In the DC Metro area and nothing on MLS cash flows

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In the DC Metro area and nothing on MLS cash flows

John Joseph
Member since 2022 · 13 posts · 4 votes

I'm on the Maryland side of the DC metro area and am finding in my analysis that not even the cheapest listings on the MLS are cash flowing. The properties I am targeting are all under $200k (which is rare in this area even for distressed properties). The inability to cashflow seems to me to be the result of two things 1) Low rent prices relative to the purchase price and 2) current interest rates. Is anyone else seeing this in their markets? Even in nicer markets like Annapolis the average rent is only $2000/month, which creates a really low purchase price ceiling. In this market if I am looking to rent a single-family home the old-fashioned way is my only hope to cashflow finding a super distressed property off-market?

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
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Buy, hold, wait for rents to rise. I make well over $150,000 a year in cash flow from DC rental properties. Nearly every single one was barely break even when I initially purchased them though

[email protected]301-893-4635Podcast Guest on Show #192
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  • Paul De Luca
    Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @John Joseph

    Given that you're not having success with finding deals with on-market properties, yes it seems you will need to find off market deals. Have you checked with other local investors to make sure you're analyzing deals correctly?

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  • John Joseph
    OP
    Member since 2022 · 13 posts · 4 votes
    4y

    @Paul De Luca

    Thanks for your response, Paul. I figured that was the case. In terms of analyzing, I haven't yet met with a local investor but plan to attend a meetup soon in my area. To this point I have been relying on Youtube videos walking that walk through the process. 

    1Reply
  • Justin Lanciault
    Realtor · Washington, DC · Member since 2018 · 166 posts · 88 votes
    4y
    Quote from @John Joseph:

    I'm on the Maryland side of the DC metro area and am finding in my analysis that not even the cheapest listings on the MLS are cash flowing. The properties I am targeting are all under $200k (which is rare in this area even for distressed properties). The inability to cashflow seems to me to be the result of two things 1) Low rent prices relative to the purchase price and 2) current interest rates. Is anyone else seeing this in their markets? Even in nicer markets like Annapolis the average rent is only $2000/month, which creates a really low purchase price ceiling. In this market if I am looking to rent a single-family home the old-fashioned way is my only hope to cashflow finding a super distressed property off-market?


     Maryland is a big state. Where specifically are you looking? Anything will cashflow if set up correctly.

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  • Paul De Luca
    Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @John Joseph

    Try networking with investor-friendly agents and wholesalers in your area to get on their off-market mailing lists. Attending real estate meetups is a great idea so I'm sure that will help.

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  • John Joseph
    OP
    Member since 2022 · 13 posts · 4 votes
    4y
    Quote from @Justin Lanciault:
    Quote from @John Joseph:

    I'm on the Maryland side of the DC metro area and am finding in my analysis that not even the cheapest listings on the MLS are cash flowing. The properties I am targeting are all under $200k (which is rare in this area even for distressed properties). The inability to cashflow seems to me to be the result of two things 1) Low rent prices relative to the purchase price and 2) current interest rates. Is anyone else seeing this in their markets? Even in nicer markets like Annapolis the average rent is only $2000/month, which creates a really low purchase price ceiling. In this market if I am looking to rent a single-family home the old-fashioned way is my only hope to cashflow finding a super distressed property off-market?


     Maryland is a big state. Where specifically are you looking? Anything will cashflow if set up correctly.


     I'm in the DC Metro area, so I'm only looking at a small portion of Maryland. Basically everything within or just outside the 495 beltway. When you say 'if setup correctly' in reference to a single-family home, what do you have in mind? Renting out individual rooms? Air bnb it? Other?

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    4y

    Buy, hold, wait for rents to rise. I make well over $150,000 a year in cash flow from DC rental properties. Nearly every single one was barely break even when I initially purchased them though

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    3Reply
  • Justin Lanciault
    Realtor · Washington, DC · Member since 2018 · 166 posts · 88 votes
    4y
    Quote from @John Joseph:
    Quote from @Justin Lanciault:
    Quote from @John Joseph:

    I'm on the Maryland side of the DC metro area and am finding in my analysis that not even the cheapest listings on the MLS are cash flowing. The properties I am targeting are all under $200k (which is rare in this area even for distressed properties). The inability to cashflow seems to me to be the result of two things 1) Low rent prices relative to the purchase price and 2) current interest rates. Is anyone else seeing this in their markets? Even in nicer markets like Annapolis the average rent is only $2000/month, which creates a really low purchase price ceiling. In this market if I am looking to rent a single-family home the old-fashioned way is my only hope to cashflow finding a super distressed property off-market?


     Maryland is a big state. Where specifically are you looking? Anything will cashflow if set up correctly.


     I'm in the DC Metro area, so I'm only looking at a small portion of Maryland. Basically everything within or just outside the 495 beltway. When you say 'if setup correctly' in reference to a single-family home, what do you have in mind? Renting out individual rooms? Air bnb it? Other?


    Well if you are looking inside the beltway you are probably only limited to capitol heights for sfh and maybe some condos in silver spring, temple hills, etc.

    The rent formula is x-y=z, with x being income and y being expenses. If you can maximize x and minimize y you will cash flow more then other folks who just go with the flow.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    4y
    Quote from @Russell Brazil:

    Buy, hold, wait for rents to rise. I make well over $150,000 a year in cash flow from DC rental properties. Nearly every single one was barely break even when I initially purchased them though


     ^^^ This Right Here. We have rentals from 2013 and at time they had almost no cash flow but now have significant cash flow. Not nearly as much as the above, but DC is long term buy and hold

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  • Steven Silbert
    Rental Property Investor · Columbia, MD · Member since 2021 · 128 posts · 129 votes
    4y

    I would keep an eye around Ft Meade. The prices aren’t as high as the more expensive parts of the state, but the employees in the area have very high salaries. There are some pockets in the area where you can get relatively high rent compared to mortgage. Places like Laurel, Severn, Hanover, Elkridge, Columbia, or Odenton can be good but make sure to check the average rent in each neighborhood. The neighborhood can change pretty quick from one spot to another.

    3Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    4y

    @John Joseph I think the short answer is - yes, you're correct, random properties listed on the MLS in the DC area aren't going to strongly cash flow. But I think that you are probably within driving distance of markets that will, like Frederick. Or you could try to find a house hack. Are you just starting out? Do you already own a primary?

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  • John Joseph
    OP
    Member since 2022 · 13 posts · 4 votes
    4y
    Quote from @Russell Brazil:

    Buy, hold, wait for rents to rise. I make well over $150,000 a year in cash flow from DC rental properties. Nearly every single one was barely break even when I initially purchased them though


     Super helpful. Thanks, Russell.

    0Reply
  • John Joseph
    OP
    Member since 2022 · 13 posts · 4 votes
    4y
    Quote from @Steven Silbert:

    I would keep an eye around Ft Meade. The prices aren’t as high as the more expensive parts of the state, but the employees in the area have very high salaries. There are some pockets in the area where you can get relatively high rent compared to mortgage. Places like Laurel, Severn, Hanover, Elkridge, Columbia, or Odenton can be good but make sure to check the average rent in each neighborhood. The neighborhood can change pretty quick from one spot to another.


    Thanks for the heads up, Steven. Those areas are on my radar. I'll be sure to take a closer look at them. If I'm not mistaken, you lead a meetup in the Columbia area, right? When is the next one? I'd love to join and meet in person.

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  • John Joseph
    OP
    Member since 2022 · 13 posts · 4 votes
    4y
    Quote from @Nicholas L.:

    @John Joseph I think the short answer is - yes, you're correct, random properties listed on the MLS in the DC area aren't going to strongly cash flow. But I think that you are probably within driving distance of markets that will, like Frederick. Or you could try to find a house hack. Are you just starting out? Do you already own a primary?


     I'm about an hour from Frederick so it's def within driving distance. I am just starting out...no rentals yet. Hoping to purchase my first ASAP. I already own a primary and have 4 kids so house hacking isn't an option right now. 

    0Reply
  • Steven Silbert
    Rental Property Investor · Columbia, MD · Member since 2021 · 128 posts · 129 votes
    4y
    Quote from @John Joseph:
    Quote from @Steven Silbert:

    I would keep an eye around Ft Meade. The prices aren’t as high as the more expensive parts of the state, but the employees in the area have very high salaries. There are some pockets in the area where you can get relatively high rent compared to mortgage. Places like Laurel, Severn, Hanover, Elkridge, Columbia, or Odenton can be good but make sure to check the average rent in each neighborhood. The neighborhood can change pretty quick from one spot to another.


    Thanks for the heads up, Steven. Those areas are on my radar. I'll be sure to take a closer look at them. If I'm not mistaken, you lead a meetup in the Columbia area, right? When is the next one? I'd love to join and meet in person.


     It’s going to be September 1st! I’ll be posting it soon

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  • Mo Karim
    Real Estate Agent · Dallas, TX · Member since 2020 · 164 posts · 80 votes
    4y

    @John Joseph Check out Dr Joe Asamoah's strategy for DC area. He's been very successful with section 8. Not sure if you're willing to get into that but worth checking out. He's been on multiple BP podcasts. 

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  • John Joseph
    OP
    Member since 2022 · 13 posts · 4 votes
    4y
    Quote from @Mo Karim:

    @John Joseph Check out Dr Joe Asamoah's strategy for DC area. He's been very successful with section 8. Not sure if you're willing to get into that but worth checking out. He's been on multiple BP podcasts. 

     Thanks for the rec @Mo Karim 

    Will do.

    0Reply
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