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Tom and Michael chat with Dan Nelson from Excalibur Homes about the specifics of the Atlanta Market.  --- Transcript   Tom: Greetings, and welcome to The Remote Real Estate Investor. On today's episode, we're going to be deep diving in the Atlanta market. And we're here today with Dan Nelson. And I'm also here with   Michael: Michael Albaum.   Tom: All right, let's do it.   Tom: Before we jump into the interview, let's touch on some of the quantitative aspects of the Atlanta market. So this information is coming from the Census Bureau, Macrotrends as well as John Burns. First, I'm going to talk about the population in Atlanta proper, just over 500,000 individuals in the greater MSA population, there is just under 6 million so 5,000,800 and we've seen a population growth of 2%. Over the last year, the median household in Atlanta that's $71,000. The existing home values year over year has increased by 5.5%. And the effective apartment rent has increased by 2.4%.   The home value entry level according to John Burns is at $196,000. The existing median home price is $279,000, then median single family rent is $1,364. And the year over year rent growth of that single family has grown a whopping 5.6%. The single family gross yield is 7.8%. Jumping into a different category. Let's talk about the occupancy rate. So the occupancy rate in Atlanta is 91.3%. The number of unique units properties are artists 2,331,002. And of that the owner occupied mix up 59% of that or 1.367 million, renter occupied and makes up just over 750,760 9000 to be exact, and vacant right now is a little bit under 200,000. And that's at 8%. All right, let's jump into the interview.   Excellent. So before we jump into the Atlanta specifics, Dan, I'd love to hear a little bit about yourself and the company that you work for and all that good stuff.   Dan: Yeah, my name is Dan Nelson. I'm the VP of Sales with Excalibur homes. I'm a third generation realtor. My grandmother, Mary Nelson was just recently inducted into the DeKalb County Hall of Fame for realtors, which was exciting for the family. My dad, Mike Nelson, the founder of Excalibur started the company back in 1985, he had a primary focus towards property management versus sales looking for a little bit more stability for himself and our family. While he was at the same time simultaneously was in the National Guard, flying helicopters, my brothers and I all grew up within the company. So we started in, you know, Middle School in high school with learning turnkey, and construction and landscaping during the summers as well as once we were old enough to drive taking administrative positions within the company, learning everything from the ground up, essentially how to each department operate, understanding each job and also working each job for a couple years at a time.   I took a brief stint down in Florida, working in the multifamily industry with some with a company out of Tampa called 908. Development, they did a low income tax credit company where they did a high rise in downtown St. Pete. So I handled the lease up and stabilization of that project that was in the 2009 to 2011 timeframe, I had my Florida real estate license down there. While I didn't need it for that job, particularly, I moved back to Atlanta in 2012, I had my Georgia real estate license here. And that was about the time 2011 2012 we started seeing institutional folks and through the Atlanta market, doing things we've never really seen before buying properties on a level that was kind of unheard of in the SFR space, you know, typically they were not really big players and this type of market until then.   So when I came back, it said, Hey, Dad, you know, we're going to go buy a couple hundred houses at a time, you know, not five, not 10. So it's a very exciting time for us to go through and one learn how an institutional level underwriting works, how they're evaluating homes, you know, what they're going to consider capitalize expenses versus what a mom and pop investor might. And the level of buying was very interesting for us to learn how to navigate and compete with some of the larger funds out there at the courthouse steps, essentially, you know, we'd have teams go out on the Tuesday of the month when they were trying loans. And we'd go out there with a big stack of certified checks and hope that we would win as many bids as possible. As well as putting out you know, 50 to 100 offers a day on the MLS trying to capture as many opportunities as possible.   So that, for me was probably the most valuable experience in the shortest amount of time for real estate related to acquiring investment properties for investors. And that experience has translated very well to assisting our mom and pop investors as well as Roofstock customers that are entering Atlanta's market to understand how big of an area we were in and each individual sub market that we're in and how different types of properties are going to perform over a certain period of time. And from there, I got promoted to Vice President of Sales. So now my job entails growing our team, you know, marketing and making sure that we're bringing in more customers assisting customers like yourself, acquiring as many properties and good opportunities, giving good counseling advice as to what type of investment strategy might be best for certain buyers, whether it's, I'm looking for a capital gains type play, or I'm looking for more of a retirement play, whatever it may be, depends on which investors and what stage of their life and what's most important to them.   But we take that into consideration much like you guys do to building a customized buy box for certain buyers. Excalibur as a whole is kind of a full service company, whereas we manage about 2500 homes here in metro Atlanta are one of the larger companies in metro Atlanta, with a pretty large footprint. We're in 12 to 15 counties. We're located here in Alpharetta, Georgia, which is about 30 minutes north of Atlanta itself. And we've been here for 35 years. The property management is what it is we're obviously going to handle properties for owners make sure that we're addressing tenants leases moving in tenants address Seeing work orders to maintain properties etc on call maintenance. But at the same time, we have a sales division that's going to help people acquire and build portfolios or help them exit the market at a certain time.   Tom: So, Dan, super interesting. Full disclosure, I'm an Excalibur customer, a happy Excalibur customer. But one thing I didn't know was that Excalibur had been in business since 1985. And and you given the background, I thought it was interesting, talking about how, you know, things changed in 2010 2012. All this institutional capital came in, how did all of that change the process, specifically around like evaluation, and then any other changes with management and what kind of changes that that look like?   Dan: On the acquisition side, it definitely sped up our timeframe. So whereas traditionally, you would go out, take a client to a house, walk through it, you know, determine exactly what your plan is, prior to making an offer. We're now sending out sight unseen offers and making our best judgment on renovation budgets based on our experience and how much renovation we do, and we're doing, you know, millions of dollars in turnkeys, and large renovations, as well as new constructions, we have a very good pulse on what's happening in the construction side of the market, which is very beneficial to our clients. The timing of it is you've probably seen this before, when you're trying to acquire a home, there's a lot of people trying to acquire homes. So from last year to this year, in September last year, we had roughly 20,000 active listings   This year, we're down about 48% in the month of September for 2020. So obviously, the demand keeps increasing supply has been going down, which makes it more competitive for us to get properties under contract. So our technique is putting out offers with our best judgment on what the property value in its current condition in estimating what a renovation is going to cost us on the front end, so that we can get that property under contract before they see 1520 other offers from other investors and owner occupants that are still competing in this price point. And then from there, we'll go out there and one of the main selling points on Excalibur is we're able to go out there and you know, one to two days with the construction team and say it's exactly $12,000, or it's exactly $5,000. So if we were off on our initial judgment, we know within a matter of days that we can renegotiate this deal, or we found something that gives us the opportunity to pull out because it's too significant for us to one be able to renegotiate with the seller or to it's beyond the comfort level of another investor and something they might be willing to spend for a renovation.   So that's one of the main things is the speed of which the transactions are happening right now and the competitiveness of the market. So I think it's it's no secret that Atlanta has been a good opportunity for people nationwide and worldwide. So once institutional guys got here that created a level of competition we weren't ready for and we got used to. And now we're kind of changing with the times on a monthly basis instead of a yearly basis.   Michael: Dan, kind of in that same vein is more of a strategy question. Are you the offers that you're writing? Are you giving them an expiration date of 24 hours or 48 hours that the seller is forced to give you a response? Because in some markets, like especially in California, it's so hot, it's so competitive, you want to give the seller a deadline so that they're not looking at other offers, but also want to be flexible enough so that they consider your offer, as opposed to they know they're getting 10-12-15 other offers? How do you play that?   Dan: The short answer is yes, in most cases, we're going to give them an expiration of 24 hours from the time of delivery. The long answer is it's a case by case scenario. So if we can get a listing agent on the phone relatively early on in our underwriting process, when we say hey, these numbers look pretty good. I want to call and make sure this property is available before my team spends half an hour putting together a contract package or rootstocks team putting together a contract package for your customer.   If we can get them on the phone and find out and kind of take their pulse of where they're at. Are they expecting offers? Or are we the first one, we can kind of change our strategy based on feedback, that listing agent somewhat forthcoming with in a lot of instances, but I would say over 50% of time, you don't get somebody on the phone, you say I'm not missing this deal. I'm making the offer, I'll just put an expiration on there.   Michael: Sure. I think that goes to hammer the point that we harp on so often that this is such a relationship centric business, you know, you can get that person on the phone and you're agreeable, and they're agreeable. There's a lot of stuff you can glean from that conversation that know is a lot of like shedding light on the situation, you know, that you had no idea about going into?   Dan: Yeah, and it's also a good opportunity for us to explain who we are, if they're not familiar with Roofstock or Excalibur. Give them a little brief history of our processes. You know, there's a lot of investment companies that will throw offers out there. Their technique is every time I'm going to go ask for a significant discount after the inspection. We try to make sure our reputation is such where we make an offer and if we do have to cancel the agreement because of the findings in the inspection, we're typically not tying them up for the entire length due diligence period. So that one, while it may not have worked out, they're not going to, you know, brush our offer to the side the next time or two, we make a competitive offer. And we go and find out the findings are in line with what we thought and there may be a minimal reduction, but it's something that both parties can live with. And, you know, the seller achieves their goals as well as the buyer finding an opportunity and a competitive market,   Tom: Relationships, relationships man.   Michael: Yeah, relationships and also reputation. I mean, that is definitely going to proceed, folks, I think much more so than they realize, especially if they're repeat customers in the same market. I know that if someone sees the same players pulling the same tricks over and over again, there's no way that anyone's going to want to do business with them. And that kind of stuff gets around right? You hear about those kind of folks pretty quick.   Dan: Absolutely.   Tom: Let's go ahead and jump into Atlanta, a lot of good stuff to cover. And the way they want to start this discussion is talking about different pockets in Atlanta. So as much as we can use kind of landmarks, either, you know, cities or freeways, how would you typically talk to an investor, you know, in thinking about the different pockets of the different types of returns that you're going to get?   Dan: We kind of look at Atlanta, more like a clock. So you've got major interstates and highways running through Atlanta going south to north, we're looking up the 75 corridor, more pointing towards the nine or 10 o'clock, our beef got Cobb County running up that way. On the east side, you've got Paulding and Douglas County's directly north is Forsyth and we can kind of just start, I guess we'll just work our way around from swell nine o'clock. So directly north of Atlanta, you've got Roswell, Alpharetta, coming and Dawsonville. Those are traditionally higher priced markets with very high rated schools. So the opportunities there are are going to be less common. Most of the time, when we do find opportunities up that corridor, they're going to be in Cumming, Georgia and Forsyth County, which is an excellent place to invest. But over the last six months, I may have bought five houses, you know, which is a small number compared to what we're typically doing on an annual basis because the inventory is lower, and the pricing is a lot higher.   Tom: And when talking about higher pricing, we're talking 200,000 Plus, right?   Dan: Yes, so the medium median price up there is probably going to be the 250 and higher. So you're not going to have a lot of homes that are going to meet the rental house metrics where the rents don't quite keep up with that purchase price. Now, if we could buy there all day, we would focus there as much as possible because of how we expect that area to grow and, and how the schools are performing. So North metro Atlanta as a whole, when you're talking about Cobb, Cherokee, Forsyth, and Gwinnett, and Holme counties, those are all very, very good opportunities for you to buy in as a whole. Obviously, there's going to be schools that range from lower caliber to much higher calibers, but as a whole, they're going to have better quality schools, you're going to have better appreciation rates, but you're also going to see that is intertwined with higher property values.   So with that being kept in mind Gwinnett County and Cobb County have been two very good sources of rental properties for us to buy with blending a higher HPA value, the home price appreciation value with a good cash flow value. So our philosophy is typically built around. We're not always looking at cash flow only. We want to look at how the properties can perform the tenant caliber in a certain area, the length of tenancy, turnkey expenses related to those types of tenants, and the appreciation value and exit value. So we're looking at the internal rate of return as a more important factor into the equation versus the cap rate only. But that goes also back to what we talked about before is what type of investor are we talking to? Are we talking to somebody that's retired and is looking for passive income, so they don't care about appreciation? They're going to leave these properties to someone else. So the monthly cash flow is very important to them, and they don't care how the property appreciates, or is this a younger investor that's building a retirement strategy as part of their portfolio that wants to take advantage of home price appreciation and the monthly cash flow is not quite as important.   As long as their debt service payments are covered, and they've got some extra income each month. They can set aside for reserves and turnkey expenses.   Tom: I got a question for you, looking at that this clock looking at Atlanta is a clock a question that will sometimes get is you know, you have these smaller cities on the outside, like how far out to that nine o'clock, would you still consider that part of the Atlanta Metro like Dallas Rockmart Temple egg At what point would you say Ah, that's pretty far out where if the economy within Atlanta, you know, people aren't really desperately commuting into there.   Dan: Yeah, our footprint is rather large and we consider everywhere we are metro Atlanta, so we're roughly a 50-55 mile radius around from Atlanta. So out on that west side that you had mentioned, we would consider Villa Rika. And Dallas and Douglasville and we've recently are getting into Temple. So that's almost on the Alabama line. I wouldn't consider temple quite metro Atlanta. But we are now including that into our portfolio and our footprint. That's an area that I've liked over the last seven or eight years due to expansion in the city, there's only so much land available inside the perimeter. So OTP, which is outside the perimeter seems to be a very good opportunity due to most people are willing to commute a longer way in metro Atlanta versus different parts of the country, just because we were set up differently. And we can talk about transportation later.   But I would consider that West Side a nice path of progress. We've had opportunities there with cheaper land expenses, and with how much our dirt costs here in metro Atlanta, that's been a really good opportunity for builders to build entry level homes that also fit the model for a rental house. So when you're looking at price points that are going to make sense between 150 and say, 240. You're not seeing a lot of that being built anywhere. But that west side and the South Side corridor of Metro Atlanta. So we've been very bullish on Villa Rika, Douglasville and Dallas, because we've had good calf rates, we've had average or above average school districts, and the rental demand has been really strong out there.   Tom: That's great. That's great.   Michael: And but at the risk of sounding silly, Dan, I'm going to ask the question, anyhow. Why do people live in Atlanta? And why are people move in there?   Dan: Well, there's a lot of reasons to be here. Obviously, our cost of living is amazing. So your dollar stretches a long way here. We've got a temperate climate for the snowbirds move in South we don't have Boston's winter, nor do we have Miami summer. So that's a big reason. We've got relatively good schools, it's it's a great place for families. There's a lot to do here. And now it's becoming a big hub for you know, video production and things like that. We're now on the east side, Hollywood, you know, the city of Atlanta itself has a lot of entertainment value, whether it's major sports or entertainment itself, as well as the music scene and your short drive away from a very large man made lake where I live Lake Lanier, which is a lot of fun if you're into watersports, or boating in general. And you're only an hour from Blue Ridge Mountains for people that like to camp or hike or just do the outdoorsy things, we've got a little bit of everything here. And and obviously it's it's an affordable place to live.   Michael: Great. And who are some of the major employers that are either there now or that you know, are coming into the area?   Dan: Yeah, we obviously have a large handful of the Fortune 500 guys like Home Depot and Coca Cola ups Delta's here as well, as well as the CDC. So I think those are It's no secret where they're located. One thing was interesting related to you guys, you guys are more in the tech field than I am. But I saw a company Deluxe, I believe, was announced last month that they're putting a new facility here in Sandy Springs, which is just outside of the perimeter in Atlanta. And they're going to have a fin tech operation that's creating about 700 new jobs, which we thought was pretty exciting down there.   Michael: Very cool. And correct me if I'm wrong, but isn't the Atlanta International Airport, the busiest airport in the world?   Dan: Oh, absolutely. And when I get to travel into different parts of our nation, I get a little bit jealous of how easy it is to get. And   Michael: I was in Atlanta a couple times. And yeah, just getting into the airport like, Man, this is a frickin city in LA. So, I mean, it is just remarkable what they do at that Airport.   Dan: The first experience there is always pretty overwhelming. Once you get used to it, it's it's very easy to navigate. Now here lately, it's been a little bit easier, you know, traffic's been down since everybody's working from home, etc. And the airports kind of experienced the same type of effect.   Michael: I was just gonna ask Dan, you were mentioning that the kind of Metro radius spans out, you know, about 5055 miles or so. So, as folks are looking at different industries that are moving in different companies that are coming into the Atlanta Metro, how should they be thinking about work movement, employee movement? You know, if I find that a company is moving into the north side of Atlanta, is it appropriate to be thinking that folks living in the south southern part of Atlanta at that six o'clock mark on the clock would be traveling?   Dan: Well, that's what's kind of unique about Atlanta is a lot of people have a 3040 and even one hour commutes in the car. Not a lot of people are using public transportation because it was set up, you know, incorrectly. It's not super convenient. People would rather sit in their car and listen to a podcast like yours or listen to the radio for an hour rather than the hustle and bustle. That's the Marta train or bus system. If somebody's coming into Atlanta and sees that, you know, their companies can be located on the north side. There's options related to different earners, whether it's a higher earner or somebody that's an entry level position. So that's what's kind of nice about North metro Atlanta or the southern side is that You're going to have different housing options that are going to play into your specific budget that makes it a little bit easier for people to spread out and say, this works best for me individually and my family individually.   Tom: On continuing the clock rundown. So we're at about we've gone kind of noon, you know, higher end less of a cash flow more of an HPA, we went to nine o'clock that West Side Douglasville talking about kind of a good blend kind of a more popular more recently, why don't we continue our way around it going down to six o'clock, I think that's a little bit more the airport area, what kind of return profile and all that continuing a little circle around.   Dan: So you're looking at places like Clayton County and Henry County or even South Fulton for that matter are typically going to be higher cash flow areas where you can find rental properties and opportunities, they're going to be a lower price point. And I think there's a lot of us out there that said, Hey, I'm ready to start investing in real estate. And I don't want to spend $250,000, I would rather spend, say 140,000, or $130,000. So there's going to be a lot more opportunity for areas like that to achieve what you're looking for, what you're going to be looking at there is a higher cap rate scenario. So you're going to have a higher rental rate related to that purchase price in an area like that. But typically, you're going to have a lower rated school system typically going to have a lower appreciation value. And you might experience a higher credit and vacancy loss. And you might experience more frequent turnkeys.   Now, that doesn't mean it's going to happen every time. But on average, it's going to happen more often in areas like that. So you're kind of blending the good with the bad there and say you know what, I like the cash flow value of this property. And I'm willing to take a little bit more of a risk on some of these other things happening. But when you do that, we want to make sure that our clients and customers are coached to say, let's make sure that you're set up with a reserve, if you do experience something like this. So if you're one, you've got to replace your tenant, and you already have to repaint a house painted, you know, we pay roughly $1.10 a square foot for an interior paint with walls trim and doors. So if you're looking at a 2000 square foot home, and you're going out there and spending a couple thousand dollars to repaint it, year two then that's you know, it's a big chunk of cash that not everybody's willing to experience, a lot of people want to come into the market, say, I'm buying a house, and it's going to make me money from here on out.   You know, that's that's not how investing works for everybody. And I'm sure that's not how it works in the stock market for them either. So we just coach them to say, here's what you might experience in an area like that. But there's a lot of positives of being down there building a portfolio like that. And you may experience a tenant that stays for 10 years and never calls you once and pays on time every time. Or you may replace your tenant every couple of years and deal with some you know, above average turnkey expenses. But that's going to be more common in those types of areas. So you've got Henry County, I like Stockbridge and McDonald a lot. They've got some marginal schools that are are, I would say average where you can find good cash flow properties over there. We still do a lot over on the Clayton side. Jonesborough has a lot of really high cash flow opportunities there. Again, the negative stuff we've already discussed. But the positive there is that the return is really good when the tenant stay.   Michael: Dan, you're familiar with the 1%? Rule right?   Dan: Yes.   Michael: So is that in South County? Will we be looking to find properties that may meet that metric?   Dan: Yes. So while we can still find opportunities like that, there's a lot less of them now than there used to be. And that's due to this supply and demand that we've been talking about. So with that being said, we're getting close to the 1% rule on average. And every once in a while we're getting the 1% rule. You got to factor into sometimes those are going to take into account having an attached property, which would be a townhouse. We don't typically recommend buying condos down here. But a townhouse would be an attached versus a detached single family home, those are typically going to have a higher HOA payment per month than what you might experience with a detached home for a similar price point in a similar area. So while you've got that 1300 dollar rent on $130,000 property, you might see a 85 to $150 a month HOA whereas if you found a detached property with that rental rate, typically the HOA is going to either be zero in an area like that or much smaller than what you might experience with a townhouse   Tom: Are HOAs pretty common throughout Atlanta?   Dan: They are, they're very common part of having boots on the ground like Excalibur with you guys are with our clients during our due diligence period, we're typically getting a copy of the covenants and restrictions to make sure that one we don't have a leasing restriction or cap. You know, if there is a cap, it's pretty risky for people to go in and say this is going to work for me forever because they might find out losing a tenant Three years later, cap has been met, you're no longer allowed to lease this house. So we want to take that into consideration. We also want to make sure that the HOA covenants weren't written in a way where they can go back and change the rental restrictions later with a vote that we may be included on but It may not go our way. So those are things we'll look at during the due diligence period to limit our exposure to something like that having being forced to sell at an earlier time than you had projected.   Michael: Did I hear you right when you said you would steer folks probably away from condos down in the Atlanta area, but not from townhomes.   Dan: Correct. Most of the time. condos, if they're going to be in an area that our clients are going to want to be our tenants are gonna want to be or my employees are going to want to be typically the HOA and condo fees are going to be pretty high and they're going to dip into the cash flow significantly whereas the townhouse typically will experience a slightly better appreciation and these price points and it will have a lower Hoa fee.   Michael: Got it. Got it. Okay. And I want to circle back to property taxes. But go ahead, Tom, and they want to finish up on three o'clock.   Tom: Yes, look at the clock through so All right, we've gone north, we've gone West, we've gone south, let's make our way over to three o'clock. So like the Lithuania's and Stone Mountains and…   Dan: Yes, so Stone Mountain Decatur like Sonia, those are all going to have, again, higher cash flow opportunities and lower price points where you're not going to get that on the north Metro side, I think the one difference is on Decatur, you're going to have different pockets. So you could have a part of Decatur that's trading in the millions and then maybe five minutes, 10 minutes down the road going to the hundred and $30,000 price points, there's a little bit of a difference in what you're going to find out there. We're obviously not going to be finding rental homes in that million dollar pocket. But there are good opportunities there. Again, those are that's going to be an area where the public schools aren't performing quite as well as what you're gonna see on the north side or the west side. Or even there's a couple schools that we like on the south side as well. It's just a lower average of them.   Outside of that there's a there's a lot of opportunity for fix and flip or forced equity plays in DeKalb. County, whether it's Stone Mountain life onya or Decatur. So if the risk tolerance for the investor is a little bit higher, and they say hey, you know what, I'm okay with not doing a move in ready home, I've got 3040 $50,000 for you guys to not only fix something but renovate something and upgrade it, then there's opportunities there from time to time where you can spend a little bit more money have a little bit more day one equity and generate a really good return based on what type of rents were able to generate for something like that.   Tom: On the furthest reaches east. Do you guys manage over an Athens?   Dan: We do not manage out in Athens we do a lot in Gwinnett County, and Logan Ville is an area that I liked a lot for a very long time buying rental properties. They've got good schools, and it's a little bit more rural, but it's a very strong rental demand. And you get a lot of bang for your buck as far as the houses go out there if we can find the opportunity. And that bleeds into Walton county right there on the on the east side as well. So that's an area that we've liked out there as well.   Michael: You good on the clock, Tom.   Tom: Yep.   Michael: Perfect. So Dan, I know from county to county property taxes can vary pretty widely. But are you able to give folks a real rough broad picture of what they could expect to say in property tax what they could expect to pay in property taxes? And talk a little bit about how property taxes work is based on purchase prices at some county assessed value.   Dan: Yeah, essentially, county by county and zip code by zip code, we're going to have different millage rates for for each area, the tax assessor are going to have an assessed value. So they're going to use that as a calculation to say, you know, if our assessed value is x, and our millage rate is x, we'll multiply the two to come up with our tax bill in different areas are going to have different, higher and lower taxes. So whereas Fulton County's got pretty high taxes, going a little bit farther north and Riverside, you could be an Alpharetta, Fulton and have really high taxes or Alpharetta, Forsythe and have much lower taxes. So we're going to look at that on a case by case basis for the investor. And a lot of times the listings or projections that investor might see are not going to accurately reflect what they're going to get. So we'll give them an idea of based on what we're seeing and the appreciation that we're looking at from the assessed value now to when you purchase it and the new values applied, you might expect say a two or $300 increase, they've got a good idea on how they're going to budget that.   Michael: Great. And so as an investor looking to identify what their property tax rate might be, does the assessed value have any correlation to the purchase price or the fair market value or if there's some kind of regularly assessed new assessment at some kind of regular interval that independent of a sale, it's going to increase or decrease just kind of depending on what the markets doing?   Dan: So typically, you know, if you own a property for a while the assessed values not going to significantly go up even if you're renovating because they don't know you might see something where somebody purchased a home last year for $100,000 but $30,000 into it and then we buy it for $150,000 you're going to see a pretty significant jump In the taxes from the previous year to this year, due to something like that the home is identical when you're selling it, typically the assessed value is going to go up at a reasonable pace based on what's happening in the overall market. The assessors aren't always typically going to go into each individual house and say this house is worth X amount of dollars, they're going to kind of use metrics from how a certain cities performing or a certain zip code is performing.   Michael: Okay?   Tom: Have you guys had any success in challenging the assessed value in trying to lower the property taxes?   Dan: About 50% of the time? It's kind of like contesting an appraisal, you know, the problem with that is, is you have to know what you're getting into, because it could go the other way, too, you know, with an appraisal, you say, Hey, I think you're wrong. Here's why. And they say, Oh, yeah, I was wrong. Now, I'm going to do it the opposite way.   Michael; I'm gonna go way low.   Dan: Yeah, recently, my family has a house up on the lake, where we didn't quite agree with all that was assessed, and we had an appraisal, and they still weren't willing to change it. So it really depends on what county you're in, and who you're talking to. It's very localized government. So at that point, it depends on how successful or how lucky you might get and how valid your case might be.   Michael: So it sounds like a sale might trigger a new assessment, a sale of a property could trigger a reassessment. Right, so well, they're going to put out those bills annually. So when they see that the property is traded hands at a much higher value, then they're going to take notice of that. Yes.   Michael: Got it. Okay, cool. Talking about kind of price points, you touched on a little bit kind of north, south, east and west. But maybe you could touch on average price point for a three, two single family and what the average rent might look like to give folks an idea of where based on their budget, where might they should be fair, that they should be? Where should they maybe consider looking?   Dan: Yeah, if I generalize it, I would say if I was looking at a higher cash flow opportunity for $130,000, I'm typically looking for something between 1200 and 1350. k, let me use a different number, because they're not going to find anything like that in the north metro area. So if I said, hundred and $50,000, then I might be looking somewhere between 1400 or so probably for the rent. If I was $150,000, say in a really good school district on the north side, I'm typically going to be looking at 1275 to 1300. So there's a pretty good gap there. And on the you know, the higher cash flow stuff, you could probably get something closer to 1% rule every once in a while. But on average, it'll be closer to that 1400 1425.   Michael: So the Delta in rents between I guess, within the south side of the north side is about 150 to $200 a month, would you say?   Dan: Roughly, and again, this is all going to be specific to each individual home and each individual city, but that's probably a good rule of thumb to generalize that.   Michael: Okay, fantastic.   Tom: Is section eight, pretty prevalent threadably. And we'd love to hear your guys's experience, we have an episode coming out, or might come out before this one where we talked to an attorney about section eight, just talking about how different is from, you know, city to city anyways, I'd love to hear your input.   Dan: Yeah, we do manage section eight, we don't manage a ton of section eight, my brother would be a little bit more well versed since he's on that side of the company on the management division. But as far as I know, the housing authorities react a little bit differently, some are a little bit easier to work with than others. For the most part, our experience has given us kind of an end to where we know how the system works. So we can do things rather efficiently now. So while we would prefer non section eight over section eight, as far as management and the workload that goes along with it, it's not something that has as much of a stigma that would say as it used to, I know a lot of landlords say, I don't want to deal with that. But in the city of Atlanta, it's not like you can refuse it.   So if your only opportunity is a section eight tenant, then that's something you're going to have to acknowledge and rent to you can't just deny an application due to section eight in certain areas.   Michael: Dan, I want to ask you about a real hot button issue that everybody's talking about COVID-19. A lot of folks both on the buying and selling side are where sky is falling prices are going to plummet renters are going to stop paying rent. curious to know what you've seen out in Atlanta, both from a price point perspective on the sales side. And then as a rental collection side on the management.   Dan: Yeah, related to sales from 2019 to 2020. On attached and detached we saw 2% increase in the average sales price. So still continuing to go up not as quickly as it has due to our economic recovery, but we're still seeing increases and we don't really have a reason to believe that that's gonna change mostly due to our low inventory and high demand. So that being said, we haven't really been affected by COVID-19 or the pandemic. I think the main thing as far as our jobs as real estate agents and realtors has been occupied showings has probably been the biggest hurdle so it's a little bit more difficult to get everybody's schedule along. And make sure people are following proper protocols with, you know, coverings for their shoes hands and face and disinfecting the home and things of that nature.   But with a vacant property, they're still selling in a matter of hours and sometimes just a couple of days. So we're moving product very quickly, the appreciation from last year to this year for detached housing has gone up about 7% in metro Atlanta, whereas attached only went up about 4%. So for the people out there concerned more about the internal rate of return versus the cash flow detached seems to be a better opportunity in metro Atlanta. As far as how that's affected us on the rental side, in the property management side, I would say during the height of the pandemic, we had about an 8% change and rent collection, but that has been steadily getting better month by month. So it was not near as significant as other parts of the country, you know, due to a lot of different factors of one us being a central business and to reopening a little bit earlier. So things you know, didn't seem quite the same in our part of the country as it did in others.   So outside of that we're actually having a record year as far as leasing properties, you know, in previous years and our highest volume months. You know, during the summer, we're typically expecting 70 new move ins are 70 new leases, whereas this summer, we're doing, you know, 140 150 so we were…   Michael: Holy smokes!   Dan: We were doing a great job getting people moved in and following safe protocols with some different approaches that we took to closing our office to the public and changing out our lock boxes to accompany showings and move ins and things of that nature. So we worked around what was in front of us and found a way to be really efficient with what was going on.   Tom: That's incredible about the appreciation and just for clarification for folks who are not familiar with the term detached or attached a detached would be a single family home where an attached to them would be possibly like a condo. So even more reasons to invest in single family over over condos that that huge jump in appreciation over condos.   Dan: Exactly.   Tom: That's fantastic.   Michael: I think Dan, that just goes to further drive home the point that it's so important to understand your local market, nationally might not be the same story as what's going on locally. Atlanta is the prime example. We hear doom and gloom, but really, you guys are killing it.   Dan: Right.   Michael: So that's That's great to hear. Great to hear.   Dan: Yeah, it doesn't look the same. But we're still getting it done.   Tom: A few more questions. Our last couple of minutes we have here. So a term investors like to throw around is near my son Charlie shining into he's throwing around some investments. Yeah, exactly. is the term investor friendly. Right. And that could have to do with rent control eviction moratoriums, where does Atlanta sit with regards to rent control and that kind of stuff?   Dan: Well, that's fortunate that we don't have to deal with that we've seen in other parts of the country that have you see investors leaving kind of hurts the tenants more so the investor they can pull their money out and go reinvest somewhere else, and now they've got less product and opportunity for them to find a rental house. So we have a large rental market here, because that's not something that we have to deal with locally. And it's not something we expect to have to deal with anytime soon. As far as the evictions that has been something that we dealt with during the pandemic, because our courts were closed just like everybody else's were. So Excaliber’s philosophy was let's get with our owners, our landlords, and let's work out payment arrangements with tenants. Let's forgive late fees that obviously we couldn't go to court and, and, and argue about anyway.   And let's make this as feasible as possible to collect what we can collect during these times and get everybody back on track. And that's reflected in the change of percentage of our collection not going drastically the wrong direction. So the courts have reopened, and we're getting pretty caught up. So anybody that was unable to make payment arrangements or their situation wasn't able to change, we've been able to release most of those properties as we're able to get them out through that process.   Tom: That's great to hear working with the tenants and the owners and coming up with payment plans and being human about it. So that's, that's great to hear.   Michael: Tom, I don't think I have anything else.   Tom: I got a good question to end with Dan. So we've been away from Atlanta for five years, you Lance and you got to get a meal. Where are you getting? Where would you record? Where would you go to get your meal in Atlanta where you haven't been there in a long time and feel free to use, you know, North suburbs or wherever, wherever else. So   Dan: That's a good question.   Tom: Tell you what, you gotta throw two meals in there. You get a fancy meal and you get Yeah, this is my go to you know. So two meals.   Dan: That's a good question. I would probably say I want to get some local pizza Antiquos. They've got a couple different locations around Atlanta. I don't know why I like it so much. I do. I just do. It's delicious. It's a little bit light and airy trust.   Tom: Like an Italian kind of, you know, thin crust.   Dan: Yeah, yeah. So you can smash more pizza than you would want to.   Michael: Such a good point.   Dan: Other than that, I have a really good friend up near where I live that owns a barbecue restaurant called Q barbecue that I like a lot. So I would probably go back to that order, whatever their sampler platter is and just work my way through it until I go to sleep   Tom: Beautiful   Michael: Does Atlanta have their own style of barbecue?   Dan: Not really, you know, Atlanta is kind of a melting pot, which is why, you know, we're growing so rapidly. We've got people that do it kind of in a Georgia way, which is a blend of some of the Southern ways, but you've got, I think everything out here, but Texas, I think Texas is the only people that can do Texas barbecue. So we don't try to do that. But I would say this, this one's probably more Kansas City style with a little bit of South Carolina mixed in with the vinegar based sauces and stuff like that.   Michael: I’m drooling now.   Tom: Sounds great, awesome. Any final thoughts for investors looking at Atlanta,   Dan: Contact Roofstock. Today, we've got new opportunities going on the site every day. You know, Excalibur is the boots on the ground as the local broker with just this last year, we've partnered up with you guys on that side. We've obviously been managing you guys for many years now. But keep an eye on the site. There's new inventory going up, just remember that it's going quickly. So if you see it that day, make a decision and give us an opportunity to get it under contract for you. And from that point, I think you'll be pleased with the process that Roofstock has put in place and calibers local knowledge will kind of help you throughout that process, making sure you're making a wise choice.   Tom: Thank you so much, Dan, this is a very informative.   Michael: And Dan, if folks have questions about the Atlanta market about Excalibur what's the best way they can get in touch with you,   Dan: You can visit our website at Excaliburhomes.com, we've got a web portal there where you can send us a message and either myself or my team will reach out to you responsively. So you’ll probably hear from us same day in most cases.   Tom: Fantastic.   Michael: Dan you're the man, thank you so much for taking the time to hang out.   Dan: Absolutely it’s a pleasure. And we'll talk to you guys soon.   Michael: All right. Take care.   Tom: Dan, thank you so much again for jumping on and thank you everybody for listening to The Remote Real Estate Investor. If you enjoyed this episode, enjoyed the podcast. we'd love it if you would subscribe and give us a review. All right. Happy investing.   Michael: Happy investing.