I am working with 200K and am looking to get into the rental market in DC. I would appreciate advice from people w/ knowledge of the dc area and its current and future market trends for ideas and tips on what to do w/ the money in terms of investing it. Sort of a broad question but any ideas would be helpful. I can deal w/ investing in bad areas, grew up near anacostia, (not sure if anacostia is quite there yet…think thats an investment bet?) but finding rentals in these areas isn’t that bad of an idea, as there has been so much gentrification all around the city, tips would be really appreciated
Some parts of DC, Anacostia included, are undergoing revitalization and you can still find some bargains around but, by-and-large, the DC Metro area is a very difficult market…if you can get in on “the ground floor” of an area that is up-and-coming, I think you can do OK…be cautious because, as I’m sure you know, some of the areas are “free-fire zones” after dark (like Berry Farms, etc.)…I would steer away from these areas.
I used to work in Anacostia at the Anacostia Naval Station!
It is my opinion, that by looking at Baltimore there are certain factors making it a desirable RE investment area: its proximity to DC, new construction in the inner harbor, revitilization of the Fed. Hill area, gentrification in parts, etc…Although a good portion of it is still like a warzone, the city itself is undergoing a transformation and property is becoming more valuable. Who knows if this will last given the market bust that I see coming, might be a gradual slowdown or an outright bust, but currently inner Baltimore (specifically Canton, Fed. Hill, Fell’s Point) areas are a good bet for both commercial and residential buys. I mean I see a lot of potential. That’s just my opinion though, anybody else have any ideas on the area?
What about the many townhouses around the DC burbs that were built in the 70’s/80’s? I know the prices have gone up lately so don’t know if they will cashflow, but they’re probably easier to manage than something in the ghetto. All around Northern VA there’s lots of young professionals looking for housing, or go out the Bowie/Crofton area in MD for more families.
I agree w/ you about looking at the outskirt of DC. Arlington, Alexandria etc…those areas are great. I just can’t believe what people have paid in recent years there. Hopefully it will slow down pricewise, I also look at people who moved out to Northern VA (Loudon county etc…) and drive 50 miles into dc with 395 traffic. There is so much expansion into those parts, but maybe it will slow with gas prices and traffic…
The prices have gone up so much that any properties
purchased might not breakeven, let alone cash flow.
I am talking about SFH/Townhomes in the metro area.
Lets take for example, a 3 BR townhome goes for over
300K. On a 30yr say 6% note, you will be still paying
over 2K/month for debt service + taxes. The rental
income is around say $1500 or so.
The prices have gone up 100%. I highly doubt if it will
fall 100% or the rents will go up a 100% to catch up with
the new mortgage.
I am also hearing that there are a lot of buyers that are
scared and are running away forfeiting their deposit just
prior to closing. The fear of a bubble burst is brewing.
I agree. Unless you are looking in a revitalizing area, it
is hard to get deals. The yuppies will not rent from those
locations, since there are a number of new rental homes
in most neighbourhoods, where the speculators want
something rather than nothing ( read - huge negative
cashflow or interest only ARM timebombs).
I speak from experience in the No.VA area.
Good luck to you and lets see how the market changes.