As part of our broader strategy of buying homes in up-and-coming urban areas, we’ve directly acquired a six-bedroom, three-bathroom rental home in the Cabbagetown neighborhood of Atlanta. In addition to this 1,723 square foot home, we’ve acquired two other renovation projects in the immediate area.
Business plan
As you can see from the listing photo, the home is currently in rough shape. We anticipate spending about $165,000 to perform a full renovation before putting it on the market. Together with the initial acquisition costs, this brings our total commitment to about $486,000. Based on comparable properties in the area, we believe we will be able to sell the renovated home for approximately $550,000, a gross profit of about 13%.
Why we invested
- Up-and-coming urban area: Cabbagetown is an emerging arts district on the eastern side of Atlanta with unique historic charm. The neighborhood is centrally located, and close to the Atlanta Beltline, which provides over 22 miles of bike and pedestrian friendly trails.
- Strong recent growth: Over the five-year period ending December 2017, the Zillow home value index in the 30316 ZIP code has more than doubled from $103,000 to $258,000, a trend that we believe will continue as prospective homebuyers are priced out of more established areas.
- Economies of scale: By acquiring three renovations in the same neighborhood at roughly the same time, we hope to work on them simultaneously, thereby lowering renovation costs.
