Newbie from the very expensive and growing Northern Virginia

OP

Member since 2020 · 6 posts · 1 vote

@Marco Santarelli — thank you! I've been talking with some realtor friends and others that do investments. They had the same thoughts. I think expanding my search is great advice. I'm originally from Virginia Beach, VA, which is part of the Hampton Roads area. That area is much more reasonable and I think plenty of opportunity still. I'm also going to search in areas further away from the I-495 beltway in NoVA.s

Marco Santarelli

Specialist · Orange County, CA · Member since 2008 · 2k+ posts · 623 votes

@Jake Barney -- Yes, it would be wise to expand your search (as far as needed) to find exactly what you're looking for. :-)

Good luck, and post (or DM) any new questions.

Continued success!

Adrienne Green

Real Estate Consultant · Chattanooga, TN · Member since 2018 · 384 posts · 330 votes

Hi Jake, There are deals that cash flow in Northern Virginia, but they may be less common than in other areas. If you plan on using a property management company, then you may find a better return in other areas. Most investors I know in Northern Virginia self manage to improve their returns.

Why are you locked in to townhouses? You may find when you compare cost vs. rent other housing types are more profitable. Looking at the example you posted, I have condos I bought for under $200k in the last few years that rent for more than $1700/mo. Yes, they have condo fees, but that lowers my maintenance costs, and they still cash flow.

2 Reply

Neil Schoepp

Real Estate Investor · Milford, PA · Member since 2014 · 395 posts · 299 votes

@Jake Barney

Your criteria is based upon what you are looking to accomplish. Some investors only specialize in MF others MHP and still others in Condo's. Each have their pros and cons, so I would think about where I want to be 5 years from now and then work backwards.

You state that properties are to expensive in NoVA. Are you looking at just retail properties from the MLS? As investors we find properties with problems to solve. They are in disrepair, the seller is sick of the property and just wants out, the children inherited the property and have no idea how to run a rental, the owner is behind on their debt servicing. Find motivated sellers buy properties under market, stabilize them and refi them out.

Expanding your market is another personal call. I am in Northeast PA and I invest in MF. Good luck finding that up here. I had to look else where, so I invest in SC and Hampton Roads (yes it is much more affordable down there). So if your comfortable investing close to home but not locally that could be an option for you.

Be Unstoppable

OP

Member since 2020 · 6 posts · 1 vote

@Neil Schoepp that’s great perspective, and I appreciate it. The SF townhome was a suggestion from another investor friend. His thought — buy something that is easy/less expensive to maintain.

My goal is 10 properties in 5 years; so two per year. That to me is absolutely achievable. I do think with enough momentum that more is possible and would to transition to multi-family with enough experience.

The properties I am seeing are on the MLS, which I realize won't be the best deals. Finding those distressed properties does seem to be a key part to the equation. In addition to MLS searches, direct mail has been a consistent message in many of the podcasts I've listened to.

Also, have you had any luck with looking through courthouse records to target houses in probate? You also mentioned owners behind in payments, which I’ve heard mentioned before. How do you gain access to that kind of information?

Thank you again for your earlier response and any future guidance!

- Jake

OP

Member since 2020 · 6 posts · 1 vote

@Adrienne Green The townhouses were a suggestion from a good friend in the business. I think he has had a lot of issues with detached SFHs and he thought they would be less involved, especially for a newbie. I’ll be honest, it was a little less intimidating from my standpoint as well. That goes hand in hand with you point on condos as well, so I’ll keep that in mind.

Thank you!

-Jake

Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

[email protected]301-893-4635 Podcast Guest on Show #192

Stop Thinking 2 dimensionally. (Here and now)

Start thinking 4 dimensionally, how the asset performs over time.

A $325k townhouse in NoVa at 25% down has positive free cash flow of about $50 per month.

My first rental I bought in Rockville in 2009 had free cash flow of $200 a month. Today it has free cash flow of $1700 per month.

If you buy in a high rent growth, high appreciation location, then that minimal free cash flow can look much better over time (4 dimensionally) than it does here and now (2 dimensionally)

District Invest Group545 Reviews

Website View Page

3 Reply

Mark Pedroza

Real Estate Agent · Sacramento/Placer ~ San Francisco Bay Area counties · Member since 2012 · 1k+ posts · 743 votes

Originally posted by @Jake Barney:

@Neil Schoepp that’s great perspective, and I appreciate it. The SF townhome was a suggestion from another investor friend. His thought — buy something that is easy/less expensive to maintain.

My goal is 10 properties in 5 years; so two per year. That to me is absolutely achievable. I do think with enough momentum that more is possible and would to transition to multi-family with enough experience.

The properties I am seeing are on the MLS, which I realize won't be the best deals. Finding those distressed properties does seem to be a key part to the equation. In addition to MLS searches, direct mail has been a consistent message in many of the podcasts I've listened to.

Also, have you had any luck with looking through courthouse records to target houses in probate? You also mentioned owners behind in payments, which I’ve heard mentioned before. How do you gain access to that kind of information?

Thank you again for your earlier response and any future guidance!

- Jake

Target probate houses? At your local courthouse your researching the decedent's probate file to see if the estate(s) has property. If so, the administration process has started and then your marketing to the PR (Personal Representative) to determine if the estate is willing to sell.

Neil Schoepp

Real Estate Investor · Milford, PA · Member since 2014 · 395 posts · 299 votes

@Jake Barney

probate is a courthouse records search also start building relationships with attorneys that deal will wills and probate

Prothonotary office is where they file legal papers find your county's office and ask them for the list most jurisdictions call it Notice of Default.

Another way is to Direct Mail. This takes time and some money as you need to mail an area for awhile before getting results. There are services that will help with this. Search yellow letters and direct mail

Network, Network, Network not the old salesman way of shoving your card in someone's face. Look to genuinely help people and spread the word organically. Do Facebook post about what you are doing. A video of a walk through, a post about how if an owner is behind you can offer them options, etc. When someone asks how's it going? Respond it's going great I've been helping people get out from being behind on their mortgages and saving them from declaring bankruptcy. That's a much better response then, I'm good little sore I'm not 20 anymore. How you been?.

Account Closed

Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes

Originally posted by @Jake Barney:

Hi all, I'm just getting started in investing in the Northern Virginia area (NoVA). I've been listening to the podcast and reading whatever I can get my hands on. I'm certainly inspired and anxious to start. I've been networking with agents and property managers; looking at listings and analyzing the costs and projected incomes. NoVA -- like many other places -- is a notoriously expensive area, but Metro continues to expand westward to the airport and beyond.

My goal is to purchase and hold two SF Townhome's annually for under $400K However, I'm seeing is that the estimated rent is never enough to get positive cashflow. For example, a townhome listed for $325K may rent for $1,700/mo.

Does anyone have any advice? My only thought is to expand my geographical search, but should I also be rethinking my criteria? Am I thinking too narrowly?

-Jake

You need to look at the ratio. Getting 1,700 for a 325,000 property is 0.52%

I live in the DMV and just closed yesterday on a duplex in ohio with a 2% ratio. Property management does all the work easy for me.

Depends on your goals. Do you want to take a good part of your lifetime to biuld equity in expensive townhouses that can appreciate, or do you want a portfolio or monster cashflowing rentals with no appreciation but you can retire off the cash flow.

Different strokes for different folkes. I also have some townhouses in Arlington but enjoy buying for cashflow way more.

Andy WebbPro Member

Rental Property Investor · Carrollton, TX · Member since 2013 · 750 posts · 538 votes

@Jake Barney - I would take a look at Texas; we still have great deals around the major metros. Or if you want something closer to home - Tennessee.

Kiera Underwood

Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes

@Jake Barney I see most investors in your situation look out of state. You could get 4 B- rentals that cash flow at $150/month in OKC for the price of one townhome in Northern VA.

You could even buy in high-risk areas (for closer to 60k) cash flow now and hope on appreciation as you would in your market.. just on a smaller scale!

2 Reply

OP

Member since 2020 · 6 posts · 1 vote

@Kiera Underwood thank you!

OP

Member since 2020 · 6 posts · 1 vote

@Andy Webb thanks a lot!

Ika Sargeant

Real Estate Agent · Reston, VA · Member since 2017 · 296 posts · 163 votes

@Jake Barney: Northern VA is a bit rough. Prices have really risen. I am focused in looking for homes that need a lot of repair and I am also a going little bit out to search but rents lag behind and so the only thing you are playing for is appreciation. Good luck.

Kiera Underwood

Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes

@Jake Barney no problem. I know it's easier said than done though. A first investment in a market that you've never been to is probably a good thing to be nervous about haha! I'd suggest reading reviews and asking for providers to talk to clients they've served before. If many people have had a great experience with a team.. let me rephrase..if many INVESTORS have had a great experience with a team, then your chances of success are higher!

Chris Coleman

Rental Property Investor · Washington, DC · Member since 2015 · 429 posts · 393 votes

@Jake Barney it is indeed tough to cash flow in NoVA. But as others have said, the appreciation in the right submarkets is very good. I don’t invest for appreciation, but it is good in this market.

Have you considered going down into Richmond? Even Fredericksburg and south.

Also, in the I-66/81 corridor like Winchester.

Daniel Brandt

Investor · Centreville, VA · Member since 2019 · 26 posts · 7 votes

A lot of good info on this thread. I live in Centreville, VA (originally from Jacksonville, FL). I recently purchased my first rental property back home in Jacksonville.

I think there are deals to be had in NOVA, but you'll have to be more creative than in other markets. For example, I've found banks offering sub 3% mortgages on primary residences. If you can get one of those and wait out any mandatory waiting periods, you can then convert to a rental that cash flows.

Daniel Brandt

Investor · Centreville, VA · Member since 2019 · 26 posts · 7 votes

@Chris Coleman I've been considering JMU Harrisonburg area. Are you familiar with the market?

Chris Coleman

Rental Property Investor · Washington, DC · Member since 2015 · 429 posts · 393 votes

Originally posted by @Daniel Brandt:

@Chris Coleman I've been considering JMU Harrisonburg area. Are you familiar with the market?

I am not familiar with the JMU/Harrisonburg market. But definitely worth considering.