Baltimore vs DC/Northern Virginia Area

[Howard Spector]

Hello,

I have lived in Baltimore for about 4 years and know the area very well. I have just recently moved to the Northen Virginia area and am still learning the best places to invest around here.

My question is, has anyone had any experience investing in the nice areas of Baltimore (Fells Point, Canton, Hampden, Federal Hill) or the Northern Virginia area?

It seems to me that Baltimore has the better opportunity for Cash flow while having A or B class renters. The downside would be that appreciation would not be great.

Northern Virgina/DC seems super difficult cash flow wise because the home prices are so high and the HOA fees in so many neighborhoods. The flip side, is appreciation seems to be phenomenal.

To investors in these areas, is this am accurate assessment? Would you rather break even/ take a small loss cash flow wise to take the appreciation in the DC/NOVA area or prefer the A/B class tenants in the nice areas of Baltimore but not see much appreciation?

Thank you!

[Russell Brazil]

For a very simple analysis imagine a long line with the left side being High Risk.....and the right side low risk.

High Risk ________________________________  Low Risk.

On the left side, consumate with high risk, you get higher cash flow as your risk premium. But along with that, you are getting less appreciation, and stagnant rent growth. On the right side, consumate with the low risk, you get very low initial cash flow, because there isnt a risk premium demanded by the market for a low risk investment.  But also in a low risk real estate investment you are typically going to have no only good appreciation, but also strong rent growth. So with patience, the low risk low cash flow investment, will cash flow a lot more over the course of time as rents there grow...just like a Dividend Aristocrat Stock that has a very low initial yield, but the yield on cost grows every year and eventually, you get higher dividends than in a high yielding stock.

While Baltimore and DC are geographically close, they are on opposite ends of the risk spectrum.

Baltimore (High Risk)  ______________ Washington, DC (Low Risk)