Is beginning a REI career in Northern VA possible??

Question

I'm working with a realtor to purchase my first owner occupied buy and hold property using an FHA loan combined with a VHDA down payment assistance grant. I plan to live with two tenant roommates starting out, then fully rent the property later. The problem is the area is so expensive! I want to purchase a property below 200k but it's seeming like that's not ideal given the state of the properties in that price range. I'm wondering if Woodbridge and Manassas are the best places to get the 1%, 2%, or 70% rule to work? I don't want to go as far back as Dumfries, VA. Any help or suggestions would be appreciated.

Russell Brazil · Answer

@Gabrielle E. but back to the original question, is it possible to start a REI career in Northern VA, or even the DC metro area at large. The answer is undoubtedly YES. In general it is going to be hard to find properties that meet the 2% rule...though they are out there in the cheaper condos in Temple Hills, Suitland, SE DC on the south/east side of the river. Baltimore is going to have properties that meet the 2% rule as well.

I personally dont invest in 2% type properties, but there are plenty of people here on BP in the area that do. I target 1% rule type properties and I own a number of them in the metro area. You may need to stretch your target areas a bit. For instance I have condos in Frederick MD that exceed the 1% rule. Germantown and Gaithersburg have condos that meet the 1% rule. I have a townhouse in Burtonsville, MD that meets the 1% rule.

Many people in our area feel that the 70% rule might be a stretch here, so rather they target properties at 65%. We have some higher transfer taxes and the such here that need that extra few percent. However in certain neighborhoods you dont even need to get that cheap because of the price spreads. Petworth and Trinidad in DC, you can easily make $100k on a flip in those areas without meeting the 70% rule. You can can hit the 70% rule in Prince George's county as well. Heck in Petworth and Trinidad you can often find properties on the MLS that are cheap enough to flip since the price spreads can be $200-$250k between the rehabbed and non rehabbed homes.

Eddy Dumire · Answer

@Gabrielle E. You won't find anything in Quantico itself but the base and base housing. Look in Dumfries, Woodbridge, and Stafford. You will likely have some military applicants for any rental in these areas. You still need to screen them well though. While there is some accountability for payment in the command structure, you can still get people that trash your house. I've also heard of people going to basic school (6 months) who sign a 12 month lease. The VRLTA requires you to let a military renter out of the lease if they are transferred. Anyone in basic school is almost guaranteed to be transferred 6 months later.

You won't be able to find good cash flowing properties by looking at the retail ready market. Plan on looking for REO properties, short sales, or otherwise distressed properties to make the numbers work. Read up on the BRRRR strategy. It's worked out great for me. I started a year and a half ago (May 2014) and just closed on my 5th property and still have a full time job.

Kevin Harrison · Answer

Just look for homes within your criteria in that area, and the built in tenants are going to be the military who are typically transient every 2-4 years, and you know they are collectable because they are military and have a reliable paycheck, and a command to hold them accountable.

Russell Brazil · Answer

@Gabrielle E. Well like everything else in the DC area it just depends on what you want out of a buy and hold and what price points you are looking at. If you want primarily a cash flow property, then I would be looking in Frederick MD, Laurel MD, Gaithersburg MD, maybe Woodbridge Va,. If you want appreciation Id probably be looking at the cheaper parts of Rockville MD, Alexandria Va, Wheaton MD (Basically areas with appreciation potential that have lagged market rises around them).

Russell Brazil · Answer

@Gabrielle E. Its possible to find properties in the $200k range, but you are probably going to be more limited to condos and townhouses. PG County you can get some SFH in the $200k range. Woodbridge has some pretty descent SFH stock in the $250k range.

Kevin Harrison · Answer

Dumfries is only one exit down and really not any harder to get to coming from DC. For reference I work in DC and lived off the Dumfries exit but have now moved up to the dale city exit.

Pretty much from Dale city on just add 10K to the price of the same house for every mile closer to DC you get, if you are looking in the 200K range and want a decent place I would look at dale city or even by Quantico. If you eventually want to fully rent it out Quantico will give you a great built in base of tenants that you know are collectable.

To get any closer to DC you will either have to have a smaller place, spend more money, or get something that needs some work.

Gabrielle E. · Answer

@Eddy Dumire Ok great advice. Thanks so much.

Eddy Dumire · Answer

I would just ask them why they're in Quantico and for how long their assignment is.

Gabrielle E. · Answer

@Eddy Dumire wow thanks for the information. Is there any way that I can know whether an applicant is in or going to basic school during the screening process? I'll look into what short sales and REO properties are available. Thanks so much!

Gabrielle E. · Answer

Thanks for the great feedback! @Russell Brazil I'll focus on cashflow in Woodbridge and see what's available in Quantico based on @Kevin Harrison's recommendation. I think I'd rather buy and live in those areas for my first purchase

Is beginning a REI career in Northern VA possible??

Is beginning a REI career in Northern VA possible??

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