New couple here in Atlanta needing advice on where to buy with potential good resell in a few years to come.

Asked by Jchat17, Atlanta, GA Sun Mar 7, 2010

My wife and I are new to Atlanta. We have been renting for about 6 months now and now looking to buy a place of our own. My concern is tha twe will only be in Atlanta for about 3 more years and want to find a place what would be more of an investment where we would be able to sell (without taking a huge hit or even better making a profit when we sell). What areas or suggestions do you have that can help us?

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17
Dataintel, , Atlanta, GA
Tue Mar 9, 2010
realvaluator.com is a free search tool that shows you all real estate transactions around specific addresses in Georgia. Try searching the address of homes you are interested in to see what the market is like around those properties. If you see a lot of pre-foreclosure and foreclosure activity you'll know that there is downward pricing pressure around the home. If you see mostly market sales, you'll have an indication that housing prices are relatively stable in that area.

No one can be sure what home prices will be in three years time. Make your decision based on the best information available to you. A good agent can help you through the process.

Best of luck to you and your wife. Welcome to Atlanta!
Web Reference:  http://www.realvaluator.com
1 vote
Lee Taylor, Agent, Decatur, GA
Sun Mar 7, 2010
Jchat17,

I don't know about your financial stance right now, but the best bonus plan in the USA is the exclusion of capital gains on primary residence real estate.

In the next three years, do not expect even a few percentage points of dollar for dollar appreciation on any real estate in metro Atlanta - hoping for appreciation is foolhardy - the fact that foreclosure inventory piles up month to month and that short sales surge at every price point, month to month, are just two simple reasons to not count on price gains just because time is passing between a 2010 purchase and a 2013 resale.

However, because the IRS enables the exclusion of a capital gain on primary residence real estate for a married couple of up to $500000 after 24 months of residency, the opportunity for buying under market now, and driving sweat equity out of a property three years from now is pretty stupendous.

I wrote an article about this money maker using the example of a $37,620 lakefront property in Stone Mountain - the link to the article is in the web reference and the article contains a link to the IRS publication that governs exclusion of taxable gains on primary residences.

The example in my article may not be exactly the type of property that you are seeking, but other examples abound.

By combining the short term incentives of the federal tax credit on a contract written before April 30 and closing by July 15, the attractiveness of both FHA and traditional loan financing terms, and the attractiveness of prices in every metro Atlanta submarket, I don't believe that anyone questions that now is a great time to buy.

Regardless, reselling 3 years from now only makes sense if you buy deeply under market now and only if you plan to improve a house either immediately or in room by room phases as you go over the next 24-36 months.

If you intend to do this, then you need to research the "retail" market in the neighborhood or school district that you choose to buy in and you need to set realistic expectations for a "retail" resale 3 years from now.

If you hire a solid agent, then you'll help your cause.

Good luck.
1 vote
Debe Maxwell, Agent, Charlotte, NC
Fri Mar 12, 2010
I agree with Keith! I do wish we had a crystal ball but, I do have to say that most times it is better to purchase than to rent--I'd rather pay my own mortgage than someone elses!

Best of luck to you!
0 votes
Dan Chase, Home Buyer, Texas City, TX
Thu Mar 11, 2010
Atlanta is having a huge amount of foreclosures. Do not buy expecting to break even in less than 5 years. It could be longer. I might be wrong but do research to see.

Does renting really make more or less sense than buying financially? Look below to see for sure.
http://www.trulia.com/blog/dan_chase/2010/01/does_it_make_mo…
0 votes
Paul Cason H…, , Atlanta, GA
Thu Mar 11, 2010
Hi Jchat17-

It definitely is a good time to buy, but with a three year selling horizons there are a few questions I would need to know. What type of proeprty are you looking to purchase, and what price range? Single Family Residences (SFRs) are going to appreciate much more than a townhome or condominium. Also, keeping in mind that you would be selling in three years, you would want to purchase something that would minimize your initial investment. There are some good programs out there right now for buyers that require as little as ZERO down, but it depends on where you would like to be. I think we will see property values begin to stabilize in three years, but I believe the key here is to look into programs that require little to no down payment. There are a couple of programs that I can offer that allow from zero down to 3.5% down. Just to name a couple, the Fannie Mae Homepath program (which I can offer) has a down payment of only 3% with no monthly mortgage insurance. Also, a good place to start would be looking at HUD REO properties, which are foreclosed properties owned by the Department of Housing and Urban Development. These properties are eligible for financing with ONLY $100 down, with up to $5,000 in repairs Good info regarding HUD REO properties - here is the link to search for these properties in Georgia: https://www.bidselect.com/servlet/RouterServlet?p_build_page…

I hope this information helps. Good Luck!

Paul Cason
Asheford Funding Group, LLC
0 votes
Lee Taylor, Agent, Decatur, GA
Wed Mar 10, 2010
Dataintel - thanks for the link to a cool new site. Georgia based too. I will spend some time with it - I linked to RealValuator again in my web reference.

Jchat17 - if you are savvy, then don't let fearmongers keep you from living the dream.

If you are not savvy, and dedicated then don't buy now and try to do a retail flip, not even in 3 years.
0 votes
Stephanie Mc…, Agent, Canton, GA
Mon Mar 8, 2010
I agree with some of the other responses - with a target sale date around 3 years, very tough question. I am sure there may be something out there but it really depends on what you are willing to spend, how much elbow grease you are willing to invest, and your lifestyle before you are able to start narrowing the possibilities. With the market where it is right now I couldn't say that I would recommend even attempting this with such a short timeline unless you are staying inside the perimeter and considering only "hot spots" that show a trend toward continuing to be "hot spot". It's the old crystal ball thing and with only 3 years to show any kind of growth, impossible to say whether it would be profitable ultimately.
Web Reference:  http://www.mysouthhomes.com
0 votes
Hotlantan, Home Buyer, Atlanta, GA
Mon Mar 8, 2010
If you buy now and sell in three years' time, you're not going to make any kind of profit. You'll be lucky to break even, in my opinion. Like some of these responses say, the market is just too uncertain right now. There are too many unknowns, and besides, you can never predict what the market's going to do in a few years' time. You could take the plunge and luck out, or you could end up taking a huge hit. The insane rate of appreciation we saw at the height of the bubble is a thing of the past, and we're not going to see solid, predictable rates of appreciation for probably another 5-10 years. I'll also remind you that property taxes here might be more expensive than you're expecting (without the correlating level of public services to justify them), so just be prepared for that expense as well.

All of that said, there *are* some stable areas that will hold their value pretty well. I agree with some of the responses here that if you can get something at a bargain price and fix it up, you might be able to sell in a few years without taking a loss. But you shouldn't be looking at it as a money-making opportunity by any means.
Web Reference:  http://clickscape.com/
0 votes
John Sabic, Agent, Atlanta, GA
Sun Mar 7, 2010
Are you interested in Atlanta or the metro area ?
Web Reference:  http://www.atlantamyhome.com
0 votes
Keith Sorem, Agent, Glendale, CA
Sun Mar 7, 2010
J
My perspective is not to buy because there will be appreciation when you sell. The economy is too shaky and unpredictable.

However, based on the fact that you are renting right now I would talk with a CPA and crunch the numbers, renting versus owning.

A couple of key points:
1. It is not inexpensive to sell a home. Selling stocks is much cheaper. You could ask a local Realtor, but I would estimate that the cost of selling is probably 8-9% of the sale price.

2. You don't necessarily need to sell when you move, you could keep it as a rental property (again, talk with a local Realtor with rental property experience and your CPA for pros and cons).

3. Quality of life. - owning your own space, no common walls, privacy, etc, can make three years in Georgia more enjoyable. What is the value of comfortable living? There is a saying. "Living well is the best revenge".

Good luck.
0 votes
James Dudley, Agent, Suwanee, GA
Sun Mar 7, 2010
This is the magic question isn't it. Everyone seems to have their own opinion about the issue.

It's a gamble still at this point if you ask me. If you buy the right property at the right price you can come out a winner or vice versa. Nobody thought 5 years ago it would be possible to buy a home and not gain 10-20% equity in a couple of years.

All you can try to do now is buy the cheapest home in one of the least affected areas and hope that foreclosures don't start popping up all around you to drag your property value down. Who can guarantee that won't happen??

Alpharetta, Suwanee, Johns Creek, Sandy Springs have all been pretty stable areas throughout the recession. I would start looking in those areas.

I would be glad to assist if you are in the market for a Realtor.
0 votes
Tony Teixeira, Agent, Atlanta, GA
Sun Mar 7, 2010
Yours is not a question that has a simple answer. But, put simply, yes it's an excellent time to buy and get out of the renting game. You need to ask yourselves where you want to live (what part of the city). There are so many great neighborhoods out there. There are even parts of Metro Atlanta (20 minutes from the city) that are almost untapped with great potential.

If you want to resell in 3 years to make money and not haver to buy a real beater of a home, you need to buy smart. You need to have an agent that can not only find a great house for you to live in, but also find a great community. There are many communities that have lost their builders and developers during the economy's downturn. Obviously, I would stay away from a place like that unless there was some clear, definite direction they were going in.

You need to buy low in an established neighborhood or find a steal (there are many) in a neighborhood that's made it through the last few years with builders and developers intact. Those types of neighborhoods are going to be the ones that bounce back the fastest and you would probably be quicker to resell your home for what you paid or more.

Think about what you want to live in, where you want to live and go from there.
I would be happy to give you my thoughts on specific areas and communities.

Call, text or e-mail me any time:
Tony Teixeira
770-851-5050
tonysellsatlanta@gmail.com
0 votes
Don Tepper, Agent, Burke, VA
Sun Mar 7, 2010
Don't buy.

Three years is a fairly short time-frame in which to buy, then sell, and at least break even. Right now, the real estate market appears to be strengthening some. But there are a lot of concerns--over the likelihood that interest rates will rise, over the concern regarding all the foreclosures that haven't been released onto the market, over questions regarding whether the economy is recovering, and so on. If you'd said five years, that might be different. But for a shorter time frame, you really need a reasonable assurance that the economy and the real estate market are going to do well in the short-term. Even if I guess that there's a 70% chance of the economy and the real estate market steadily getting better, how would you feel knowing that there's a 30% chance you'd have to do a short sale or face foreclosure in three years?

You could reduce the risk some by finding and buying a real bargain--something perhaps 20% under market value. That way, the market could remain flat or even drop slightly and you could break even. And you did mention investment potential in your question.

I'm not an accountant, so what follows is not accounting advice. For that, please see an accountant.

One other strategy to consider is a lease-option. Lease with an option to buy. However--unlike the way most options are written in that they're not assignable--make sure your option is assignable. Then, in three years, if prices have gone up, you sell the option to someone who wants to buy.

Example: You find a house that you could rent for $2,100. Its fair market value right now is $400,000. You do a lease option on the property--keeping both the rent and the option price as low as possible. Let's say it's a 4 year lease-option with rent at $2,400 with $500 a month credited to the purchase price. The option price in 4 years is $450,000. The up-front option fee is $5,000.

You'll pay that $5,000 up-front option fee and an additional $400 a month in rent (though if you were just renting, the landlord likely would raise the rent annually). So over 3 years you'd have paid an extra $19,400. (You'd do a 4 year option to give yourself some breathing space, even though we're working with a 3-year plan.)

If prices drop 5%, you'd only lose that $19,400. But if you'd bought, the value of the home would have declined by $20,000, on top of which you'd have sales costs (up front costs plus real estate commission, etc.) of maybe $20,000. So you'd be way ahead with a lease-option.

If prices rise 20% (that's about 7% a year, around the historical average), you'd have $19,400 to apply to the purchase of the property, bringing your actual cost down to $430,600. The house would be worth $480,000 (20% above your today's value of $400,000). But you wouldn't buy. Instead, you'd find someone who wanted to buy the house. Then you'd assign the option to them for an assignment fee. The option is worth $49,400 (the difference between the value of $480,000 and the $430,600 actually due to the seller). You assign the option for $49,400, repay yourself the $19,400 that you have "invested," and walk away with $30,000.

And while you won't have gotten the tax deductions for taxes, you'll also have paid very close to the fair market rent, which--when considering all the expenses of ownership--are less than purchasing. (If you do want the benefits of the tax deductions, look into using a land trust as the purchase mechanism--see http://www.landtrust.net for more information.)

It's a much safer way to handle today's uncertain economy than buying if you're looking at a short-term situation. You minimize your downside potential, and yet can benefit from rising values.

Hope that helps.
0 votes
Russ Garmon, Other Pro, Norcross, GA
Sun Mar 7, 2010
Don't think that on a typical sale and resale in three years there will be much profit, unless you are buying something that needs rehab or using the same guidelines of us that buy/ fix/ and resale.
With the purchasing and selling cost and holding cost three years is a short time typically.
Like I say unless you can create or insure you have equity when you buy, who know what the market will be like in three years.

Russ Garmon
770-368-8151
http://www.garmonrealestate.com
0 votes
Courtney Gore…, Agent, Lilburn, GA
Sun Mar 7, 2010
Are you looking for something in more rural parts or the actual city of Atlanta. As a rule you can usually look in area's that have high school rating, http://www.schoolratings.com, I have found that most have a more stable market and pretty good resale potential. However if you let me know if your looking in the city, or rural area, I can better serve you.
0 votes
David McEach…, Agent, Peachtree Corners, GA
Sun Mar 7, 2010
Hello:

If you have a shorter time frame like the 3 years you mentioned the closer in you can get on the northside of town the better you will be. Properties in Dunwoody and south seem to be holding up better in values than way outside the Perimeter. Shorter commute to downtown translates to better holding power. Now I refer to this with single family residences not condos. If you buy in the Northlake area over to Smyrna along or inside the Perimeter you should be fine.

If you need help in finding a place I would like to the opportunity to assist you. Using a buyer's agent does not cost you anything and I can help you hone into the right location quickly.

Thanks,

David McEachern
Keller Williams Realty
Chattahoochee North

404-406-0638
http://www.dmceachern.com
0 votes
Michael Hamm…, Agent, Suwanee, GA
Sun Mar 7, 2010
Where do you live now, Jchat? Where do you and your wife have to commute for work or other? What is your budget, down payment, lifestyle? Are schools a factor? I have a listing priced close to six figures under market, but if it doesn't work for any of the above, it's fruitless to even look at the link provided on the property below.

Michael Hammond
SellsRealty@gmail.com
404-538-5499

http://www.georgiamls.com/agentsite/index.cfm?SiteID=hammondjohnm
0 votes
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