Thursday, 31 January 2013

Real Estate Opportunities in Atlanta the Economic Hub of the SE United States.


Bruce Ailion has been a realtor and associate broker with remax since 1979 in metro Atlanta  , he has extensive knowledge and experience to the real estate market in Atlanta; he has a bachelor degree in in marketing a masters in real estate and urban affairs and a doctrine in law. , his clients include the nation’s largest banks, the US department of veteran affairs and the federal deposit insurance
corporation. As well he has been representing foreign investors ,
specifically Israeli investors who are seeing value in Atlanta
property market.
770-977-9654 between 4:40 pm to 5pm

-Presently What is the state of the real estate Market in the South
Eastern United States particularly in Georgia ?

-Atlanta is a business city, with nearly 5.8 million people in the
metro area; Atlanta is the 9th largest metro area in the US and is the
central location and economic Hub of the South Eastern United States.
What does Atlanta have to offer?

-How can investors become involved with investment in Atlanta real estate market ?

-Atlanta has a large Jewish population, over 120000 Jewish people,
Most are in to Atlanta because of the business and educational
advantages. The Atlanta area is now considered one of the top 5
centers in North America for Israeli company activity with over 45
Israeli companies establishing their US or regional headquarters. Why are Israeli investors attracted to investing in real estate in the
Atlanta region? And Why has Atlanta become such a hot location for international investment?

Bruce's Interview with Radio Shalom CJRS 1650AM - 

Atlanta Property FOR SALE -Why Buy Property in Atlanta,

Historically investors have focused on Gateway US Cities like New York City, Los Angeles, San Fran Cisco, Miami and to a lesser extent entertainment cities like Las Vegas, Orlando and New Orleans. Canadian investors favored warm climates like South Florida and Phoenix. Atlanta is a business city, with nearly 5.8 million people in the metro area; Atlanta is the 9th largest metro area in the US. Atlanta is the central location and economic Hub of the SE United States.

 It has the 3th largest concentration of fortune 500 companies, with
12 national headquarters, companies like Coca Cola, Delta, UPS, Home Depot, NCR, 487 of the Fortune 500 companies have regional or national headquarters in Atlanta.  Over 2800 international firms representing 60 countries have significant operations in Atlanta.  Atlanta is the
home to 65 consulates, trade offices and foreign chambers of commerce.
  While Atlanta is known for large business, the favorable business
climate has been beneficial to small business.  Of the 66500 business in Atlanta 97.5 are classified as small businesses.

Atlanta is known for its unique transportation and logistical
advantages. Hartsfield Jackson International Airport is constantly the world’s busiest airport with over 90 million passengers a year, 2700 daily departures and arrivals per day non-stop flights to over 80 international markets. A new International terminal was added at a cost of 1.3 billion dollars.  Four fifths of the US population 119 of
the 150 largest US market can be reached within a 2 hour flight from Atlanta’s airport..
 In additional to Hartsfield Jackson, there are 20 regional airports
scattered throughout the Atlanta Region Atlanta is one of only 4 metro markets with 3 interstate highways converging in the city Interstate 20, 75 and 85.  There is a tremendous linkage by rail to the Port of Savannah the 4th busiest port and fastest growing port in the US. There are 14 all cargo air carriers, rail and trucking intermodal transportation networks.  Trucks originating in Atlanta can reach 80% of the US market in 2 days or less.

Atlanta has a very diverse economy, no one market segment dominates the local economy.  Atlanta has a work force of 2.6 million, 34% of the population 25 years or older have a bachelors or higher degree and the average employee age is 39 years old.  Georgia is a right to work state, you cannot be forced to join a union.  Georgia has the 3rd
lowest unionization rate in the US just 4%. Atlanta is a great location for education.  There are 57 colleges and
universities in Metro Atlanta enrolling 280000 students.  Best known for Emory and Georgia Tech, both recently recognized in the top 20 in and top 100 in the world.  These and other schools provide both an educated students and research partnerships for business. Atlanta consistently ranks in the top 5 metro areas for higher education research with over 1 billion annually. Atlanta is also home to 3 historically African American private colleges, Morehouse, Clark and Spellman Universities.

 Atlanta offers a very low cost of doing business.  Low commercial
space, housing, taxes, labor costs consistently allow Atlanta to rank
among the most competitive economic environments for doing business in the US.  Atlanta offers one of the highest quality of life locations in the US, with a diverse population base, stable political system, favorable climate with 4 distinct seasons, an active arts and
entertainment community, many museums, parks, every professional sports team, Atlanta offers something for everyone.
Atlanta is a major wholesale exhibition center.  The Atlanta
Merchandize Mart/Georgia World Congress Center offers over 3 million square feet of exhibition space accommoding the largest trade shows in the US.  We provide the largest concentration of permanent showroom space in the US. There are over 100,000 hotel rooms within a 10 block radius of the Atlanta Mart.

Healthcare is a significant segment of the Atlanta market with more
than 98000 healthcare practitioners and 37000 support personnel.
There are more than 50 local hospitals with over 12000 beds.  Atlanta is headquarters for the Center for Disease Control, the American Cancer Association, Arthritis Foundation, CARE USA,
Atlanta has a large Jewish population, over 120000 Jewish people
called Atlanta home in 2006, the 9th largest Jewish population in the US up from 17th in 1996.  31% of the Jewish household moved to Atlanta between 1996 and 2006 making Atlanta one of the fastest growing Jewish populations.

Most come to Atlanta because of the business and educational
advantages. There is a very active American-Israeli Chamber of
Commerce that serves 500 members in the SE United States.
 The Atlanta area is now considered one of the top 5 centers in North
America for Israeli company activity with over 45 Israeli companies
establishing their US or regional headquarters. Atlanta is also home
to an Israeli Consulate.

Atlanta has become a hot location for real estate investment.  Atlanta has consistently been attractive to businesses for the reasons above and these are attractive reasons for real estate investors.  The focus on Atlanta has heated up because Atlanta real estate offers superior returns to investors due to the current highly distressed pricing. Unlike many metro markets, Atlanta has no natural barriers or boarders to growth.  There is no ocean, lake, mountain range, or international boundary that restricts growth.

That helped moderate prices.  Atlanta added one million new residents between 1980 to 1990, another million between 1990 to 2000 and a million more residents between 2000 to 2007.  With this rapid growth, housing prices remained moderate and did not spike to the same degree as markets like Florida, California, New York and Nevada. Atlanta’s bubble was not in pricing but in construction.

In the price bubble markets despite dramatic declines, prices remain above their early 2000 price levels.  Atlanta’s prices in most markets are below 1998 levels and our clients are frequently purchasing older properties those built in the 1980s below the early 1980 sale prices. This is unprecedented, unbelievable, truly a once in a life time opportunity. As businesses began shedding jobs, many of these last hired people were the first fired, and many of these people purchased new homes in that 2002-2006 period.  There was a 50 month supply of
new homes when job growth stopped in Atlanta in 2008.  These homes can be purchased at 60-70 per cent off their early to mid-2000 prices. Approximately 50% of their replacement costs.

 It is not unusual for an investor to buy a home in an attractive
neighborhood 10-15 miles from the central business district in the
40’s that sold in the 150’s in the mid 2000’s.  This home can be
renovated to like new condition for under $15000 and rented for an
average of 1000 per month.
This results in a 8-11% net cash on cash return and the potential for
100% or more appreciation when markets recover. Many ask why?  One pillar of the location economy, Atlanta’s large corporations shed jobs quickly in 2007/2008 they have been slow to rehire.  Construction
historically was a large sector of the local economy collapsed from a peak of nearly 80000 new residential units built to a low near  6000 in 2010.  From 1990  to 2007 Atlanta was either #1 or #2  in housing starts.
Building and construction which accounted for 15% of the market
dropped to under 5% with a rippling effect throughout the economy.  A third pillar of the local economy, small business typically obtained funds to start and expand their businesses by borrowing against their homes.  With dramatic price declines, and highly restrictive lending criteria, this source of funding for small business growth disappeared.  The result, Atlanta has experienced higher than the national unemployment for 50 plus months.

 Housing prices have declined further and faster than other markets,
and created an unprecedented opportunity for value investors.
Georgia is a title state which allows lenders to foreclose quickly
without having to take the borrower to Court.  Georgia has typically
been in the top 5 in foreclosure activity.  The issues of Robo signing
and having to prove the borrower is in default and the lender is
entitled to foreclose in court is not required, simply providing a 30
day notice of default and advertising the sale at the court house
steps for 4 consecutive weeks is all that is needed for a lender to
foreclose.  Metro wide, 35% of homes are under water.  Looking in
those newer communities Built in the 2000-2008 period it’s more like 90%+.

The only sales are REOs and Short Sales.  Although there should be a line around the block to buy these homes, many have been vandalized and require paint, carpet, appliances and HVAC making them unattractive to the typical home owner.  Lenders are reluctant to lend on properties below $50000, or needing renovation, limiting to pool of potential buyers to cash investors.  Not know as big spenders.  For those investors who understand the underlying value of the Atlanta Market, and the reality that buying at 50% or less of the replacement cost will result in a 100% gain stand to make huge profits. In many markets prices have bottomed and started up.

This was especially true in the March to May period.  Warren Buffet says real estate is the best investment out there and if he could buy 100000 homes he would.    In that period employment improved, it looked like a European debt deal was a reality.  Our investors were often out bid at 10-20% above list price.  Growing concerns have erased much of that premium and we are successfully purchasing at very attractive prices we experienced in the 2009 to early 2012 period. Rents have risen and remained stable.  A number of statistical providers indicate Atlanta offers the best investment returns in the country when looking at purchase price to rental rate.

 This has caused a boom in the Atlanta apartment market with prices increasing 20% plus, cap rates on the most desirable properties have fallen below 4% going in, with the hope of rental increases increasing yields. Apartment investors have expressed confidence in Atlanta’s growth,
there were 1725 units started in 2010, 4100 units started in 2011 and multi-family data provider The Reid Report is predicting over 10000 new starts for 2102.