Showing consistent growth year upon year, Atlanta has become the most significant metropolitan area in the South over the past few decades. Highly popular for its business opportunities, fine shopping and dining, music scene, arts and culture, mild weather and relatively modest housing prices, Atlanta is something of a 21st-century boom town, drawing a large number of entrepreneurs, corporate entities and young families seeking a better life.
With all of this bustling activity, it is little wonder that the Atlanta real estate market has also grown considerably over the past years. Home values growing at healthy rates across many of Atlanta’s vibrant neighborhoods make it a great bet for first-time homebuyers and seasoned investors alike. Here are six reasons why you should consider investing in Atlanta real estate.
1. Predictable growth
Real estate is already considered one of the most reliable investments one can make, even more so in Atlanta with its growing housing market., According to Trulia, median home values in Atlanta grew by 11 percent in last year alone, and most experts and economic predictors suggest this growth will continue for the foreseeable future. Among the reasons for this growth:
- Business and job opportunities, which commonly draw more investors and homebuyers (as well as renters)
- An influx of millennials into Atlanta, which currently constitute about 52 percent of home buyers nationwide
With an increased demand for homes an increase in home values naturally comes, meaning a significant annual appreciation for property owners. While no one can predict the future, investment in Atlanta real estate shows promise for growth for home buyers and investors alike.
2. Rising rents mean better cash flow
Due to increased population and low inventory, rental rates in the Atlanta area are on the rise. In fact, RentRange identified Atlanta-Sandy Springs as the 13th hottest rental growth market during the second quarter of 2016. This equates to the potential for greater cash flow for rental properties in Atlanta.
3. Low inflation
In tandem with the previous point, while values and rental rates increase on real estate investments, overall costs do not — or at least, they increase at modest rates. In other words — rents go up, while with the right financing, your mortgage rates will not. The cost of insurance and maintenance may cause minimal increases in overhead, but on the whole, Atlanta real estate enables you to bring in more than you spend.
4. Tax breaks
Real estate investments are afforded a variety of tax incentives, from deducting the interest on mortgage payments to business expenses to capital gains deferment strategies to depreciation. (In case you did not catch it — you get to depreciate aspects of your holdings while your property value continues to appreciate.) For many investors, these combined tax breaks mean they are effectively experiencing tax-free growth.
5. Leverage
Simply put, banks like to lend money on real estate investments. By making smart purchases on properties with good ROI, you can effectively use the banks’ money as leverage to increase your rate of return. For example, theoretically you could invest $200,000 cash on a property, and experience a 5 percent growth in value over the next year, OR you could invest the same $200,000 on four properties (borrowing the rest from the bank) and experience 20 percent growth from the four properties combined. This kind of leverage is typically only available with real estate investments.
6. Increase your equity with improvements
One of the great things about real estate investments is that many improvements and upgrades generate more equity than they cost to implement. In other words, the money spent on a new kitchen for an investment property will increase the home’s equity by more than the cost of renovations. If this pattern is repeated over multiple properties, the overall ROI can increase even more.
All in all, not only is Atlanta real estate a relatively safe investment, but there are many strategies by which a smart investor can multiply the rates of return on those properties. At Atlanta Fine Homes Sotheby’s International Realty, our experts can offer you key guidance on which Atlanta neighborhoods have the highest growth rates and potential for high returns. To learn more, call us today at 404.237.5000.