New to Real Estate · Northern Virginia · Member since 2021 · 2 posts · 4 votes
Hi BP family!
I am a 23 year old first time home buyer in the Woodbridge/dumfries VA area and looking to house hack to begin my REI journey!
I am looking at townhouses and am planning on renting out the basement. Was wondering if anyone has any experience with renting out townhouse basements? My main worry is finding a townhouse with a separate basement entrance as well as issues with accessing that entrance if the townhouse is a middle unit and not an end one.
My plan is to live in this townhouse for about a year or two, move and rent the entire unit out, and rinse and repeat. My only worry is mortgages are looking to be around $3200-$3500, and from what I can see rental rates are quite a bit below that.
Does this seem like a good idea? Does the Woodbridge area have a good demand for basement rentals?
Also am interested in meeting and connecting with other investors in the northern Virginia area if anyone knows of any chats or meetups!
Real Estate Agent · Reston, VA · Member since 2017 · 295 posts · 163 votes
3y
@Zain Jafri Yes buying a townhome and renting lower level works well if done right. Certainly makes sure it walks out or separate entrance. You also need to think about how the tenant in the basement will cook. Often full kitchens are not allowed. @Joaquin Camarasa is right, it is getting tougher in our market to break even. We are seeing unsettled market that is shifting almost from month to month, but in general inventory is still very low. You can do what you are suggesting but it will take a longer period to get to your goal. I can't answer about the demand for rentals in Woodbridge but my hunch would be with the rising rentals, a basement rental would offer competitive pricing. The price would be the attraction.
Real Estate Agent · Springfield VA · Member since 2018 · 479 posts · 400 votes
3y
Hi Zain,
During the last few years, the scenario you were describing was common. The outcome after living in the townhome for two years and leaving after could make you break even. However, unless interest rates go lower significantly and you can refinance is unlikely you'll be able to break even in two years. I estimate a few more years than that.
It seems this is the new reality with the current low inventory.
Real Estate Agent · Reston, VA · Member since 2017 · 295 posts · 163 votes
3y
@Zain Jafri Yes buying a townhome and renting lower level works well if done right. Certainly makes sure it walks out or separate entrance. You also need to think about how the tenant in the basement will cook. Often full kitchens are not allowed. @Joaquin Camarasa is right, it is getting tougher in our market to break even. We are seeing unsettled market that is shifting almost from month to month, but in general inventory is still very low. You can do what you are suggesting but it will take a longer period to get to your goal. I can't answer about the demand for rentals in Woodbridge but my hunch would be with the rising rentals, a basement rental would offer competitive pricing. The price would be the attraction.
@Zain Jafri Yes buying a townhome and renting lower level works well if done right. Certainly makes sure it walks out or separate entrance. You also need to think about how the tenant in the basement will cook. Often full kitchens are not allowed. @Joaquin Camarasa is right, it is getting tougher in our market to break even. We are seeing unsettled market that is shifting almost from month to month, but in general inventory is still very low. You can do what you are suggesting but it will take a longer period to get to your goal. I can't answer about the demand for rentals in Woodbridge but my hunch would be with the rising rentals, a basement rental would offer competitive pricing. The price would be the attraction.
Thanks for the response @Ika Sargeant and @Joaquin Camarasa! Yes that does seem to be true. I guess now is a pretty bad time to begin the REI journey. I can definitely try to find a townhouse where the basement can be rented out well, but looks like I'll need to sell the entire unit once I plan to move elsewhere in a few years as renting isn't very feasible.
Real Estate Agent · Northern Virginia · Member since 2021 · 106 posts · 50 votes
3y
@Zain Jafri As long as the following is true, I'd recommend the house hack now for sure.
(your mortgage) - (Rent from house hack) < (Rent you would pay for the same place)
With added factors of better taxes, loan paydown, appreciation this becomes a no brainer.
I recommend my clients to make decisions based on current situations, not speculating on future appreciation/rent growth, etc. Make your decision about moving out/selling/upgrading your townhome, when that time comes down the line, and you know what the current environment is like.
In the northern VA area, there is always people looking for properties, that are cheaper/nicer than living in a larger condo/multi unit building.
Real Estate Agent · Fairfax, VA · Member since 2019 · 79 posts · 68 votes
3y
I specialize in mid-term and short-term rental in the NOVA area. With mortgage being around $3200-$3500, if you find the right property 4 bed with 3.5 bath townhouse, meaning there is a bedroom and full bath in the basement with a walkout entrance you can cash flow very well. Renting out the entire home to a long term tenant is out of the game here. It doesn't cash flow anymore in the NOVA area. I own a few townhouses in the Centreville area and they are cash flowing very well ($800-$1100). Happy to share the strategy with you!