Northern Virginia Investment rentals

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Northern Virginia Investment rentals

Lori N.
Vienna, VA · Member since 2013 · 16 posts · 1 vote

Hi all, I'm looking to buy my first investment rental in the Northern Virginia area. Budget is 400K. Looking for appreciation and modest cash flow at least. (The more the better obviously.) I had high hopes about the area near where the new Amazon HQ is going to be, but don't think this budget will allow me to get anything besides a condo which I am very wary of because of their high HOA fees. Seems like townhomes are the better bet. I hadn't thought much about outside Fairfax county but places like Reston, Herndon, and Manassas seem like they fall more in that budget. Anyone with any experience in these areas? Is the appreciation good there?

Thanks in advance for your input.
 

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Adrienne Green
Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes
6y

Hi @Lori N.! You can certainly find an investment property that fits your list in Northern Virginia. I agree with what @Brian Beck said above.  Western Fairfax, Loudoun, and Prince William counties all have potential for you.

Condos can still cashflow, even with the higher condo fees. You must also take into account much lower maintenance costs for condos, which help offset the higher condo fees. That doesn't mean every condo will cashflow, but they can. Plus they appreciate very well. We have a shortage of affordable housing in the area, so that means condos, as the most affordable, have gone up in price.

As far as your question regarding appreciation, all of Northern Virginia is seeing 6-7% annual appreciation. Hot spots for appreciation have been near Amazon's new HQ2 and near the upcoming metro stations on the Silver Line. In those areas, keep in mind you'd be paying more, too.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Id probably look at College Park and Hyattsville at that price point instead

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  • Lori N.
    OP
    Vienna, VA · Member since 2013 · 16 posts · 1 vote
    6y
    Thanks Russell for your input!  What is your rationale for picking these areas over NOVA?  Do these areas appreciate more?  I always heard that renting in MD is harder than in VA.  Is that true?
    1Reply
  • David Fernandez
    Real Estate Agent · Vienna, VA · Member since 2016 · 289 posts · 253 votes
    6y

    Hi Lori, I invests in both MD and VA. Yes, MD is a lot more tenant friendly than VA, plus they require lead licenses for each unit as well as property licenses (at least the counties where I invest).

    The areas you mention in VA fit with your goals of modest cash flow, but potential for appreciation. I like Reston/Herndon over Manassas though.

    0Reply
  • Ika Sargeant
    Real Estate Agent · Reston, VA · Member since 2017 · 295 posts · 163 votes
    6y

    @lori 

    @Lori N.I would consider the following cities; Reston and Herndon but you will notice that prices have run up because of the metro. However that same metro effect has a lot of people coming to these areas because they are been over priced in cities closer to DC. The other great thing about the two cities is that they have a fairly good bus system. Other areas to consider: Sterling and Asburn; slightly out but all these areas seeing strong growth.

    1Reply
  • Brian Beck
    Flipper/Rehabber · Fredericksburg, VA · Member since 2018 · 96 posts · 58 votes
    6y

    @Lori N.

    I'd agree with the above, all of the Northern Virginia area I think is a safe bet with terms of appreciation due to the Federal Government.  Western Fairfax County and Loudon County, still have pricing lower than the parts further in to the beltway.   Loudon has invested a ton of money and has new construction all over the place in for the past 5 years or so.

    Woodbridge/Manassas are definitely lower priced, people who live/lived here (like I did) consider it to be Northern Virginia, however, if you're from further in or the city or any other part of the county and see the commute times you'll think it's another state.  That being said, I think it'd be easier to cashflow in Prince William County but the further out you get from the city the less insulated it becomes.

    1Reply
  • Sudhanshu Singha
    Investor · Colonial Heights, VA · Member since 2015 · 78 posts · 53 votes
    6y

    @Lori N. The Reston/Herndon area has seen a lot of appreciation in the past few years and most likely will also see more in the future due to tech companies moving in or expanding their offices. Just over the last year Google/Facebook/Microsoft have either announced new offices or expansions in the Reston area. The biggest expansion being Microsoft which announced 1500 new employees coming in summer of 2021.  

    The issue you will run into is the 400k budget. You will be able to find a condo for that price but it is going to be much harder to find a townhouse in the Reston or Herndon for that price. I have seen a few for that price but its not common and you will have multiple bidders if you do.

    Also one thing to take note of is that even though Maryland may currently be more tenant friendly than Virginia right now that may not be the case in the future. The Virginia Governor and both legislative bodies of the state government are now under the same political party and if they want to make Virginia more tenant friendly it will not take as much effort as it would of in the past.    

    2Reply
  • Lee Johnson
    Rental Property Investor · Sterling, VA · Member since 2017 · 13 posts · 15 votes
    6y

    @Lori N., May I start by asking why Single Family Rental (SFR), if the goal is Appreciation? Also, being a landlord and dealing with tenant issues isn't for the faint of heart. One bad tenant event is all that is required to force most out of the business.

    I ask because SFR and condos are tied to market appreciation and while I agree with the others regarding new jobs coming to the region. The DMV region has traditionally had low unemployment and housing demand has always been high, thus keeping price appreciation is steady but nominal. 

    Knowing Leverage is the secret formula & magic of real estate, I suggest Value-Add Multifamily Syndications. 

    Why? Most syndications have a minimum requirement of $50K and at this level you can diversify across eight deals thus reducing your risk. Moreover, Value-Add deals use Forced Appreciation to increase the asset value, which is a tremendous advantage over Market Appreciation w/ SFR. 

    Personally, I’ve invested in just about every area of real estate and about two years back I landed on Multifamily Syndications. I’m now invested in 15 deals across the Southern region of the US. Each continues to send my monthly/quarterly dividend even during the current pandemic. 

    I'm happy to share my experience so feel free to reach out or join my Meetup, Loudoun REI Connect, were we dig into Real Estate Investing topics just like this.

    Lee


    1Reply
  • Adrienne Green
    Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes
    6y

    Hi @Lori N.! You can certainly find an investment property that fits your list in Northern Virginia. I agree with what @Brian Beck said above.  Western Fairfax, Loudoun, and Prince William counties all have potential for you.

    Condos can still cashflow, even with the higher condo fees. You must also take into account much lower maintenance costs for condos, which help offset the higher condo fees. That doesn't mean every condo will cashflow, but they can. Plus they appreciate very well. We have a shortage of affordable housing in the area, so that means condos, as the most affordable, have gone up in price.

    As far as your question regarding appreciation, all of Northern Virginia is seeing 6-7% annual appreciation. Hot spots for appreciation have been near Amazon's new HQ2 and near the upcoming metro stations on the Silver Line. In those areas, keep in mind you'd be paying more, too.

    2Reply
  • Patrick Shep
    Rental Property Investor · Washington, DC · Member since 2018 · 98 posts · 38 votes
    6y

    @Russell Brazil hyattsville is best. But you won’t find much for that price point. Value will continue to climb with purple line.

    How much is a modest cash flow to you ?

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  • Narr Sunkara
    Member since 2020 · 7 posts · 0 votes
    6y

    Prices are way up in Reston/Herdon. With 400K budget Ashburn is the place you can find with a metro coming soon. Most of the tech companies which are projected to increase their foot print in Reston/herndon will have a place for Ashburn as residential.  But I second the thought of looking into MD which is probably closer commute to Amz HQ2 than to Herdon or reston on the metro.  

    0Reply
  • Matt Friedman
    Fairfax, VA · Member since 2015 · 4 posts · 4 votes
    5y

    I'm in a similar position in terms of looking to invest in the area as a local resident. The problem I seem to keep encountering is just making the numbers work. Unless my research is just way off, I don't see a $400k townhome or condo generating more than $2,000 a month in rent, maybe a few hundred dollars more. However, at this price and rent, a 15-yr mortgage of 75% of purchase price at 2.6% interest and 15% of rent for monthly costs (taxes, insurance, HOA/condo fee, maintenance, vacancy, etc.) and you break-even to negative at the end of each month from a cash flow perspective. In fact, the mortgage alone would be $2,000 per month.

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  • Adrienne Green
    Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes
    5y

    @Matt Friedman I think you're spot on! The numbers don't work for the majority of places in NOVA. Personally, I've found condos in the Leesburg area work out well, as the condo fees are reasonable so they cashflow (and appreciate!) well.  Others in the region have success with house hacking. 

    1Reply
  • Catherine Dipietro
    Real Estate Agent · Reston, VA · Member since 2021 · 2 posts · 0 votes
    5y

    Hi Lori, 

    I live in Reston and am in the perfect neighborhood for rentals that are within your price range. They are 3 level townhomes that are appealing to most. I am new in real estate and would love to help you with my knowledge in real estate and the area. I have lived in Reston for 4+ years and have done a ton of market research. Please let me know if you have any questions, I would be happy to help. 

    0Reply
  • Meg Khal
    Member since 2022 · 16 posts · 2 votes
    3y

    @Lori N. where did you end up buying? I have a slightly higher budget at 475K but with prices going up significantly since then it won’t help. 

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