Looking for advice on (outter areas of) Northern Virginia

[Jessica Swingle]

Hi all.

I am looking into Northern Virginia sub-markets and am wondering if there are any active/experienced investors/brokers who can offer advice on:

• Fredericksburg
• Winchester 
• Strasburg
• Front Royal
• Woodstock
• Culpeper

I am primarily interested in multi-family properties (for medium-long term hold - will consider stable and value-add opportunities) and it seems there is a concentration of 2+ units in these areas. I understand the stock is older - however, looking for insight on tenant-base, local culture/demographics, supply/demand, economic drivers.

You know, in laymen's terms, the things Wikipedia won't tell me.  

Thoughts?

[Roger Lin]

Hi Jessica,

The inventory for MF in northern VA is still somewhat scarce. The small ones (4-12 units) do pop up every once in a while. I own a 4-unit and have looked at several. You are right, they tends to be in the outlaying areas of NoVa. I think some are great rental markets, meaning you can get decent tenants who pay consistently, higher cap rate 7%-9% and generally economy of scale that you can't achieve with SFHs.

What I struggled with when I considered my deal was value. First, typically, there are not too much upside to add value beyond improving your rent overtime. Second, being further out, I questioned whether the value will increase or at least hold when I eventually sell the property. My 4-unit is in Quantico. The demographics are a little tricky. The day-time population is obviously highly educated highly paid folks with the Marine base or contractors that support the Base but the demographics of the people who actually live in Quantico is a little more spotty. 

Eventually, I pulled the trigger for two reasons. 1. The cap rate was high enough for me to know that this property will throw off enough cash flow that I will pay off the acquisition loan in a relatively short time. 2. I also had to be sure that the likelihood of having to sell this property during a downturn is very very low (the reason I want to get it paid off quickly). So, in the end I was essentially purchasing that cash flow and not much else. 

Ideally, I like to purchase properties with both a high Cap rate and a high potential for expectation but there are times that you just have to live with having one of the two. I hope this is informative. You can reach me privately if you have further questions.