Reconciling appreciation and cash flow plays?

10 Replies

DC Metro based and trying to invest close to home. Cash flow is hard to get in this HCOL area and appreciation is not a given at this point in the cycle. Buying an off-HOA house and AirBnB'ing it looks like an attractive play. Potential STR regulation is a risk -not too high so far around here (Norhern VA) but the house would retain value even then.

Comments?

Appreciation and cash flow are both possible in DC.  Listen to this week's BP podcast with Joe Asamoah as he breaks down one strategy to cash flow in DC, the other way to cash flow in DC is do what I do and buy a house with six bedrooms and rent it out by the room.  My last three DC rental properties have met the 1% rule and the cash flow and appreciation have been amazing and I didn't have to leave the area to achieve it!

@Ron Gallagher

Yup, everything Ron said....and in addition....buy in high rent growth areas. I make more from cash flow in the DC area by buying where rents grow and just being a little patient, than if I had bought in some secondary cash flow market.

Originally posted by @Ron Gallagher :

Appreciation and cash flow are both possible in DC.  Listen to this week's BP podcast with Joe Asamoah as he breaks down one strategy to cash flow in DC, the other way to cash flow in DC is do what I do and buy a house with six bedrooms and rent it out by the room.  My last three DC rental properties have met the 1% rule and the cash flow and appreciation have been amazing and I didn't have to leave the area to achieve it!

Congrats! Where in Metro DC do you get the 1%? Anacostia and PG County come to mind

 

Originally posted by @Russell Brazil :

@Ron Gallagher

Yup, everything Ron said....and in addition....buy in high rent growth areas. I make more from cash flow in the DC area by buying where rents grow and just being a little patient, than if I had bought in some secondary cash flow market.

Fully agree with the strategy, I am patient. Where are those "high rent growth areas"? Silver line extension in NoVa?

 

Originally posted by @Russell Brazil :

@Jacques Herve

Rents are weaker on the VA side of the border.

Brightwood, Takoma, Kingman Park, Rockville, Silver Spring, College Park, Riggs Park,

I see. I own properties in Rockville and SS. SS is fine. The Rockville section I'm at (King Farm) is crazy overbuilt all around the Shady Grove metro, capping appreciation and rent increases, at least in my experience. Takoma Park is rent control land. I'll check the others as I know nothing about them. Thanks for pointing that out.

 

Originally posted by @Russell Brazil :

@Jacques Herve

Takoma, not Takoma Park.

My rent increases in Rockville have averaged $100 a month every year for a decade now.

See, that's the beauty of BP: I learn something everyday. I knew about Takoma, WA and Takoma Park, MD, but not about Takoma, DC. As regards Rockville, I can increase the rent -moderately- with a tenant in place, but overbuilding puts a cap on both appreciation and rent increase, at least where I'm at (King Farm/Shady Grove). I love the place: walkable, quaint neighborhood, close to metro. But sometimes I'm thinking I love the place more than the market does. In a nutshell, I agree that there's a ton of value there but someone else (the builders) is capturing the increase in value.

 

Check out Arlington, VA they are booming with Amazon HQ2 and other businesses will follow to poach talent.