Bruce Ailion, an Atlanta-based real estate attorney, Realtor, and managing member of ATL Investors LLC -- an investment firm specializing in locating, analyzing, negotiating, acquiring, and rehabbing high-cash-flow properties in metro Atlanta, primarily for foreign, long-term, buy-and-hold, and strategic investors in U.S. real estate -- sat down to talk with Millionacres about the present state of the market and how investors can best capitalize on it.
A diverse career in real estate
Bruce Ailion, immediate past director of the Georgia Association of Realtors, is a skilled real estate executive who's been involved in more than 4,800 transactions over his career. Bruce manages ATL Investors LLC, an equity fund of commercial and residential assets, and also leads a full-service property management company.
Bruce says ATL Investors' core value proposition to investors is simple: "We make money when they make money. We only buy properties that are certain to make a profit, and we have shared that profit 70/30 on approximately 60 percent of the properties sold, with investors averaging 17 to 18 percent annual returns after the ATL Investors share of profit."
What is your approach to investing in real estate, and how has this approach changed/evolved from years ago?
My core belief has not changed in over 40 years: You make money when you buy the right property. Selling is just the realization of that smart decision. If you don't think you can sell it for a good return on day one, don't buy it. The key to success is buying low and selling high. Some say that is easier said than done, but if you buy when everyone is selling and sell when everyone is buying, it's pretty easy.
How would you assess the current state of the real estate investing market?
I feel we are still at a market peak. But that doesn't mean you shouldn't purchase real estate today. Right now, you can buy at the financing market's bottom. Even paying the top price today, locking in 2.75 to 3.25 percent long-term financing means you can be safe and profitable over the long term. Do this in superior locations and hold for 10 or 20 years and you will have a huge win -- same as if you bought in 2009 and sold today. But instead of benefiting from low prices, nowadays you can benefit from low interest rates.
What challenges does COVID-19 present to real estate investors nationally?
COVID-19 presents so many hurdles. Health concerns are one component. There has been widespread economic devastation. The government has been propping up the economy with unprecedented spending and financial liquidity, but this stimulus cannot last forever. Millions of workers will not return to jobs, and thousands of businesses will not reopen. The bankruptcies are just beginning and are already unprecedented. How we work and where we work will be forever changed.
Fortunately, large parts of the residential market have not been hurt. Strong demand, low supply, and bargain-basement interest rates have positioned the residential real estate market for a sharp V-shaped recovery.
Looking ahead, what's your forecast for the real estate investment market?
At some point, the market will adjust to the new reality of recession, reduced GDP, bankruptcy, and business closures. Declining consumer and government spending will have an impact, especially on apartment rentals. A lot of the apartment market is made up of the last hired, first fired and under-$50,000 annual-income group that has been and will continue to be the hardest hit in this recession.
I would also hate to be invested in Airbnb properties or hotels, where landlords and investors have experienced a blood bath. In Atlanta alone, hotel occupancy is expected to hover around 20 percent for the rest of the year.
Yet where there are crises there are also opportunities. I think there will be great buying and investing opportunities in retail and office properties in particular. Going into 2021 and 2022, the market will be supported by very strong demographic trends. More people will enter the peak homebuying age range than ever before. And baby boomers will continue to sell, free up equity, and move into urban centers and second/vacation home communities.
What advice do you suggest to investors, especially beginning investors?
Learn as much as you can, surround yourself with a team of service experts, and find honest mentors. Investors who have the stomach for it should take calculated risks if they want long-term gains. Don't try to time the market and wait. Even if you fail in the beginning, pick yourself up, dust yourself off, and keep trying. I've heard it said that 85 percent of first-time flips lose money. Remember that you won't hit a home run your first time out, or even in your second or third attempt. Getting to first base means you're in a position to score. Do that consistently, and you'll end up a winner in the long term.