Athens, GA Real Estate: East Side Value

Athens is a great community that is driven by our wonderful university.  As I have mentioned before, the university brings many different people to Athens which helps create a unique population here in town.  Even though Athens is geographically small there are many different areas one can choose to live.  Each one of these areas has its own advantages that may or may not appeal to different people.  But the east side of Athens is an area of town that is often undervalued and under appreciated.  And that can provide buyers in Athens an opportunity.  We all know that the real estate market is recovering.  In some areas it has fully recovered and other areas aren’t quite there but are progressing.  Here in Athens, you hear a lot about 5 Points, Normaltown, and Oconee County.  And we just don’t hear as much about the east side, but that doesn’t mean it is without value.  In fact, the east side offers a lot of value and may offer more as time goes on.  I am not referring to value with regards to its worth or price.  But value in terms of what you get for what you pay.  So this week let’s take a look at the growth and value on the eastside of Athens.

University Heights Entrance

Athens’ east side of town is a fairly large area, but in general it begins once you cross the North Oconee River heading east.  To the north, that begins on Oconee Street just past downtown, and to the south it begins where College Station road and The Loop intersect.  The east side of town is primarily comprised of residential neighborhoods. For example, University Heights, Green Acres, Cedar Creek, and Falling Shoals just to name a few.  However, the east side like most of Athens has plenty of student areas as well.  The student housing areas are concentrated on Barnett Shoals between Lexington road and Gaines School, yet those are not the only student housing options.  Nevertheless, the majority of east Athens is comprised of residential neighborhoods.

Vet School on College Station

You don’t have to be a real estate agent to know that real estate seems to be more affordable on the east side of town. Over the years, that has generally been the case and there are reasons for the difference in price.  One main reason maybe that Atlanta is located to the west of Athens.  It is only natural that Athens would see more growth towards Atlanta than Augusta over the last 40 or 50 years.  When I was in school the eastside had a lot less to offer than it does now. First of all, there were less amenities and fewer places to eat,  but now the east side has two great grocery stores, several restaurants, and even a few places to grab a drink.  These are all good things, but the biggest thing to happen on the east side of town has come very recently. And that is the opening of UGA’s new Veterinary Medical Center.  Better amenities and the new vet school serve as two good examples of where the east side can offer convenience and good location.  But what are the real estate costs?

In other areas of town, buyers often have to pay well over $250,000 just to get a house in need of work with no upgrades.  On the eastside of town, buyers can pay much less and receive more.  Falling Shoals serves as a good example of an east side value.  Falling Shoals is a swim/tennis neighborhood with great amenities located about 10 mins from UGA.

Falling Shoals Tennis Court
Falling Shoals Tennis Court

That is much closer than many west side locations and Oconee neighborhoods.  But the price tag is much lower.  In Falling Shoals, resale homes with over 2,000 sq. ft. sell around $230k, and there are still a few new homes available that can be purchased around $250k.  The price per square foot makes Falling Shoals a real value for many home buyers and families.  A similar value is offered in some of the older neighborhoods as well.  For instance, Green Acres and Cedar Creek are located closer in and still offer a good value per square foot. In Green Acres, a large house on a basement would probably sell close to $170,000.  Meanwhile, a smaller brick house with no upgrades might be purchased below $130,000.  At today’s interest rates, these prices make home ownership available to many more buyers.  In my opinion, there may be real opportunity in other areas as well.

Vet School on College Station

As I mentioned before, UGA recently opened its new Veterinary Medical Center on the corner of Barnett Shoals and College Station.  This is a good thing for the whole area and UGA.  But its impact on the east side could be fantastic.  Essentially, the university now extends to the end of College Station road making all of the east side more convenient for vet students and professors.  More importantly, University Heights is now situated between the vet school and UGA’s main campus.  In case you didn’t know, University Heights is the neighborhood located off of College Station road between Research Drive and the vet school.  I don’t have a crystal ball, but the vet school could increase prices in University Heights over time.  The homes are older and many are rentals.  But the location is close to campus, 5 points, and not far from downtown.  And of course, it is right next to the vet school.  Given that prices in University Heights range from $100k to $150k it provides more value and opportunity than many other areas in Athens.  Granted, most east side homes will likely never have a price tag as high as some other locations. But that doesn’t mean it is a bad investment.  In the end, it may offer the most bang for your buck in all of Athens.

If you have any questions or real estate needs, please don’t hesitate to contact me or visit my real estate brokerage firm, 5 Market Realty.

Athens, GA Real Estate Value: 5 Points

The last 5 years have been a little crazy for real estate all over the country. And Athens, GA serves a prime example of what was good and what was bad.  I am sure you can remember what it was like 5 years ago.   Our economy was in full recession which was created by the mortgage crisis, and the real estate industry was suffering.  We experienced a record amount of foreclosures along with a sharp drop in real estate values across the country. What-is-my-home-worth-mascot I think it was late 2010 or early 2011 that we finally saw the bottom.  After that the only direction to go was up and boy have things gone up.  Here in Athens, we have seen many areas of the market make a full recovery.  Granted, not every area of town is all the way back but the recovery is evident.  So what areas have recovered the most?  If you go by the numbers the strongest real estate values are in three primary areas:  5 Points, Normaltown, and Oconee County.  Oconee is a large county and not every location is strong but in general the area is doing very well. I plan to discuss the values and current trends for each area or market in Athens over several blog posts.  But since our office is located in 5 Points it makes sense to start there.


5 Points is the general area that runs from UGA’s south campus and ends around Baxter street and the Alps road area.    It is an older area of town and is considered to be a very central location.  Subsequently, it has always been a desirable part of town.  You would have to go back a long ways to say otherwise.  In 2010, 5 Points values were much lower than today.  Nevertheless, when compared with other areas of town it was still one of the strongest.  But lately there has been a huge comeback and increase in values. 5 Points Clockeditededited  This is of course due to the location and traditional look of the area.  During the recession, values were topping out around $150 PSF, but when the recovery began 5 points was positioned to boom.  Have you ever heard to buy low and sell high?  Well 5 Points real estate serves as a great example, and many home buyers were able to take advantage of a depressed market from 2009 to 2012.  As of today, some values in 5 Points are over $200 PSF.  For instance, if a house is fully renovated or up to date it may easily achieve a value of $200 PSF or greater.  On the other hand, if a house is small or drastically out of date the value can be much less.  With respect to residential lots, the dirt in 5 points is worth more than any other dirt in town.  So what caused this value or boom?

Well there are many reasons.  First of all, 5 Points is right next to UGA, and the university is a desirable area of town where many people work.  Convenience could be considered another driving factor.  Over the last several years, we have seen more and more people want to live closer in to town.  Nowadays more people want to walk or bike to places and 5 Points can provide that option. In general, the overall driving force behind 5 Points is location which should be no surprise.  But every area has at least one drawback.  In 5 points, the drawback could be seen as the age or size of the homes.  Many people love older homes and their charm so to speak.  I am definitely one of those people.  I enjoy the unique characteristics of older homes and neighborhoods.  I enjoy the feel of a home that has been lived in or has a history.  Unfortunately, many older homes do not have much space.  Many of us have grown accustomed to large kitchens and open floor plans along with expansive closet space.  But older homes were just not designed in this manner and this can obviously be a drawback to many buyers.  Nevertheless, people are working hard to make houses up to date in 5 points.

You are probably aware that numerous renovations have taken place in 5 Points and more are underway.  Depending on your taste, you may or may not like this new trend.  In my opinion, some renovations look fantastic and others could have been done better.  I don’t want to get into a discussion about which renovations are good and which are not.  But the fact is that every home needs to be kept up or renovated from time to time.  Overall, this is a good thing for the 5 Points area.  It also proves the rule that people will sacrifice and work to be in a good location.  In summation, the 5 Points area has proven to be a desirable area in good times and bad.  It remains a great location to purchase a home or invest in real estate and should be for years to come.

If you have any questions or real estate needs, please don’t hesitate to contact me or visit my real estate brokerage firm, 5 Market Realty.

Investment Real Estate 102: What is a Cap Rate?

Previously, I posted a blog that addressed investment real estate for beginners.  In general, I wanted to outline some key things to consider when purchasing real estate as an investment.  Now I would I like to delve a little more into determining a value for investment property.  Value and price are obviously important components of buying an investment property, and there are many tools that people can use to find a value.  In general, I do not adhere to one set rule for finding value.  I have found that each property is different and there are numerous factors you need to consider. download  But many investors use certain methods to evaluate properties.  For instance, gross rent multipliers, internal rate of return, and cap rates.  All three are useful ways to compare and value investments. But the most commonly used is probably the “cap rate” or “capitalization rate”.  You may or may not have heard people use this term.  It can be confusing and misleading to buyers or new investors.  I am not a text book writer, but I will try to explain or clarify the term and its use in real estate.

Generally, speaking the capitalization rate is a valuation used to compare real estate investments.  A cap rate seeks to find a ratio in the relationship between a property’s income and its purchase price or value.  To find the cap rate, you need to determine a property’s “net operating income” or NOI.  Net operating income is all the income for a property minus the operating costs.  For the purposes of a rental property, the operating costs include: property taxes, insurance, hoa costs, management fees, and other maintenance.  When calculating NOI they DO NOT INCLUDE:  debt, depreciation, income tax, and improvements.  For example, if a property makes $18,000 a year after property taxes, insurance, etc. than the Net Operating Income (NOI) is $18,000.  Please remember this DOES NOT INCLUDE a mortgage payment.  Once you know the NOI you can find a cap rate.  Below is a simple formula used to calculate a cap rate:

Net Operating Income(yearly) / Price = Cap Rate


Cap Rate X Price = Net Operating Income

It is a fairly simple formula. But you may have noticed something about this formula.  Where do you get a number for price? CAP-Rate-balance Without price you cannot determine a cap rate.  So essentially, you can make a cap rate whatever you want.  One could simply make the price as high or as low as they want.  What you need to understand is that the “cap rate” is just a way to express the relationship between the price and income.  It is not ideal for finding value but better used to compare properties.  Sellers offer investments at a price with a cap rate in mind but the real price is not determined until it is sold.  In general, a higher cap rate means a lower value, but that could be a sign of a good buy depending on the market.  You need to remember that cap rates are specific to the area.  If cap rates are 7% in your area, and you find something at 9% than you may have found a good deal.  But if cap rates are 11% in an area, and you find something at 9% than it may or may not be a good deal.  Be sure to understand all the circumstances surrounding a property.  This is another reason why it is helpful to find a professional to help you because knowing the local market is crucial when looking at cap rates.

I never like to talk over a client’s head, and cap rates seldom come up when I am working with someone to buy student rental property in Athens, GA.  But it is a tool for many investors, and it never hurts any investor large or small to understand value methods.  In the end, I am not a huge fan of cap rates.  Expenses can vary year to year especially for large items and the interest rate on the mortgage is not considered.  There are many types of investment properties.  Hotels, warehouses, and commercial office buildings just to name a few. And cap rates are often be more applicable to these larger income properties.  They can be useful, but it is not necessary for new investors to get too caught up with cap rates when buying individual rental properties.

If you have any questions or real estate needs, please don’t hesitate to contact me or visit my real estate brokerage firm, 5 Market Realty.

Home Buying Process Part 4:  Offer and Negotiation

Making an offer and negotiating a contract are crucial parts of the home buying process.  This is not an area where you want to make a mistake.  Which is why it is so important to have a good agent, and lender working with you before you make an offer. home-sale-negotiation-600  The process of making an offer is fairly easy thanks to uniform contracts.  Here in the state of Georgia, almost all realtors utilize the Georgia Association of Realtors Contract.   It changes a little from year to year but the core components stay the same.  This is good because it helps create uniform practices throughout the state.  Nevertheless, other areas of real estate do not always use uniform contracts.  For example, a condo conversion or a commercial purchase often have special contracts that are unique to the agreement or property.  But that is rarely the case with residential homes.  Your agent will walk you through the contract when you are preparing an offer. Most things are fairly straightforward.  Honestly, the current GAR contract is more of a buyer option than a contract because there are so many contingencies in favor of the buyer.  Regardless, when I work with buyers in any transaction I want them to understand three things:

  • Negotiation tactics vary depending on the property and market conditions
  • An offer price needs to be realistic
  • Time frames are crucial and must be understood

When it comes to negotiating everyone claims to be an expert.  I have worked in real estate for over 10 years, and I have seen all kinds of tactics.   Many of us are naturally competitive, and that seems to come out in people when they negotiate for property.  Someone wants to win.  In reality, both sides should win.  A seller wants to sell and a buyer wants buy. WIn win Puzzle Depending on market conditions, a buyer may get a great deal and other times a seller may get one.  But a good agent can make sure you buy or sell at a price that is either fair or a good deal.   The property and market conditions should influence your offer price.  For example, if the market is slow, and the house has been sitting there may be an opportunity to purchase well below asking price.  Conversely, if the property is well located and highly desirable you need to bring a strong offer.  The type of property influences negotiations as well.  People become emotional about their home where as an investment or commercial property is mainly a business decision.  There is no rule of thumb or secret to negotiation.  It will depend on the situation, the market, and the circumstances around the property.  Try to find a good deal, but also be prepared to pay a fair price for what you want.  A good deal is always preferable, but there is nothing wrong with paying a fair price either.  Sometimes there just aren’t many great deals available.

When it comes to price all the same rules apply.  There is no set rule for the initial offer price.  That being said, most of the time you don’t want to make your best offer in the beginning.  But from time to time you will need too.How-to-Negotiate-the-Best-Price-when-Buying-a-Home-612x281  The last thing you should do is go around making low ball offers to everyone.  First of all, it wastes people’s time which is rude.  And lastly, it often makes you look stupid instead of smart.  Don’t get me wrong, you can make a low offer but do it within reason and when it makes it sense.  Most importantly, understand that it is ok to pay fair market value.  In the end, a good realtor will make sure you either get a fair price or a good deal.

Lastly, you need to understand the time frames of the contract and make sure they are realistic and reasonable.   As a buyer, you will have a due diligence period and a financing contingency.   A due diligence period should be two weeks at the most when buying in the Athens area.  timeThis is the time frame for you to get a licensed inspector into the property and your loan process underway.  14 days is more than enough time to get this accomplished for an existing home.  New construction purchases can be a little different, but 14 days is plenty of time for an existing home purchase.  The loan approval and appraisal can take a little bit longer.  In most cases, 25 days is enough but this can be pushed back a little if necessary.  The appraisal should be done within this timeframe.  Ideally, the appraisal price is equal to or greater than the contract price.  If not, you will have the option to leave the contract, reduce the price, or pay the difference.  It should be noted that most appraisals are usually within a few thousand of the agreed price. Basically, don’t expect the appraisal to be $30,000 over your contract price.  It can happen but it is rare.

In the end, this part of process is very subjective.  The market conditions and circumstances around the property should always be considered when making an offer.  For instance, when a property is in foreclosure you may be able to take advantage.  But beware because many foreclosures are competitive, and you may need to offer list price or better to acquire the property.  One of the biggest things you need to have with your realtor is trust.  You may need to rely heavily on them when it comes to making an offer.  So it is important to find someone that you can trust that is professional.  There are bad people in every profession.  Bad lawyers, bad doctors, bad chefs, and bad hair stylist.  Real estate is no different so find a good person to help you.

If you have any questions or real estate needs, please don’t hesitate to contact me or visit my real estate brokerage firm, 5 Market Realty.

Investment Real Estate 101

Investing in real estate is an absolute must for any person or family.  At the bare minimum, you need to own your home and not rent.  There are too many advantages to owning real estate, and if you don’t take advantage it can hurt you in the long run.  People invest in real estate for many reasons.  Most buyers purchase real estate to build equity and appreciation in their personal home. Others take it a step further and buy real estate solely as an investment and not for any personal use. 101 Real estate investment is often a good idea and a necessary part of a balanced portfolio, but new investors need education on real estate as an investment.  For example, how does one determine a good price or fair value?  There are many ways that investors determine a property’s investment value.  For example, gross rent multipliers, cap rates, and the internal rate of return.  These are all good barometers but require more explanation and may be a little advanced for “Investment 101”.   For now, I only want to discuss the basics to consider when getting starting in real estate investment.

When most people think of an investment they generally think of the stock market, a 401k, or an IRA.  All three can be good tools for investment, but what most people don’t realize is that real estate has been one of the best performing investments throughout history.  Real-Estate-InvestorsTo put it simply, it is a real asset and they aren’t making any more of it.  Meanwhile, the population continues to grow and people continue to live longer.  And all of those people need places to live and work.  There are many areas where you can invest when it comes to real estate.  For example, rental housing, commercial buildings, or land just to name a few.  But one of the best areas to get started is residential rental properties.  Athens, GA is a great college town with a major university.  Therefore, residential and multi-family rentals represent a large part of the investment opportunities in the area.  Having a large state university in Athens creates a strong rental market.  Because of UGA, there is a steady supply of people that need short term housing which makes Athens an ideal place to purchase investment property.  So what do you need to know when it comes to investing in rental properties?  There are numerous factors to consider when investing, but the three most important are location, price, and time frame.

Everyone should understand that location is important in real estate, but it is especially true when purchasing investment property.  The location of a property is directly correlated to its desirability and ultimately the rental income.   If a property is well located it will have less vacancy and more resilient rates.  For example, if you are buying a property to lease to college students make sure it is located in an area desirable to college students.  Conversely, if you want to rent to families than you may want to find a property in a good school district.  It is also important to understand that a well maintained property tends to attract better tenants than a poorly maintained one.  The next thing to consider is the price.  Price is important when it comes to buying anything, but an investor really needs to understand how the price of an investment property relates to cash flow.  Investors use many methods to value investment property.  An old rule of thumb is to take monthly rent and multiply it by 100 or 110 to determine a value.  It is a very basic formula and doesn’t work every time.  But it is a good place to start for a new investor.   Basically, you need to make sure that the investment is not going to lose money.  Be sure to take into account all the expenses along with the mortgage payment.  Many times new investors forget about maintenance or other costs outside of  property taxes and the mortgage.  Lastly, you should have a plan or time frame in mind for the investment.  For example, do you want to pay off the property?  Do you want to hold and sell later, or take advantage of depreciation and cash flow for a number of years?  There are numerous reasons people invest in real estate, but be sure you understand your goal and purpose of investing.

Yes, there are many factors to consider when investing in real estate, but it should not be viewed as a scary endeavor.  It seems most people don’t invest because they worry about an unexpected cost or the maintenance of a property.  This is somewhat understandable because maintenance can be a costly item from time to time.  Nevertheless, if a property is well located, and purchased right with a time frame in mind the advantages will greatly out weigh any risks.

If you have any questions or real estate needs, please don’t hesitate to contact me or visit my real estate brokerage firm, 5 Market Realty.

Location, Location, Location!

Most everyone has heard that the three most important things when it comes to real estate are location, location, location. In reality it is true, true, true. We all understand that real estate in Beverly Hills or Manhattan is generally worth athensdtmore than real estate in Nebraska. But this principle usually applies to even the smallest cities or towns. In the Athens area location and school district directly affect the value and desirability of a residential property. For example, the two strongest residential markets in Athens-Clarke County are the 5 Points Area and the Normaltown/Boulevard Area. Both of these neighborhoods are close to many in town amenities, the university, and are located in strong elementary school zones. In 5 Points we are seeing values above $200 per sq. foot and in Normaltown values are around $170 per sq foot in some areas. There are many factors that can contribute to value but most can be traced back to location

For example, the Watkinsville area has some of the best schools in the state and it is in close proximity to Athens, GA. This creates a strong residential market in Oconee County and makes it desirable. The land can be purchased cheaper and therefore buyers can see a value to living in that area because they can have more house for less money. So if the schools are strong and the location is good why can someone buy more house for less money? Because land is more abundant in that area. The availability of land is directly correlated to the location. There is just not as much land to build or own in Clarke County as there is in Oconee. For example, a condo in the heart of Downtown Athens will be worth more than one located on Epps Bridge because in the downtown location land is scarce. Basically, it comes down to supply and demand. With little supply demand can grow.

Real Estate values are returning in our area and confidence is up with consumers. It is not likely that the market will crash like it did in 2008 but the reality is that trees do not grow to the sky. At some point, the local market will have to slow. It doesn’t mean it will fall but it will not grow to infinity. The best thing to do is to be aware of all the factors in location when buying a property. Make sure the location has a value and will remain valuable in good times and bad. Please understand that popular interior features are always changing when it comes to real estate. There is no way to know what will be the hot new look of a kitchen in 15 years but one can make a reasonable prediction on what locations will still have a high value. In closing, a well located property will sell in a good market or a bad market. So always make location the TOP priority when purchasing a property. Do not get too wrapped up in granite, tile, or other interior features interior. Remember location always wins.

If you have any questions or real estate needs, please don’t hesitate to contact me or visit my real estate brokerage firm, 5 Market Realty.