Investors Building Rental Properties in Atlanta Are Reaping the Rewards

Most real estate experts will agree that Atlanta belongs in the top 10 cities for real estate investing, and investors are taking advantage.

Several factors make Atlanta such an attractive market for real estate investors:

  • consistent and steady population growth
  • tons of attractions and events
  • healthy job market that includes financial and tech-based companies.

There has been a higher demand for housing in the suburbs since the pandemic, but it’s been hard for builders to meet that demand. New home construction in Atlanta is no exception. It has been at a crawl because lumber and other building materials have increased so dramatically since early 2021. The result has been slower new construction starts – even with continued demand for single-family homes. Despite construction slow-downs due to costs increasing and high demand, there are still many investment opportunities for real estate investors looking to move into the Atlanta market.

Atlanta Real Estate Market Statistics (May 2021)

  • Total Sales: 6,631
  • Active Listings: 7,846
  • Average Sales Price: $444,500
  • New Listings: 8,402
  • Month’s Supply of Inventory: 1.1
  • Median Sales Price: $363,000

The biggest takeaway from Atlanta’s real estate market: there is practically no supply of single-family homes available. Buyers are flooding the market, often leading to frenzied bidding wars where some buyers are waiving all contingencies.

The State of Atlanta’s Rental Market

Atlanta’s rental market is strong and showing solid promise for real estate investors. Market reports show that Atlanta has had a fast-paced recovery from the effects of the pandemic. The city is actually experiencing record demand for apartments, according to key metrics from Q1.  In fact, Georgia claimed the nation’s top spot for apartment demand.

About 50% of the households in Atlanta, GA are renter-occupied. Atlanta’s rent prices plunged during the most severe period of the coronavirus outbreak when much of the city’s economy was locked down but quickly rose to $1,559 – a 6% increase YOY from May 2020. Rent prices for single-family rentals are up in Atlanta as well, mainly because the increased demand for housing and rising home prices are making it difficult for people to buy. So, instead of purchasing property, would-be homebuyers continue to rent, creating a demand for rental housing that leads to a surge in rent prices.

Construction costs are also high in the wake of the pandemic because of increased materials and lumber costs, which keeps real estate home inventory low and leads to an escalated demand for rental properties. Because the housing inventory is so low and rental property demand is so high, investors are swooping into Atlanta for new construction opportunities, specifically with the intent of building single-family rental homes and build to rent homes.

In early 2021, single-family rental investors Transcendent Investment Management and multifamily owner and operator Electra America established a fund, Transcendent Electra, to purchase newly-built, single-family homes. In all, the venture added 1,889 new single-family homes scattered through major southern cities including Atlanta. Additionally, an Atlanta-area real estate firm and nonprofit recently announced they would partner to build an 84-unit apartment complex in South Atlanta.

New Construction is Promising for Atlanta

Atlanta is mirroring the same national trend of families moving to less populated suburbs and into larger homes. Given the insatiable hunger for single-family homes, new construction is hot in Atlanta as single-family construction permits have increased.

Single-family construction permits in Atlanta increased by 1,484 permits from 2019 to 2020.  Despite that increase, overall housing permits have decreased by 1,398 from 2019 to 2020, signifying a pivot from multifamily housing to single-family build to rent homes. Single-family home rentals and single-family new construction are currently the best investment opportunities in the Atlanta area. But it’s worth noting that the southern suburbs are still doing well in all facets of housing investments – including fix-and-flips.

Build to rent communities are also hot in Atlanta because of the demand for single-family rental homes. According to the Pew Research Center, more U.S. households are headed by renters than at any point since at least 1965. There are a number of reasons potential homebuyers are out of the market and continuing to rent – student debt, tight job market, and lack of a down payment. On top of that, millennials and Generation Z can’t afford to purchase a home in the area where they want to live.

Instead, these two demographics groups are looking for single-family homes to rent, making Atlanta an ideal choice for rental property investors.

What Does Atlanta’s Rental Demand Mean for Investors?

Atlanta has had one of the hottest real estate markets in the country for years, and market experts predict it will remain that way for the rest of 2021. For several reasons, it is also one of the most popular real estate markets for investing in rental properties. Atlanta’s population continues to grow daily, and that growth has had an incredibly positive impact on its housing market. Nearly 285,000 people moved to Georgia in 2019, according to the most recent data from the U.S. Census Bureau.

Updater, a tech company that helps people and companies relocate, examined a sample of 1.5 million moves nationwide throughout most of 2020 and found that metro Atlanta ranked sixth for inbound relocations among major cities. It’s no surprise that people are migrating to Atlanta. The state of Georgia consistently ranks as the best state for business. Area Development, a corporate site selection, and facility planning resource, named Georgia the top state for businesses seven years running. Atlanta is also home to several Fortune 500 companies including Delta, Coca-Cola, Home Depot, and Aflac.

Georgia’s film and TV industry have also played a huge role in Atlanta’s population and economic growth. Popular television shows like “Ozark,” “Stranger Things,” “The Walking Dead,” “MacGyver,” and “The Resident” are currently filming in neighborhoods throughout metro Atlanta. A litany of films including “A Madea Homecoming,” “Bandit,” Black Adam,” and “Spider-Man: No Way Home” are planned for production in Atlanta through the end of 2021.

When it comes to thriving metropolitan areas with relatively reasonable home prices, Atlanta is a serious contender. Boasting a strong economy, tree-lined neighborhoods, vibrant culture, and urban walkability, Georgia’s state capital is a place where newcomers put down stakes and locals never leave. When looking at Atlanta through a real estate investment lens, the numbers come up big. It’s a city with an incredible amount of upside and an ideal real estate market for investors looking for a winning combination of cash flow and appreciation.

Even as home values continue to rise, low mortgage rates have given buyers more buying power. The growth of home prices in Atlanta is projected to outpace national home prices this year. According to the Atlanta Business Chronicle, Atlanta housing price increases could be among the largest in the nation in 2021.

The Atlanta housing market has a housing shortage which will continue to contribute to increasing prices. Atlanta home prices on average are less expensive than the national average. Despite being below the national average, Atlanta home prices have more than doubled since 2012, and are projected to continue increasing. 2021 will be defined by low-interest rates and low inventory, a perfect storm that will continue to push home prices higher.

While inventory might be harder to find, investors with strong real estate investment strategies can still profit. It’s now more important than ever to have a lender capable of helping you:

  • Secure a loan with the best price and maximum leverage for your next rental investment
  • Close properties quickly and certainly
  • Run your construction or rehab projects smoothly

Lima One Capital offers that and much more for real estate investors. We are experts in financing FixNFlip projects for investors who are interested in purchasing and rehabbing an investment property, building a rental property portfolio, investing in multifamily real estate, and new home construction for builders on urban in-fill, spec homes, model homes, and teardown/rebuild projects. Our team of experienced professionals will help guide you through how to get a new construction loan for your next investment.

If you’re looking for a hard money lender in Atlanta or interested in obtaining construction loans in Georgia, call us to learn more. Get started today and scale your rental property portfolio with Lima One, the nation’s premier lender for real estate investors.