 years!
June was a continuation of no new homes to be had. Two developers we’ve worked with in the past will no longer sell to investor owners and two others have no product until at least September. And the new product will be at significantly higher prices (8% to 10% higher.)
Real Estate Stats and Thoughts
Our primary areas of service are below, and it continues to be an unusually strong Seller’s market. Average appreciation is just over 22% year over year, but the rate of appreciation is slowing. Number of sales in July of 2021 dropped a bit by over 8% compared to July of 2020. Median Days-on-market at 5 days is an all-time low too! We predict this to be the best time to sell in 11 years. Interesting note: for the first time in my memory median sales prices exceeded median list prices – many homes are selling for over asking.
Highlighted City: Acworth
Many of our investors have bought in Acworth “The Lake City” in the western edge of Cobb County and runs along the southern border of Lake Allatoona and Lake Acworth. Located 35 miles Northwest of Atlanta. The area was first settled by the Cherokee Nation. In 1845, the Western and Atlantic Railroad began operation in Atlanta and began laying tracks towards Chattanooga. The first water stop north of Atlanta was Northcutt Station. A railroad engineer named Joseph Gregg later renamed the station after his hometown of Acworth, New Hampshire. On December 1, 1860, the area in a half-mile radius surrounding Northcutt Station was incorporated into the City of Acworth.
Less than two years later, the Civil war reached Acworth when James Andrews and his crew stole “The General” and raced through the city in what would be known as “The Great Locomotive Chase.” Later during the war, General Sherman was headquartered in Acworth for several days. In November of 1864, many Acworth buildings were burned as a result of Sherman’s Atlanta Campaign.
The town had nearly recovered by the 1880s. Cotton farming in the area peaked from the 1890s through the 1920s. Low prices during the Great Depression resulted in a cessation of cotton farming in the area and throughout Cobb County.
There were eventually a total of three textile mills in town from 1905 through the 1980s. They employed about 800 workers at their peak.
When the Etowah River was dammed, forming Lake Allatoona, citizens feared that land near the town would become a swamp. They successfully petitioned for a second dam, resulting in Lake Acworth in the 1950s. This became a tourist attraction.
Acworth was recognized as a 2010 All-America City Award winner.
In 2011, the filming of several scenes for the Footloose remake took place in downtown Acworth. The Acworth Presbyterian Church was used as the primary church, and the house of Mayor Tommy Allegood was used as Julianne Hough‘s character’s home
Today it boasts about 25,000 residents with a bustling historic downtown full of great restaurants, shops, and activities. Real Estate has appreciated tremendously too!
Property Management Question of the Month
“My property is Vacant! – Now what?”
Every landlord must plan for Periods of Vacancy In Between Tenants
Because your profits rely on consistent rent payments, periods of vacancy will inevitably lower your Return on Investment. In our service area tenants expect a decent home. This generally requires fresh paint every three to five years and new carpet every five to seven years. A vacancy is an ideal time to coordinate these activities. This being the case, your goal should be to have as short a vacancy period as possible. Here are five tips that may help:
- Post the Listing Online
Real estate listing sites and social media are great resources for getting your rental in front of the right audience. Make sure you know how to highlight the property’s biggest selling features in your written description; consider the renters in your area and focus on capturing a tenants’ attention by addressing how your rental meets their top priorities.
Don’t forget to include plenty of high-quality photos and video in your online posts. Before you photograph the property, make sure the home is free of clutter and simplistically staged in order to create a warm, inviting aesthetic. A 3D Matterport tour might be something you consider – when we post a 3D tour, we see increased demand.
- Consider How Your Rent Price Compares to That of Similar Rentals
Always research your local market and pay close attention to comparable rental homes. Make sure your monthly rent isn’t significantly higher than the rate for similar homes in the area, unless your property offers unique amenities or other benefits that can justify a higher price.
- Compare Your Income Property to Other Rental Homes
As you’re researching the local rental market, take note of similar homes and the features they include; if your rental home appears out of date in comparison to others, it may be worthwhile to consider investing in some cosmetic upgrades such as new flooring, fresh paint, or even new appliances that may help attract new tenants. Don’t be afraid to attend open houses for other rentals in your neighborhood, as this is a great way to see how your home compares. Allowing pets also increases demand significantly.
- Work on Improving Curb Appeal
Simple upgrades such as a fresh coat of exterior paint or some bright, colorful outdoor plants can help make your rental property more alluring to renters. A new mailbox and house numbers can really make the new shine. If the home has an outdoor living space, consider staging this with neutral-colored patio furniture to further improve the overall aesthetic.
Don’t neglect to keep up with routine maintenance as well, like mowing the lawn, cleaning the gutters, and keeping the yard free of weeds and debris.
- Hire USTo Help You Market The Home
Finding a suitable tenant is much easier when you have an experienced property manager working to represent your rental. Not only can we help to create a custom marketing strategy for your home; we are familiar with plenty of active renters in the area who may be looking for a home like yours. Our marketing for rentals is causing most properties to have multiple applications within a week or two of being available. In some cases we are able to check out a tenant and check in a new tenant with just a day between.