As a real estate investor looking to invest in Atlanta investment properties, you might wonder whether to use cash on cash return or Excel.
Purchasing a property is one of the biggest expenses and one of the most important decisions you’ll make in your life. As such, you want to be in a position to ascertain whether the investment property makes financial sense or not.
Table of Contents
- Is the Atlanta Real Estate Market a Great Place to Invest in 2023?
- Cash on Cash Return Calculator or Excel: Which Is Better for Analyzing Atlanta Real Estate Market?
- How to Find the Best Investment Properties in Atlanta
- The Top 5 Neighborhoods in Atlanta for Long Term Rentals
The best way to do it is to assess the property’s return on investment before making an offer and placing the down payment. One of the best metrics to measure a property’s potential return on investment is cash on cash return.
In today’s blog post, we’ll be looking at cash on cash calculator vs Excel when computing the said return on investment metric to analyze real estate properties in the Atlanta housing market. We’ll also look at how Mashvisor can help you choose the best rental property investments in Atlanta.
But first, should you invest in real estate in Atlanta in the first place? What do Atlanta rental returns data say?
Is the Atlanta Real Estate Market a Great Place to Invest in 2023?
The Atlanta real estate market seems to be recovering smoothly after a tumultuous two years. Before we can take an in-depth look at the housing market, let’s see what the Atlanta rental returns data from Mashvisor says about the market.
Keep in mind that the data presented here is from our latest market report generated for February 2023.
- Median Property Price: $559,104
- Average Price per Square Foot: $1,760
- Days on Market: 80
- Number of Long Term Rental Listings: 2,613
- Monthly Long Term Rental Income: $2,246
- Long Term Rental Cash on Cash Return: 3.11%
- Long Term Rental Cap Rate: 3.17%
- Price to Rent Ratio: 21
- Number of Short Term Rental Listings: 6,285
- Monthly Short Term Rental Income: $1,629
- Short Term Rental Cash on Cash Return: 0.06%
- Short Term Rental Cap Rate: 0.06%
- Short Term Rental Daily Rate: $169
- Short Term Rental Occupancy Rate: 35%
- Walk Score: 43
Atlanta has always been a real estate investor-favorite market, especially for short term rental properties. But will short term rentals remain profitable for investors in 2023?
Short Term Rentals vs Long Term Rentals Atlanta
According to Mashvisor’s Atlanta rental returns data, the short term rental occupancy rate in 2019 was 46%. The rate went up to 48% in 2020, then fell to 43% in December 2021. As of December 2022, it was only 37%. From the latest data, we can see that the rate‘s declined further to 35%.
The number of short term rentals in Atlanta rose to 6,285 in February 2023 from 4,186 during the same period in the previous year. It stiffens competition and shows that the market is already congested.
However, it also shows that many investors are banking on the recovering economy to boost tourism rates. Many are uploading new listings daily or reactivating dormant ones.
As for long term rental properties in Atlanta, the latest US data and statistics show that at least 50% of the properties in Atlanta have been renter-occupied since 2015. Also, rent prices from March to May 2020 fell by 2.2%, mainly due to the rise in housing prices.
But by June 2021, the average rent were back to pre-pandemic levels, continuing to surpass them ever since. Mashvisor’s Atlanta rental returns data also shows that the monthly rental income from a long term rental property is $2,246.
So, should you invest in long term or Airbnb Atlanta?
To answer the question, we need to look at the return on investment statistics for each rental strategy. The cash on cash return for long term rentals is 3.11%, while that of short term rentals is 0.06%. From the said data, it’s clear that the long term rental strategy offers a higher return on investment in Atlanta.
Besides, the monthly rental income for long term rental strategy is $2,246, while that for Airbnb properties in Atlanta is $1,629.
Should I Invest in the Atlanta Housing Market in 2023?
After looking at the data above, one may wonder whether investing in the Atlanta real estate market is indeed worth it in 2023.
Here are some pros and cons for you to consider:
Properties Will Continue to Appreciate
The Atlanta housing market is known for being one of the best markets for long term property investments. It is due to the local market’s ability to maintain a consistent property appreciation rate over the years.
According to Norada real estate, property prices in Atlanta appreciated by 142.22% over the past decade. The annual property appreciation rate is an average of 9.25%. It puts Atlanta at 10% in the US in property appreciation.
At Mashvisor, we predict that property prices with continue to appreciate in 2023, though at a slower rate than last year.
Strong Demand for Rental Properties
There’s a low inventory of property listings for sale in the Atlanta housing market. Add to that the current inflation, high property prices, and astronomical mortgage rates. You have a perfect recipe for strong rental demand.
Due to the current market conditions, not many residents can afford to buy properties in Atlanta. People moving into Atlanta may find it more economical to rent than buy.
Additionally, many companies that allowed their employees to work remotely during the pandemic may be switching back to full-time office work. Since many workers had already moved to the suburbs, they may be moving back to stay near their workplaces.
It is a good sign for investors with rental properties in Atlanta. But it also presents one problem.
Affordability Issues
In January 2023, the median property price in Atlanta was $569,488, which was 20% higher than the national median property price of $472,156. In September 2022, the housing demand was down by 23% compared to the previous year.
There’s only one explanation for the above trend: rising property prices and mortgage rates. It means many potential investors will be priced out of the market.
Since we don’t want you to miss out on great investment opportunities in the Atlanta real estate market, here are some tips to help you invest amid high property prices and mortgage rates:
- Save 20% downpayment: Prepare at least 20% of the property price in cash to pay as the down payment. Investors with less than 20% can still access a mortgage but will need to obtain Private Mortgage Insurance (PMI). The additional insurance may further increase your mortgage costs and fees.
- Choose a 15-year fixed-rate conventional mortgage: While there are many mortgage providers with various mortgage products out there, not all are good for you. For example, a 30-year mortgage will tie you down to mortgage payments for a long period, and you may end up paying exorbitant fees. Choose a 15-year fixed-rate mortgage from a conventional lender.
- Follow the 25% rule: The 25% rule states that your monthly mortgage payments shouldn’t be more than 25% of your total monthly income. Calculate all payments, such as the mortgage principal, interest, property taxes, home insurance, and HOA fees. Ensure the total costs stay below 25% of your income.
The idea here is to avoid obtaining a property or signing up for a mortgage that you can’t afford. Don’t make bad financial decisions in the name of investing.
Related: 3 Best Investment Property Lenders for 2023
Cash on Cash Return Calculator or Excel: Which Is Better for Analyzing Atlanta Real Estate Market?
For starters, cash on cash return is a return on investment metric that allows investors to estimate returns based on the initial amount invested on the property. In other terms, it’s the ratio of yearly pre-tax cash flow to the total cash invested into the property.
Unlike cap rate, cash on cash return accounts for the mode of financing used to get the property.
Here’s the cash on cash return formula:
Cash on Cash Return = Annual Pre-Tax Cash Flow (Annual Net Operating Income – Mortgage Costs) / Total Cash Invested (Down Payment + Closing Costs + Repairs)
Understanding the cash on cash return metric isn’t an uphill task. Basically, the higher the cash on cash return, the more profitable the property is. High cash on cash return means that you earn more for each dollar invested.
But high cash on cash return also means that there’s a greater level of risk involved.
Cash on Cash Return in Excel
The cash on cash return formula makes it easy for investors to manually calculate a property’s ROI. You can simply enter the formula on an Excel spreadsheet and use your DIY cash on cash return calculator. The results will help you quickly know whether investing in a certain property makes financial sense.
Undeniably, an Excel spreadsheet makes an investor’s work way easier. It can provide you with ROI results quickly.
But there’s a downside to it. Spreadsheets can waste a lot of time. Remember, you still need to gather all the property details and enter the data individually on the spreadsheet. The entire process will be done manually.
Firstly, gathering data manually doesn’t give you an assurance of collecting reliable, up-to-date, and accurate data. Some sources of your data may provide past or unreliable analytics.
For example, if you want Atlanta Airbnb properties data, some sources don’t guarantee that their data is from active short term rental hosts. Some bits of the Atlanta rental returns data may be from former hosts who tried a hand at short term rentals and quit.
Secondly, gathering all the data you need involves visiting multiple sites and platforms. It can mean taking days or weeks before you get all the data to calculate the cash on cash return.
Thirdly, entering your data manually into the spreadsheet makes it prone to errors. A small error, such as misplacing a decimal point, will make your entire Atlanta rental returns inaccurate.
It doesn’t mean that doing things the traditional way is ineffective. Some investors and realtors prefer using conventional means. But you’ll use a lot of effort and energy, which won’t be reliable if you need to invest soon.
That said, is there a better alternative?
Cash on Cash Return Calculator
Technology has made our lives a lot easier. And it applies to calculating the cash on cash return as well.
A cash on cash return calculator is an online tool that investors use to compute the potential cash on cash return of a certain investment property. The tool uses real estate data from legitimate data sources to provide you with accurate Atlanta rental returns estimates.
A cash on cash return calculator is the fastest and most reliable way to establish whether a potential investment property is a good investment.
Many real estate investors today choose a cash on cash return calculator to determine a property’s profitability for some reasons. Besides the accurate data and results, you also benefit from the speed in delivering results and ease of use.
There are many cash on cash return calculators available online. But not all of them are the same. For the free ones, you’ll still need to enter the data manually, which ends up beating its purpose.
While you’re spoilt for choice, you need to prioritize finding a calculator that’s thorough with how it sources its data and how it presents it. You want one that provides you with crucial real estate data, such as Atlanta rental returns, one-time and recurring expenses, vacancy rates, and mortgage payments.
What’s the Best Cash on Cash Return Calculator?
Mashvisor offers the best cash on cash return calculator today. The tool uses predictive analytics and big data to provide you with the most reliable analytics for any property in the US housing market.
As mentioned earlier, manual spreadsheets will take you weeks to come up with the desired results. Besides, manual systems run the risk of human errors.
But Mashvisor does all the legwork for you. Our cash on cash return calculator is a variant of the rental property calculator, which provides all crucial property analytics in a matter of minutes.
Our data is derived from reliable sources, such as MLS, Airbnb, Redfin, and other publicly available sources. The tool then uses machine-learning algorithms and predictive analytics to make accurate cash on cash return predictions.
Mashvisor’s Cash on Cash Return Calculator
But how does our cash on cash return calculator really calculate the cash on cash return? Let’s break down the process into the following three steps:
1. Calculates Rental Property Expenses
Finding rental expenses is important when calculating the cash on cash return. Gathering the data from landlords and short term rental hosts in your local market can be an uphill task. That’s why our cash on cash calculator first estimates both startup and monthly rental property expenses for you.
The startup costs are the costs you need to pay when buying the property. They include:
- Property inspection
- Closing costs
- Repair costs
- Furniture and appliances
On the other hand, monthly costs are the recurrent costs you must settle every month. They include:
- Property management fees
- Utilities
- Insurance
- Taxes
- HOA fees
- Marketing
- Maintenance and cleaning fees
While our tool offers estimates for the above expenses based on the data collected, your research may sometimes tell you a certain estimate is different. That’s why our tool is interactive. You can adjust different figures on the calculator and see how the changes will affect the Atlanta rental returns estimates.
2. Predicts Rental Income and Occupancy Rate
The calculator then provides estimates for monthly Atlanta rental earnings and occupancy rate. The best thing about our tool is that you get estimates for both long term and short rental strategies.
It is extremely helpful, especially for investors who may still be unsure about what strategy to pursue. You can run a side-by-side comparison and pick the strategy that aligns with your financial and investment goals.
You also get both long term and short term occupancy rates in your desired market.
3. Calculates the Cash on Cash Return
At this point, the calculator already provides every metric needed to execute the cash on cash return formula. You’ll also get the estimated cash flow on top of the cash on cash return. You’ll also get the cash on cash returns for both long term and short term rental strategies to allow you to carry out a quick comparison.
Related: Mashvisor: The Ultimate Cash on Cash Return Calculator in 2023
How to Find the Best Investment Properties in Atlanta
At this point, you might‘ve already made up your mind to invest in rental properties in the Atlanta real estate market. But how do you find the most profitable investment properties?
Here’s a step-by-step process:
Conduct an In-Depth Neighborhood Analysis
The first step to finding a profitable investment property is conducting a comprehensive neighborhood analysis. While you might’ve already established that Atlanta is a great investment location, you need to narrow down your analysis to specific neighborhoods.
A neighborhood analysis is important since different neighborhoods in the same city offer different ROIs. Besides, a neighborhood suitable for short term rentals may not necessarily be the best for long term rentals.
Many investors may be tempted to simply put their money in a neighborhood termed a “hot” market. But finding data to support your findings is your best bet. Data speaks volumes.
Finding data for a comprehensive neighborhood analysis isn’t as hard as you might think. All you need is to use a heatmap analysis tool. The tool is extremely important in 2023, when many markets are either going to cool off or shift from being a “sellers’ market” to becoming neutral.
A real estate heatmap tool will display different results for neighborhoods, depending on your search criteria. You can set up your search criteria using the following filters:
- Listing price
- Rental income
- Cash on cash return
- Occupancy rate
The heatmap is essential since an investment neighborhood that’s perfect for another investor may not be perfect for you. The tool will show you areas with the best ROI for your investment budget.
If you’re looking to invest in Airbnb properties for sale in Atlanta, the heatmap tool will help you find neighborhoods with the best short term rental cash on cash returns and occupancy rates.
Use Investment Property Search Tools
When searching for profitable Atlanta investment properties, you must ensure you’re using the right online tools. Not all property listing sites are equal. Some online sites come with outdated listings, inaccurate estimates, or incomplete property details.
Mashvisor’s Property Finder is the solution you’re looking for. The tool uses machine-learning algorithms and predictive analytics to display Atlanta properties that match your requirements.
You can set up your search criteria on the Property Finder tool using the following filters:
- Selling price
- Location
- Rental strategy
- Property type
- Number of bedrooms
- Number of bathrooms
The tool then lists properties that match your requirements by order of performance. In short, the most lucrative houses for sale in Atlanta appear first.
Related: How Is Mashvisor’s Property Finder Helping Real Estate Investors?
Find Rental Comps
The third most important step is conducting an in-depth investment property analysis. Remember the rental property calculator tool we mentioned before? This is where it comes in handy.
One of the most important features of conducting an investment property analysis is real estate comps. Real estate comps are comparable properties that are as similar to the subject property as possible.
Your property is most likely to perform as well as the comps. It is why it’s important to find real estate comps data before investing.
Our rental property calculator will provide real estate comps and other important property performance metrics, such as estimated income, expenses, cash flow, cash on cash return, and cap rate.
Want to start using the better alternative to cash on cash return in Excel? Sign up to Mashvisor today and access your 7-day free trial.
The Top 5 Neighborhoods in Atlanta for Long Term Rentals
According to Mashvisor’s February 2023 Atlanta rental returns data, the Atlanta housing market is more suitable for long term rentals.
Let’s look at the top five neighborhoods for the said rentals in Atlanta. The neighborhoods are sorted by order of cash on cash return (from the highest to the lowest).
1. Brockwood
- Median Property Price: $345,343
- Average Price per Square Foot: $333
- Days on Market: 55
- Monthly Long Term Rental Income: $2,452
- Long Term Rental Cash on Cash Return: 5.35%
- Long Term Rental Cap Rate: 5.45%
- Price to Rent Ratio: 12
- Walk Score: 61
2. Vine City
- Median Property Price: $301,751
- Average Price per Square Foot: $221
- Days on Market: 89
- Monthly Long Term Rental Income: $1,922
- Long Term Rental Cash on Cash Return: 5.26%
- Long Term Rental Cap Rate: 5.38%
- Price to Rent Ratio:13
- Walk Score: 58
3. Harris Chiles
- Median Property Price: $236,723
- Average Price per Square Foot: $227
- Days on Market: 69
- Monthly Long Term Rental Income: $1,673
- Long Term Rental Cash on Cash Return: 3.90%
- Long Term Rental Cap Rate: 3.99%
- Price to Rent Ratio: 12
- Walk Score: 66
4. Loring Heights
- Median Property Price: $599,750
- Average Price per Square Foot: $377
- Days on Market: 33
- Monthly Long Term Rental Income: $3,402
- Long Term Rental Cash on Cash Return: 3.84%
- Long Term Rental Cap Rate: 3.87%
- Price to Rent Ratio: 15
- Walk Score: 51
5. Piedmont Heights
- Median Property Price: $543,299
- Average Price per Square Foot: $1,005
- Days on Market: 27
- Monthly Long Term Rental Income: $2,709
- Long Term Rental Cash on Cash Return: 3.20%
- Long Term Rental Cap Rate: 3.25%
- Price to Rent Ratio: 17
- Walk Score: 64
Visit Mashvisor today and start looking for searching for profitable long term rental properties in Atlanta.
Final Thoughts
The Atlanta real estate market has always been an investor favorite. Atlanta rental returns data shows that the market is known for maintaining a good property appreciation rate. It also boasts a strong demand for rental properties.
In 2023, you should be careful due to inflation and high mortgage rates. But with the 25% rule, 20% DP and a good conventional mortgage, you’ll be well on your way to successful investing.
Cash on cash return is one of the most important metrics for potential investors. Cash on cash return in an Excel sheet can be a quick solution since you only need the cash on cash return formula. But it can make the process extremely tedious since you need to manually gather all the data needed. Also, it makes the outcome prone to errors.
The best way to compute Atlanta rental returns is by using a cash on cash return calculator. The tool is easy to use and provides you with reliable, accurate, and up-to-date data and analytics. Besides, you don’t need to collect the data since the tool already does the heavy lifting for you.
Mashvisor provides the best cash on cash return calculator online, plus a variety of many other tools that will help you find lucrative Atlanta houses for sale.
Schedule your demo today and see what Mashvisor’s tools can do for you.