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Should Your New Start-Up Be Brick-and-Mortar?

Renting apartments does not have the zing of a tech start-up that created the next virtual reality breakthrough, but the rental market has heated up recently in cities like Atlanta where limited rental stock has driven the rent prices ever upwards. This has left some business people to wonder if it is time to go into the real estate rental business.

Why This Is Happening

According to a recent article in The Street.com, rents are on the rise again after slowing from 2015 to the middle of 2017 with the national average up 2.7 percent in a 12-month period ending in March of 2018. According to Rents Up In Most Of Metro Atlanta, Still Competitive With Other Cities published last month in the The Atlanta Constitution-Journal, rents are rising at the rate of 7 to 10 percent in the last year, depending on the rental property size. Moreover, despite a more rental stock being built, rents are up an astounding 35 percent since 2010 because demand still outpaces supply.

Pros and Cons Of Starting A Rental

As with any discussion involving starting a business or investing in one, it is a question of timing. Has the rental market topped out. Here is some additional food for thought:

The bad news: While home prices have doubled nationally since 1998, the price of buying rental properties has tripled.

The good news: Home prices have gone up faster than income, which pushes people to rent rather than buy. Prices on the rental in Atlanta have gone up an average 4.4 percent in the last year.

Boom Or Recession, It Takes Planning

The best way to make a rental property business successful is to have a strong business plan in place. This involves finding the right properties at the right price. Maintaining or improving those properties so that your business is viable in the long term. A well-maintained property also avoids messy legal issues resulting from an accident on the property. It's also crucial to know and understand the rental property laws here in Georgia to make sure your business is compliant with local and state laws.

The Advantage Of Brick And Mortar

The risk averse can also take heart in the fact that chances for success of a rental property business here in Atlanta are much higher than a tech start-up. And if it turns out that the rental business isn't right for you, you can sell those brick-and-mortar assets.

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Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

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