I'm new here on this site. My husband and I are considering a townhouse purchase in Washington, DC. The price of the 3 bedroom townhouse, which comes with 2 parking spots (and has no affiliated HOAs) is the price of most 1 bedroom condos in the area. Its within walking distance of 3 metro stops which is valuable to city dwellers. We anticipate covering the mortgage and taxes and coming out even or with no more than $200 per month in excess earned. I would not buy the property with the expectation of cash flow. My hope is that the property will continue to gain value because of the multiple bedrooms, small fenced yard and parking, as well as proximity to public transportation in an area filling in with high rises.
So my big question mark is whether to proceed, given that this house is directly across the street from a low-income housing development. As in many parts of DC, there are extremely high cost properties directly next door to low income properties, but I have no idea how to anticipate whether we would be able to rent it out. There are condos for sale with similar square footage on the adjacent streets within 0.2-0.3 mile away for double the price and luxury high rises, high end gyms, restaurants, bars, and yoga studios, all within a few minutes walking. There are also projects in the pipeline for additional high rises (condos and rentals) that are either under construction or breaking ground soon.
Does anyone have thoughts on whether this is a good idea to move forward? I should add that this would be paid for out of savings, the house is newer construction (1994), and its not a giveaway price as in some markets in the US.
We hope to make a decision 11/23 so any input quickly is appreciated!
@Alexa S. congrats on the initial research and finding something sounds promising. Right now, you don't have enough info to know if it is or is not a good deal (unless you omitted it in this post). Specifically, I would do the following:
1. Speak to a property mgmt company in the area and get an idea of rents for the property
2. Get a better understanding of any costs required to get it move-in ready
3. Get a better grasp of the area. How are the schools?
Evaluating 1 - 4 unit properties is pretty straightforward. You just need to know the income, the money needed to fix up for tenants and anticipated ongoing expenses. Then, armed w that info look at the area and determine if it's worth having a property making X% return in that area.
@ Joe Fairless
Thank you for your response. I'll look into talking to a property management company. I can say that covering the mortgage (the price we plan to rent for) is lower than most properties in the area for 1 bedroom and certainly for 2+ bedrooms, but the trick is that we'd be 'competing' against luxury units/highrises in the area so of course ours would be cheaper. There are few townhomes from which to draw a comparison, but your point is well taken.
The house would be move-in ready as its fairly new and we would plan to take care of any repairs in the purchase agreement.
The schools in the area are middle-range, but that is most of DC. I would imagine for the size of the unit (1000 sq. feet) prime renters would be a couple or a person with a small child.
Thanks again. Good points to consider.
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