Buying rentals in Georgia can be a wealth builder—or a wallet drainer—depending on how you underwrite and operate. Below are field-tested rules that keep investors out of trouble and in the black. Use them as a checklist before you write your next offer.
Rule 1: Buy the Street, Then the House
You can renovate kitchens; you can’t move a property. Focus on micro-location:
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Daily convenience: 10–15 minutes to groceries, healthcare, and major employers.
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Crime trends: Pull recent reports; talk to neighbors at dusk, not noon.
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Noise + traffic: Avoid major arteries, cut-through streets, or awkward corner lots.
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School proximity (not adjacency): Close enough to benefit, far enough to avoid pickup traffic.
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Supply signals: New permits nearby, infill construction, and refreshed retail are good leading indicators.
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Risk zones: Verify floodplain, wetlands, and soil issues; price in flood insurance if applicable.
Local tip for Georgia: Drive the block at 7:30am and 9:30pm. What you see (and hear) then is the truth.
Rule 2: Underwrite Like a Pro (and Stress-Test It)
Pick simple metrics, calculate them the same way every time, and then stress-test.
Core formulas
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Cap Rate = Net Operating Income (NOI) ÷ Purchase Price
(NOI = Rent – Operating Expenses; excludes loan payments) -
Cash-on-Cash (CoC) = Annual Pre-Tax Cash Flow ÷ Total Cash Invested
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DSCR (for lenders) = NOI ÷ Annual Debt Service (target ≥ 1.20 for comfort)
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1% quick screen = Monthly market rent ≈ ≥1% of all-in basis (purchase + initial repairs + closing). It’s a screen, not a rule of law.
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50% rule (pro forma) = Assume ~50% of rent goes to operating expenses (taxes, insurance, management, maintenance, CapEx, utilities you cover, HOA, admin)—before mortgage.
Fast reality check
Purchase: $150,000. Market rent: $1,600/mo.
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50% OpEx ≈ $800 → NOI ≈ $800/mo or $9,600/yr
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Cap rate ≈ 6.4% ($9,600 ÷ $150,000)
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With 20% down and typical financing, P&I may run ~$750–$800/mo; your cash flow could be a slim $0–$100/mo.
Action: Either improve basis (lower price), improve income (higher rent/additional revenue), or pass.
Stress test: Drop rent 5%, add 5% vacancy, and bump insurance/taxes 10%. If the deal still floats, you’ve got something.
Rule 3: Budget for the Truth (Not the Listing)
Hidden costs sink returns. Price these before you offer:
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Turn/Repair scope: Roof age, HVAC age, water heater, electrical panel, polybutylene/galvanized plumbing, foundation, windows. Sewer scope older lines.
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CapEx reserves: Roof, HVAC, exterior paint, parking/drive—fund it monthly.
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Property taxes & reassessment: Use the post-purchase tax bill estimate, not the seller’s.
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Insurance: Get a quote now (wind/hail deductibles, flood, and liability umbrella).
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HOA/condo: Special assessments? Rental caps? Upcoming capital projects?
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Utilities reality: Who pays what and at what historical usage?
Rule 4: Know Your Exit Before You Enter
Multiple outs = less risk.
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BRRRR: Buy, Rehab, Rent, Refinance, Repeat—only if the after-repair value (ARV) and today’s rates support a strong DSCR on the refi.
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Flip: Use a conservative 70% ARV – repairs – fees formula. Tighten to 65% for heavy rehabs or soft comps.
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Hold long-term: Favor boring, stable cash flow in landlord-friendly pockets.
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Medium/short-term: Check local ordinances and HOA rules first; they change.
Rule 5: Finance to Match the Strategy
The cheapest rate isn’t always the best fit.
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Conventional (owner-occupied house hack): Low rates, low down, best for duplex/tri/quad hacks.
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Conventional non-owner / portfolio: 20–25% down, rate depends on DSCR and credit.
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DSCR loans: Qualify on property income; watch prepayment penalties and reserves.
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Private/hard money: Great for speed and rehabs; model points, interest, and exit timeline.
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HELOCs/partials: Smart for down payments or rehab—but track risk if rates float.
Rule 6: Buy Property Management Before You Need It
Even if you self-manage, build the system:
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Screening standards: Income ≥3x rent, verifiable rental history, credit/background checks, pet policy.
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Written processes: Leasing, renewals, maintenance SLAs, delinquency, and legal notice timelines.
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Local compliance: Rental registration, lead-based paint rules, fair-housing training, security-deposit handling, and eviction timelines in Georgia.
Rule 7: Add Value the Market Pays For
Skip vanity rehabs. Do tenant-tested upgrades:
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Durable flooring, LED lighting, leak-proof plumbing fixtures
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In-unit laundry, dishwasher, storage, fenced yard
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Off-street parking, shade/landscaping, energy efficiency
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Smart thermostats/locks (if your renter base values them)
Ask: “Does this increase rentability or rent (or reduce maintenance calls)?”
Rule 8: Negotiate Like It’s a Business (Because It Is)
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Lead with your clean terms: as-is with inspection, quick close, strong earnest money.
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Price repairs twice: once in your offer basis, again after inspections if new items emerge.
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Don’t chase. Your next great deal starts the day you walk from a bad one.
Rule 9: Protect the Downside
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Entities & insurance: Discuss title/LLC with your attorney/CPA; add an umbrella policy.
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Buffers: 6+ months of PITI + OpEx in reserves per door.
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Vendors on speed dial: PM, GC/handyman, roofer, plumber, electrician, HVAC, locksmith, landscaper.
Rule 10: Keep Score (and Adjust)
Track each door’s rent, vacancy, OpEx by category, CapEx, turns, days-to-rent, make-ready cost, and maintenance tickets. Winners get more capital; underperformers get a plan—or get sold.
Want help sourcing or selling investment property in Georgia?
Whether you’re eyeing your first door or pruning a portfolio, Middle Georgia Cash Homes can help you underwrite, source, or sell as-is without delays. Get a straight, data-driven offer or a second set of eyes on your numbers.
Call 478-216-1795 to talk strategy today.